Many people assume that the IRS has primary jurisdiction over tax-exempt charitable nonprofits. Yet state governments play a much more active role in regulating nonprofits on almost everything, from their creation to dissolution and multiple life-cycle events in between. State laws govern a wide variety of activities, such as how a nonprofit changes its name, amends its bylaws, elects its board members, and pays its employees. Typically, it will be a state charity official who investigates simple items, such as how nonprofits fundraise (“solicit contributions“), to the more complex, such as alleged malfeasance involving charitable assets.
To help everyone understand the state-level regulation of nonprofits, Columbia Law School’s Charities Regulation and Oversight Project and the Urban Institute’s Center on Nonprofits and Philanthropy conducted a study and issued a report, State Regulation and Enforcement in the Charitable Sector. The report, based on a legal analysis of state laws relating to charitable nonprofits and a survey of state officials with regulatory authority of nonprofits, describes the structure of state charity offices, the scope of authority for these state government officials, and the types of enforcement actions they typically use when finding a charitable nonprofit to be out of compliance with state law. The report also identified the collaborative partners state charity officials partner with most often: state nonprofit associations!
We’ll be hearing more from state charity officials in the coming months in connection with their pilot single portal multi-state charitable registration project, designed to streamline the process of registering a nonprofit with multiple states for fundraising solicitation purposes. Stay connected with your state association of nonprofits so you can be among the first to learn how that project may affect your nonprofit’s charitable solicitation registration activities