Misreporting a nonprofit`s fundraising expenses is dishonest and contributes to the “overhead myth” and the “nonprofit cycle of hunger.” For over 30 years, Labyrinth`s experts have worked with thousands of organizations to help them comply with all legal fundraising requirements at the federal and state level. We file tens of thousands of charitable registrations each year, allowing us to fully immerse ourselves in the world of fundraising law. We`ve compiled the key regulations that any nonprofit operating in the United States should be aware of. We will cover the legal requirements of fundraising, which fall into the following key categories: PLEASE NOTE: The lesson plan and webinars are provided for informational purposes only and do not provide specific legal advice for an individual situation. In addition, the information contained in the lesson plan and in each webinar is based on the laws of June 1, 2014, and these laws may be repealed, revoked or amended, possibly retroactively. Any changes in the law may result in changes to the information contained in the lesson plan and webinars. The lesson plan and webinars should be used in conjunction with qualified legal and tax advisors, not as a substitute. Only a lawyer or other tax professional who knows your particular situation can provide you with the support you need. We encourage you to consult a lawyer or other tax advisor. A shareholders` agreement is a legal agreement between the company and the shareholders that defines their rights and obligations. This agreement sets out the obligations of each shareholder of a company and prevents actions that cause harm to minority shareholders. Such an agreement helps to reduce internal conflicts within the company, protects actions that are not in the interest of all shareholders and allows for impartial decision-making. If you don`t have much experience organizing fundraising events, it can be very helpful to work with a professional fundraising agency.

Of course, you`ll need to determine whether it`s worth paying a professional agency to do fundraising for you – but in many cases, it can actually be a big net win for your fundraiser and help you make more money for a good cause. Have a clear written agreement with the fundraising agency so you know exactly what they will provide and what fees they expect for their services. Get started for free and look for legal fundraising solutions. Charitable promotion laws give the government transparency in the fundraising activities of non-profit organizations. These regulations are designed to protect donors and ensure that their donations go to reputable organizations. By earning IRS 501(c)(3) status, your nonprofit becomes a federally recognized fundraising organization. However, nonprofit promotions themselves are regulated at the state level. This means that you must register to collect donations in state jurisdictions where your nonprofit actively solicits donations. This process is called charitable registration or fundraising registration, and is usually handled by each state`s attorney general or secretary of state`s office. In addition to what has already been covered here, there are a few other legal concerns you need to consider when running a charity: After all, it`s federal and state regulations that ultimately allow nonprofits to raise money and reinvest their income back into their missions instead of losing some of the taxes.

Following these regulations shows the government (and donors) that your organization is actually using donations for their intended purpose and that you are not abusing the goodwill of your generous donors. Failure to comply with applicable fundraising requirements, even accidentally, can result in significant penalties and a loss of trust on the part of your donors. It`s definitely worth understanding the legal landscape of fundraising and seeking professional help if needed. Most of these regulations apply to fundraising activities that involve gambling-like “games of chance,” although other logistical considerations may come into play. Here are some general event requirements you need to remember: A popular way to raise money is to ask local businesses to become event sponsors. Generally, the benefits of sponsorship vary depending on the level of sponsorship (e.g. Platinum, Silver, Gold and Bronze) and may include complimentary tickets, golf tournament tickets, receptions with major donors and distribution or presentation of the Sponsor`s product at the event. The value of the goods and services provided in exchange for the sponsorship payment is treated as separate consideration, and the remaining sponsorship payment is generally tax deductible as long as it is a qualifying sponsorship payment. There is an important difference between a “qualified sponsorship payment” under IRS regulations and advertising. Many organizations include sponsor names and logos in event programs, brochures or other fundraising materials, which is considered a form of recognition and always constitutes qualified sponsorship.

However, if the charity promotes the sponsor`s products or services, advertising revenue may be subject to independent corporate income tax (UBIT). Advertising includes messages that contain qualitative or comparative language, price information or other indications of savings.