If you run a Nonprofit or Charitable Organization, you may wish to solicit funds from people throughout the country who are interested in the work that you do. You may also want to expand the services that you provide to help people outside of your immediate geographic location. 
Operating a Nonprofit in multiple states is possible, but there are many legal steps that must be taken in order to successfully work across state lines while remaining in compliance with the law. An experienced Scottsdale Arizona nonprofit lawyer can help you to understand your options and ensure you are in compliance with the law so you do not accidentally do anything that will jeopardize the good works your organization is trying to do.
Following the Rules for Operating a Nonprofit in Multiple States
When Soliciting Donations from people from out-of-state in order to raise funds for your non profit, you must ensure you comply with the rules and requirements from the states where the money will be coming from. This is true even if you send donation requests via email or via mail, rather than having a physical location in the location where you are soliciting funds.
The laws, unfortunately, differ from state-to-state. This means you will need to find out the specific requirements for raising money in every state where you wish to tap into a potential donor base. In states like California and Illinois, for example, there may be criminal penalties for a failure to register your Charity before Soliciting Donations.
The Internal Revenue Service, which operates on the federal level, also wants to ensure that your Charity is not breaking the rules for any of the individual states that you are soliciting funds from. Form 990 must be filed by nonprofits that raise $25,000 or more. This form asks questions about compliance with state registration laws and it has to be signed by an officer of the organization under penalty of perjury.
Of course, your organization may want to do more than just solicit funds. If you wish to actually provide services in a different state, then you will also need to check the laws applicable to beginning your type of operation. Many states have very specific rules about the type of charity work that can be performed. For example, there may be municipal ordinances or statewide laws limiting where homeless people can be fed. You need to know the local rules to avoid criminal and civil penalties.
This does not mean that operating a non profit in multiple states is impossible. In fact, non profit organizations that work in different geographic areas can open up different chapters that share a name, trademark and mission. When this occurs, the groups of charity chapters in different states are usually called “Federated Organizations.”
Federated Nonprofit Organizations can be structured as a Single Corporation operating in multiple locations; as Separate Subsidiary Corporations; or as separate corporations with affiliation agreements. There are advantages and disadvantages to each approach and you should ensure you speak with a Scottsdale Arizona nonprofit lawyer at Lotzar Law Firm, P.C. for help before you decide how best to begin your operations in a new location.
- How Often Do I Have to Re-Certify a Tax Credit Tenant’s Household Income? - November 12, 2015
- Property Tax Abatement vs. Property Tax Exemptions – GPLET - November 12, 2015
- Can You Restructure Your Business Under the Arizona Entity Restructuring Act? - November 5, 2015
