For many nonprofits, foundation grants represent a huge percentage of their annual income. And the Internet has made finding grant opportunities easier and has streamlined the grants application process to an extent. Organizations look for grant funds outside their state, however, certain charitable solicitation requirements come into the light.
1. Most states include grants as a form of charitable solicitation.
Grants and grant writing are considered forms of charitable solicitation in most states, just like direct mail or phone solicitation would be! So…if you are applying for grants and they are a significant part of your nonprofit’s fundraising activity, it has to comply with regulations that are active in forty-one states. This regulation requires a charitable solicitation registration.
2. Charitable solicitation registration is expected when you apply for a grant.
Foundations almost always insist that grant applicants be exempt from federal income tax, which usually means they’ve been approved by the IRS as a tax-exempt, charitable organization and are able to provide a determination letter to that effect. It is also common that applicants show proof they are registered with the state charity official in states where they plan to solicit grants or donations. You should, of course, make sure your nonprofit is registered in its state of incorporation.
3. A funder’s location determines the state of registration.
Because many grants can be applied for online, it is sometimes difficult to assess in which states you should register. Generally, nonprofits should meet the registration requirements of the state where the funder is located.
4. Registration costs may be wasted if the grant is not awarded.
The unfortunate fact is that organizations must register with the appropriate state charity official regardless of whether they get the grant or not. If it wins the grant-the organization is registered and compliant with state laws. If it doesn’t win-the organization has already paid the registration costs and can apply for other grants…but it can’t recoup its registration costs. Organizations should consider this information when deciding whether to apply for a grant from an out-of-state foundation!
5. Nonprofits are required to register regardless of the amount of the grant.
The grant award attached to a given grant can vary based on the applicant, the nature of its project or program, and the funds available. When it comes to charitable solicitation registration, the amount requested typically won’t impact the requirement to file.
6. Staying “grant-pliant.”
Nonprofits must comply with charitable solicitation requirements before they start to solicit donations or apply for grants. If you want to be proactive and compliant, register your organization or file for an exemption in every state in which you plan to approach a funder for a grant! Many nonprofits don’t have the resources to do that, so smaller organizations might consider limiting their grant proposals and fundraising efforts to states they have registered in.
In a nutshell, before you apply for a grant
- Check with the funder to determine what its requirements are.
- Proof of charitable solicitation registration often is one of them, and in those cases you’ll have to decide whether the grant is worth the time and expense of registering.
Marni Wax is a student in the Journalism school at the University of Iowa. She spends her free time running, listening to music, and enjoying a large cup of coffee while scrolling through social media pages.