Five Ways to Reassure Your Donors Through Compliance

James Gilmer, Contributor, Business2Community

August 26, 2016

With the widespread use of social media, crowdfunding and other amazing donor retention tools, it’s easier than ever to find and engage with donors online.

As more nonprofits look to the power of the Internet for greater fundraising results, they must distinguish themselves from the noise and competition while staying true to their mission. At the same time, donors want to give to legitimate organizations and know that their money is going to the right place.

One clear way to communicate your charity’s worth to your donors is through compliance with state charitable solicitation regulations.

Most states regulate fundraising, and 41 states require charities to register with the state to solicit donations. Charitable solicitation registration is separate from your federal 501(c)(3) exemption, and if you solicit in any of these 41 states, it is required before you even ask for donations! Charities that fundraise online should pay special attention because they are technically soliciting donations nationwide.

The value of charitable solicitation compliance is twofold. First, you stay on the right side of state and IRS law. Nonprofits are highly regulated, and for good reason, as government agencies want to make sure only legitimate charities are soliciting funds from and serving the public. Charities that fail to meet basic compliance requirements can receive penalties ranging from fines all the way to revocation of their right to solicit.

Second, and perhaps more importantly, is the reassurance you can give your donors. Fundraising laws are in place to protect donors, but it is your donors themselves who need to feel connected with your mission and trust you with their donation (or investment, depending who you ask). In addition to the many online tools available to donors, most states maintain databases where your donors can see whether your charity is registered. At the same time, your donors can see if you are current, under government scrutiny, and can get a better sense of where their donation actually goes.

While you may think your charity’s mission is the best thing since sliced bread, you still have to cut through the noise. Here are a few tips that can make your donors’ decision to give a bit easier, especially if you are reaching them impersonally online:

1. Register to solicit donations in the state in which the charity is based (usually the state of incorporation). For many small and medium sized charities, this is where many of your board members and donors reside, and where most of your fundraising activities take place.

2. If you fundraise online, be sure to register in select states before you ask for donations. A charitable solicitation license from the state of Illinois will do you little good in Wisconsin. At the same time, fundraising online means you must comply with applicable requirements nationwide.

3. Include disclosure statements on all your fundraising solicitations. Not only are they required by law in 24 states, but your donors can use them to find more information about your organization.

4. Include proof of 501(c) exemption and charitable registration in your solicitation “packets.” Your staff and fundraising footsoldiers probably have stories, pictures, and compelling materials to show prospects. Without the “legal stuff,” however, you may find your meeting with a donor cut short.

5. Don’t forget to really, truly thank your donors. Compliance isn’t flashy, but it absolutely helps demonstrate your nonprofit’s credibility and responsibility. However, both before and after your donors give, they need to feel engaged with and inspired by the work your charity does. When they do make that investment in you, return the favor. Sending a handwritten thank-you note goes a long way.

Your donors are busy people, so it’s time to make their decision to give as easy as you can. You already know how to tell stories, ask for donations, and manage donor communications and follow-ups. By staying compliant, you reassure prospective donors that your cause is legitimate and that their money goes exactly where it should. And if your donors feel good about giving to you, what more could you want?

This article was written by James Gilmer from Business2Community and was legally licensed through the NewsCred publisher network.

The views of the author of this article do not necessarily represent the views of First Republic Bank.