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What To Consider Before Holding A Fundraiser For Your Nonprofit

Before You Begin Fundraising Or Holding Events For Your Nonprofit, There Are Some Guidelines You’ll Need To Know In Order To Stay Legal With The State

If you are a public benefit or religious nonprofit, there will most likely come a time in your nonprofit’s life where you want to hold a fundraiser. You can’t just set up your lemonade stand or charity bingo event and start raking in donations, however. There are certain steps that must be taken before you can accept donations for your nonprofit corporation, especially if you plan on obtaining 501c3 tax exempt status from the IRS.

Registering your nonprofit

In most states it is required that you register your nonprofit as a charity before you accept any money. It is a smart idea to register with your state as soon as you have formed your nonprofit. You will do this by filing a form with the attorney general, secretary of state, or similar government office in the nonprofit’s home state. There is generally a fee.

Most states also have an annual report that you will need to file in order to keep your nonprofit current both as a corporation and as a charity so that you stay legal.

Gaming and gambling rules

Many states have strict rules regarding gambling, gaming, and other common fundraising methods. According to the IRS, this could mean bingo, raffles, lotteries, betting, punchboards, tip jars, video games, games of chance, and more. This cannot be your only method of obtaining income, however, if you wish to remain tax-exempt, because the IRS does not consider gaming of any sort to be a charitable activity. It is also important that no one privately benefits as a result of funds received from gaming—the money must go back into the nonprofit and its purpose. A nonprofit that occasionally holds an event where gaming takes place won’t jeopardize their tax-exempt status, but they may be potentially subject to the unrelated business income tax.

Who to contact

Your state will have guidelines set out through the Department of Revenue, Attorney General, or similar government entity. You can visit their website to find out specific rules regarding gambling, gaming, and fundraising. Also make sure that you register your nonprofit as a charity before accepting donations. Northwest Registered Agent has an inclusive list of nonprofit requirements by state, simply choose your state to learn exactly what needs to be done. Generally, the process will look like this for registering your nonprofit as a charity:

  1. File the charity registration form with the government office responsible for charity registration in your state (generally the attorney general or secretary of state).
  2. Make sure to include your registration fee (this will differ depending on state).
  3. Renew your registration on a regular basis. Some states require annual, biennial, or other periodic registration.

It may seem like there are a lot of hoops to jump through before you can hold a fundraiser for your nonprofit organization, but doing so can be well worth it in the end. Some states do not require charity registration before fundraising, but it is wise to double-check before you start.

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