Some states offer exemptions to certain types of nonprofit organizations, so your organization may be eligible for exemption from registration in some states.
Exemptions may be very important to your organization, providing substantial financial savings while ensuring compliance with state solicitation statutes. Clearly Compliant completes an extensive review of all possible exemptions for an organization as part of the initial assessment process. Some states require a one-time filing, while others require the exemption be completed annually. For those states allowing self-certification, your organization will have the documentation to support the exemption determination.
10 states do not require charity registration: Arizona, Delaware, Idaho, Indiana, Iowa, Montana, Nebraska, South Dakota, Vermont, and Wyoming. So, all nonprofit organizations may solicit funds in these 10 states without additional concern for charity registration. Remember, registration requirements change! NV added the requirement for charity registration in 2014 while AZ eliminated the requirement in fall of 2013.
Higher Education and Higher Education Foundations are eligible for exemptions in 24 states depending on specific fundraising criteria. States are NOT consistent in offering these exemptions, some states exempt only Higher Education Institutions and others offer the exemption only to the Higher Education Foundation. However, three states (LA, OK, and SC) will not offer the exemption if a Professional Fundraiser is employed.
Hospital and Hospital Foundations are eligible for exemptions in 13 states, but similar to the Higher Education segment, states are not consistent in offering exemptions to both. For example, Alabama offers exemptions to Hospital Foundations, but not to nonprofit Hospitals. LA and SC do not offer exemptions if a Professional Fundraiser is employed. If you were wondering about OK, it does not offer exemptions to either type of institution!
Many, but not all, states offer Religious institutions exemptions. However, just because a nonprofit is affiliated with a religious organization does not mean it has the same standing. A few states that do not offer Religious organizations exemptions are: FL, MA, ME, MS, SC, VA, and WI.
Membership organizations may qualify for exemption in 21 states. Many of these states require that exemption only applies when solicitation is limited to the members. Another frequent state requirement is that membership is not conferred based only on the receipt of a donation. Finally, most states have a definition of membership that includes certain rights be included with the term membership, such as the right to vote or attend meetings.
Veterans groups are eligible for exemptions in 17 states, but the criteria for exemptions varies greatly state to state. The most consistent exemptions are for Federally Chartered Veterans Organizations.
The definition of Small nonprofit organization varies by state. AK, VA, and WI define small nonprofits as raising less than $5,000 in annual contributions, KS and NJ as less than $10,000, while CT and WA raise the threshold to less than $50,000 in annual contributions. There are many variations in between for the 27 states offering an exemption for nonprofits with small annual contributions. Most states also dictate that no Professional Fundraiser is employed and a few off the exemption only if the staff is all volunteer.