Monthly Archives: June 2015

Penalties for Not Registering Under State Charitable Solicitation Registration

A common question about state charitable solicitation registration is what are the penalties for noncompliance. In fact, early on we did a blog about it with a couple of examples, but realized that we needed to go a little deeper.

States have created charitable solicitation registration in order to provide their residents transparent information about the charities that solicit within their state. They take these rules seriously and expect compliance usually prior to solicitation or within 30 days of the start of solicitation.

We picked 5 states for which we could find clear information about penalties to illustrate the types of penalties that exist. Generally, the penalties are steep fines with additional possible consequences for the organization.

Minnesota states that failure to comply may be a violation of Minnesota law and as such can result in “civil penalties, attorney’s fees, [and] costs.”  Failure to file annual reports puts an organization in default in Minnesota so that they cannot solicit again until they are up to date on all filings, have paid a $50 fee, and file a new registration.

In New York, there are two overlapping categories of registration — one for soliciting from New York State residents (7-A), and the other for doing business in New York State (EPTL) — that are filed on the same forms. Monetary penalties for failing to register under 7-A are $1000 per violation and up to $100 per day of noncompliance. For EPTL it is up to $10 per day with a $1,000 max. Penalties are combined for those organizations subject to both rules.

Ohio law carries stiff penalties for failure to register that vary with total contributions.  1716.99 Penalty states:

(2) Except as otherwise provided in division (B)(4) of this section, division (B)(3) of this section applies to solicitation fraud, and solicitation fraud is one of the following:

(a) Except as otherwise provided in divisions (B)(2)(b) to (d) of this section, a misdemeanor of the first degree or, if the offender previously has been convicted of or pleaded guilty to a theft offense or a violation of division (A)(1) of section 1716.14 of the Revised Code, a felony of the fifth degree.

(b) If the value of the contribution or contributions made in the violation is one thousand dollars or more but less than seven thousand five hundred dollars, a felony of the fifth degree or, if the offender previously has been convicted of or pleaded guilty to a theft offense or a violation of division (A)(1) of section 1716.14 of the Revised Code, a felony of the fourth degree.

(c) If the value of the contribution or contributions made in the violation is seven thousand five hundred dollars or more but less than one hundred fifty thousand dollars, a felony of the fourth degree or, if the offender previously has been convicted of or pleaded guilty to a theft offense or a violation of division (A)(1) of section 1716.14 of the Revised Code, a felony of the third degree.

Washington State  code 19.09.271-279 penalizes non-filers after five days’ notice by publishing a press release on internet and newspapers of a notice of the charity’s unregistered status. Knowingly giving false information in your filing is punishable as a misdemeanor under RCW Title 9A Chapter 20.

In Pennsylvania, the registration instructions specify that registration is due within 30 days of the start of solicitation.  Late fees are $25 per month or part of month and cannot be waived.

One issue that comes up is whether you are calling attention to your organization if you begin to register when you have not in the past and should have. Bear in mind that these are state regulations and carry that weight. Compliance is important. States want you to comply. Pennsylvania adds in their description of late fees that “organizations electing to voluntarily register are not subject to late fees.”

Regardless of penalties, you should file where required. Penalties grow steeper for willful violations of the law. Also, when you file, your information must be accurate. The biggest penalties are reserved for those who knowingly file incorrect or incomplete information because accurate information protects states and their residents from fraud. The bottom line is that charities need to know what the state registration requirements are, how they apply to their organization, and how to follow them. There are consequences for not.

Please note, this information is not intended as legal advice. We recommend you consult your nonprofit’s legal advisor if you have questions on how fundraising regulations affect your nonprofit.