Navigating State Charitable Solicitation Laws: How the Charleston Principles Guide Multistate and Online Fundraising

If your charitable organization raises funds across multiple states or from residents in various locations, you’re likely familiar with the challenges of complying with each state’s charitable solicitation laws. These laws can vary greatly between jurisdictions, and failing to adhere to them can lead to penalties or even the suspension of fundraising activities.

Fortunately, there is a set of guiding principles that can help clarify when and where your nonprofit needs to register, and what kind of compliance is necessary. These principles are known as the Charleston Principles, which were developed in 2001 by the National Association of Attorneys General (NAAG) and the National Association of State Charities Officials (NASCO).

In this article, we’ll explore how the Charleston Principles apply to multistate fundraising, including both traditional and online fundraising efforts, and provide practical guidance on ensuring that your nonprofit stays compliant with state laws while raising funds across state lines. For your convenience, you can find the full text of the Charleston Principles here.

Important note before we get started: the Charleston Principles are not adopted law in any state. They are practical guidance intended to help nonprofit leaders understand when their organization might need to register in a state based on their fundraising activities. While the principles offer valuable insights and can be useful in assessing your obligations, relying solely on them as justification for not registering in a particular state may not be enough to avoid penalties. In some cases, state regulators may still require registration, even if your organization believes it falls within the guidelines of the Charleston Principles.

That said, the Charleston Principles may serve as persuasive evidence if you are in a situation where a regulator is questioning your registration status and you want to demonstrate good-faith efforts at compliance.

What Are the Charleston Principles?

The Charleston Principles offer a framework for understanding when a charitable organization must register in a state before soliciting donations. Although states have their own charitable solicitation laws, the Charleston Principles help determine whether a nonprofit has a ”substantial connection” to a state, which would trigger the need for registration.

The Principles take into account several factors, including:

Soliciting donations from residents of a state (through mail, email, phone, or online platforms);
Having a physical presence in the state (such as an office or employees); and
Receiving a certain amount of donations from the state.

Essentially, these guidelines aim to help nonprofits assess whether their activities in a state are significant enough to require compliance with that state’s registration and reporting rules. By applying the Charleston Principles, your organization can simplify the process of determining where you need to register and which state-specific obligations apply.

Key Considerations for Multistate and Online Fundraising

If your nonprofit raises funds in multiple states—whether through traditional methods (direct mail, phone calls, in-person events) or online fundraising campaigns—you need to ensure that your activities comply with the charitable solicitation laws in each of those states. Here’s how the Charleston Principles apply to these fundraising efforts:

1. Soliciting Donations from Residents of Other States

One of the primary factors in determining whether you need to register in a state is whether your nonprofit is actively soliciting donations from residents of that state.

Traditional Solicitation: If you send direct mail, make phone calls, or conduct events where you ask for donations from people in another state, this could be considered “soliciting” donations, which often triggers the requirement to register in that state.
Online Solicitation: The internet complicates matters because it’s easy for your nonprofit to reach potential donors across the country. Under the Charleston Principles, if you’re actively soliciting donations from residents in another state (e.g., through targeted digital campaigns, online donation forms, or social media), you may be required to register in that state. The key factor is whether your efforts are aimed at residents of that state, even if you don’t have a physical presence there.

For example, if you run a nationwide digital fundraising campaign (say, via social media or email), and a large number of your donations come from residents in a particular state, that state may require you to register, even though your nonprofit operates primarily in another region.

2. Having a Physical Presence in a State

Under the Charleston Principles, simply having a physical presence in a state can trigger the need for registration. This might include:

An office or employees in the state
Staff conducting fundraising activities (such as phone solicitations or in-person events)
Holding events where donations are solicited

If your nonprofit has a presence in a state beyond online solicitations, be sure to review that state’s laws to determine whether registration is required. For example, if you hire a fundraiser to conduct phone solicitations in another state, that could be considered having a physical presence, necessitating registration.

3. Financial Thresholds and De Minimis Solicitation

The Charleston Principles also consider financial thresholds when determining registration requirements. Many states have minimum fundraising thresholds that exempt smaller operations from needing to register. For example, if you’re raising only a small amount of money in a particular state (often below a set dollar amount), you may be exempt from registration.

However, these thresholds vary greatly from state to state. Some states may exempt you from registration if you raise less than $25,000 a year from residents in that state, while others may have higher or lower thresholds. Therefore, if you’re soliciting donations in multiple states, it’s essential to track the amounts raised in each state to determine whether registration is necessary.

4. Online Fundraising and the “Substantial Connection” Standard

When it comes to online fundraising, the question of whether you need to register in a state often depends on the degree of solicitation activity in that state. The Charleston Principles help clarify that it’s not just about whether you have a physical presence in a state, but whether you have a substantial connection through your solicitation efforts.

As an example of this, if your nonprofit’s website is available to residents of a state, and you encourage donations via an online donation form, that could be viewed as soliciting donations from that state’s residents. If your online campaign is broad or specifically targeted at certain geographic regions, you may need to assess whether the volume of donations or targeted outreach to that state requires registration.

5. Multistate Fundraising Strategies: Best Practices

To manage compliance effectively, consider these best practices for multistate fundraising:

Track donations from each state: Make sure you track where your donations are coming from, especially if you’re conducting online fundraising. Some states require registration based on the amount of money raised from their residents.
Review state requirements regularly: State laws can change, and it’s important to stay updated on any new regulations that may impact your registration obligations. This is especially crucial if you’re running a national online campaign where donations could come from any jurisdiction.
Consult with legal experts: Multistate fundraising can be complex, and working with a nonprofit attorney who understands the nuances of state charitable solicitation laws can help ensure compliance. A legal expert can help you navigate the registration process, assess whether you need to register in specific states, and handle any filings or reporting obligations.

6. Exemptions for Certain Fundraising Activities

In some cases, there may be exemptions based on the nature of the solicitation.

For example, certain types of solicitations—such as those conducted by volunteers without significant expenses or out-of-state fundraising events—might be exempt from registration requirements in some states.

However, these exemptions are state-specific, so it’s important to check each state’s laws for details.

Final Thoughts

When it comes to fundraising in multiple states or through online campaigns, understanding and applying the Charleston Principles is essential for ensuring that your nonprofit complies with the varying laws that govern charitable solicitations. The principles help clarify when your organization’s activities create a “substantial connection” to a state, triggering the need for registration and compliance.

By focusing on where you solicit donations, tracking the amounts raised in each state, and staying informed about state-specific requirements, you can navigate the complexities of multistate fundraising with confidence.

If your nonprofit is facing challenges or needs help understanding how the Charleston Principles apply to your fundraising efforts, we’re here to guide you through the process and help ensure that your organization remains compliant across all jurisdictions.

Reach out for a consultation today!

About the Author: Ricardo Simmonds, Esq.

Ricardo Simmonds, founder of Lighthouse Legal, brings six years of experience working exclusively in the nonprofit sector. Licensed in Indiana and Ohio, our founder has served nonprofits from every angle—as a regulator, in-house counsel, and a private firm attorney.