A nonprofit’s fundraising footprint can grow long before its back office catches up, and for the client’s CPA, the issue is not simply how many jurisdictions may be involved, but whether the organization has a repeatable way to identify state-registration questions, prepare supportable filings, and maintain an operating record after approval.
Federal reporting is an important starting point, but it does not settle every state requirement, as the IRS directs charities to consult appropriate state agencies because state rules can differ on solicitation triggers, exemptions, forms, attachments, fees, signatures, and periodic reports.
Establishing Controls for Nonprofit Clients
CPAs can help nonprofit clients establish controls before fundraising expands, and here are five controls to consider.
First, map the actual fundraising footprint, starting with evidence, not a generic list of states, and ask where the client is actively requesting gifts, including email and direct-mail lists, digital-ad targeting, event locations, grant campaigns, sponsorship outreach, peer-to-peer campaigns, and online giving reports.
Separate initial registrations, renewals, and recovery work, using distinct statuses such as initial registration, renewal preparation, renewal filed, regulator follow-up, recovery review, exemption review, and no current action, to prevent combining those workstreams and hiding the most urgent action.
Reconcile the filing packet before opening portals, drawing from records the CPA already helps maintain, such as Form 990 information, financial statements, governing documents, officer details, and prior filings, and use a practical pre-filing checklist to flag issues early.
Assign ownership for signatures, portals, and payments, establishing a named handoff and backup contact before a deadline arrives, and preserve proof and schedule the next review, keeping confirmation pages, receipts, accepted certificates, deficiency notices, and regulator communications in a shared filing record.
With a documented footprint, separated workstreams, reconciled records, assigned owners, and retained proof, nonprofit clients are better positioned to ask the right state-specific questions before the filing sprint begins, and the advisor’s role is to turn a fast-moving fundraising plan into a set of visible decisions and accountable handoffs.
In practice, this means that nonprofit clients will be able to identify potential registration issues earlier, and make more informed decisions about their fundraising strategies, which can help them avoid costly mistakes and ensure compliance with state regulations.
The multi-state charitable registration process can be complex, but with the right controls in place, nonprofit clients can manage it more effectively, and CPAs can play a critical role in helping them establish these controls, such as guiding them through the merger of different state requirements.
By following these five controls, nonprofit clients can ensure that their fundraising efforts are compliant with state regulations, and that they are well-positioned for future growth and expansion, ultimately allowing them to focus on their core mission.
It is essential for nonprofit clients to have a solid understanding of the state regulations that apply to their fundraising efforts.
