Fundraising with Professionals

Before your nonprofit hires a professional fundraiser to solicit donations, both the nonprofit and fundraiser must comply with charitable solicitation registration laws.

Definition - Professional Fundraiser

A blanket term meaning individuals or firms that are paid for their expertise in development. Examples include professional solicitors, fundraising consultants, fundraising counsel, and retained gift officers.

Definition - Individual Solicitor

Known alternately as a solicitor agent or individual professional solicitor, these are individuals who are paid to raise funds on behalf of client charities. In certain states, they are regulated differently than firms providing the same services.

Definition - Professional Solicitor

An individual or firm that raises funds for their clients. They are directly involved in the act of asking for donations and generally have custody of the funds for some amount of time.

Definition - Fundraising Counsel

An individual or firm that provides strategic input on development methods, tactics, or events. Generally, they work behind the scenes and aren’t directly involved in the act of asking for donations.

Who are professional fundraisers?

Professional fundraisers, known alternately as professional solicitors, fundraising counsel, or fundraising consultants, are companies and individuals in the business of providing fundraising services. Telemarketing, direct mail, and door-to-door professionals all fall under this umbrella. Charitable solicitation registration laws apply to professional fundraisers in 45 states. Professionals involved in the act of asking for funds are the most heavily scrutinized and regulated. Professionals who help charities plan or manage solicitation without interacting with the public face less oversight.

Individual Solicitor Requirements

Overview of Requirements

Fifteen jurisdictions have licensing requirements for individual solicitors: Alabama, Arkansas, Florida, Georgia, Illinois, Kansas, Kentucky, Michigan, Mississippi, Missouri, New Jersey, New York, Oklahoma, Rhode Island, and South Carolina. Individual solicitors are registered through the same regulatory body as fundraising firms in these jurisdictions; however, the individual requirements are decidedly less onerous than those of firms. Generally, these registrations are renewed on an annual basis.

Explore individual paid solicitor 50-jurisdiction requirements

Fundraising Firm Requirements

Overview of Requirements

A business entity offering professional fundraising services to the public must be licensed prior to engaging in charitable solicitation. Firms practicing without a license can be liable for penalty fees and even criminal charges. Registration for professional fundraisers usually follows incorporation or foreign qualification of the business entity with the secretary of state office. After registration with the secretary of state, firms must register through the relevant jurisdiction agency, most often the attorney general’s office.

Professional fundraising registrations are generally divided by the types of fundraising services that a firm might provide. The two most common types are: professional solicitor and fundraising counsel.

• Professional solicitors take an active role during fundraising campaigns, and they typically solicit for donations on behalf of the charitable organizations that require their services. Because of their direct involvement in solicitations, charitable fundraisers face greater regulations than fundraising counsel.
  Explore professional fundraiser 50-jurisdiction requirements
• Fundraising counsel manage and consult on charitable campaigns but do not actively solicit for the charitable organization.
  Explore fundraising counsel 50-jurisdiction requirements

Registration requirements vary by jurisdiction, but almost every jurisdiction requires fundraisers to submit contracts with charitable organizations as a part of registration. For most jurisdictions, contracts and a solicitation notice must be submitted at least 10 days prior to the start of the solicitation campaign, but South Dakota requires at least 30 days of notice.

Professional fundraisers need to also be aware of the ongoing financial reporting requirement that most jurisdictions have in place. Typically, a fundraiser must submit a financial report within 90 days after the completion of a charitable campaign, although this requirement also varies by jurisdiction. For example, California assigns a fixed due date of January 30, while New Mexico requires that a report be submitted every six months.

Additional filing requirements may include, but are not limited to, surety bonds, paperwork accompanying the bond, paperwork accompanying the contract submission, consent for service filings, reports on solicitor compensation, background checks, and explanations of fees charged for services.

Impact on the Nonprofit

The nonprofit carries the primary burden for meeting solicitation requirements. The responsibilities of nonprofits engaging with these professionals include:

1. Registering before any solicitation occurs.
2. Disclosing on charitable solicitation registration forms that it has engaged with a professional.
3. Including required disclosures on solicitation materials.
4. Maintaining its own charitable solicitation registrations by filing annual renewals and financial reports.

Know Your Professional Fundraiser

Professional fundraisers should independently comply with registration, reporting, and disclosure requirements outlined by charitable solicitation laws. That said, auditing your professional’s compliance is a good idea. Ensure any professional fundraiser you hire is compliant with registration, bonding, and record-keeping requirements. Confirm their fundraising registration is on file with the jurisdiction and up to date (many jurisdictions maintain a public website where you can check). Always document your contracts with professional fundraisers in writing. You may need to file each new contract with a professional fundraiser with the jurisdiction authority. Contracts filed with the jurisdiction are publicly available.