You created a nonprofit corporation under your state’s corporation laws. You presented your nonprofit corporation to the IRS and requested tax-exempt status. Congratulations, you just received your Determination Letter from the IRS that grants your nonprofit tax-exempt status! You are a 501(c)(3) tax-exempt, nonprofit organization. By this time, you are probably ready to start soliciting donations from the public, who you’re certain will be anxious to contribute to your worthy cause. Are you finished with the applying, registering, filing, etc? No!
STEP #5: REGISTER YOUR CHARITY WITH THE ATTORNEY GENERAL
In Ohio, a charity that solicits donations from the public must register with the Ohio Attorney General. Ohio law requires such registration, and other states likely have similar charitable registration laws. At this point, my clients are often tired of registering, filing, and applying, and some tax-exempt nonprofits actually overlook this important step in the process.
It helps to see the big picture with many legal processes. Here, you create an entity in your state to do business, whether it’s for-profit or nonprofit. As a nonprofit, you want to attract donors, so you decided to offer them a tax deduction for their donation by asking the IRS for permission to do that–having your nonprofit become tax exempt. Since you are asking the public for their money, the attorney general enters the picture as the agency in charge of protecting the public. To protect people about to donate their money, the attorney general ensures that charities in its state are legitimate. There are many unscrupulous people who use fake charities to attract donations and the attorney general is tasked with protecting people from giving money to scams. Fake charities tend to mimic the name or mission of popular charities, particularly veteran organizations, breast cancer charities, and charities that pop up after disasters.
In Ohio, the Ohio Revised Code requires charities to register with the Ohio Attorney General, and to file annual registration statements. There are charities that are exempt from this requirement. If your organization contracts with a professional fundraiser or solicitor, parts of the Ohio Revised Code govern your contractual relationship–in other words, special attention is paid to these arrangements. Certain disclosures need to be made to the public for any organization asking the public to donate, and records of all fundraising activity need maintained for 3 years whether you hire a professional fundraiser or not.
Clients sometimes wonder at this point why all of this work is needed when they just want to “do good.” There is much initial work involved, and annual registrations and other actions must be followed, but the main reason clients must follow these steps is to make sure that people are giving money to legitimate causes.
If you have any questions about registering your Ohio charity with the Ohio Attorney General, email me at email@example.com.