In a world where there seems to be either a law or regulation covering every conceivable human activity, one might be forgiven for concluding that anything involving money or a gathering of more than three people might require some kind of official sanction, license, permit, or registration with some obscure government office.
As with most seemingly unnecessary regulations, the only likely purpose of such a license is to prevent some high-ranking government official from being unexpectedly informed of potential legal action, an oppositional political movement, or embarrassing media coverage. Nevertheless, if the rules require it, then permission must be obtained. The alternative is time consuming and expensive litigation either at the scene – or for months afterwards.
When it comes to a fundraising event, most regulations are governed at the state level. Some states have agencies with the specific responsibility to monitor the activities of charities and other non-profit organizations. If the event involves the serving of food or drink, especially alcohol, there may be other agencies with jurisdiction as well. If you are planning a fundraising event, here are some things to consider.
In nearly all states and jurisdictions, a charitable organization soliciting any donations – whether they be in-kind, remaindered clothing or property, money, or even real property – must at least register with the state government. In many cases, the smaller the organization and the lower the amount of the fundraising drive, the less burdensome these registration requirements are.
Churches, schools, and various other kinds of civic organizations are often exempt from registration due to the nature of their relationship with the community. But while they may not necessarily need a separate registration with the state, they will often need to establish status as a non-profit organization as part of their initial formation, or before soliciting deductible contributions.
Fundraising events are very often handled not by the organization itself, but by a company or individual with specialized experience in event planning and scheduling. In nearly every instance, a person or company soliciting donations on behalf of any other person or company must be licensed at the state level before either being paid to raise funds, or actually collecting any funds for the separate organization.
These requirements are meant to proscribe fraudulent activity. An example would be where a person or group of people fraudulently claims to represent the interests of a recognized charity, solicits donations on behalf of that charity, and then misappropriates the funds for some other purpose.
Another important element of professional fundraising is disclosure. Very often, as a requirement of their license, a person being paid to raise funds on someone else’s behalf must not only disclose the nature of their fundraising activities, but must also disclose that they are being paid to solicit donations on another organization’s behalf.
How an event is licensed and sanctioned by the government almost always depends on the venue. For example, if a charity throws a parade, there are going to be permit requirements at the city level for traffic abatement, police involvement, and crowd control. If a church has a carnival on their property, they may need various kinds of paperwork for waste disposal, food service, and so forth.
On the other hand, if an event is held inside, at a convention center, church facility, school, or other establishment meant to hold large crowds, the requirements for licensing may be either greatly reduced or non-existent. This is due to the fact that those facilities are likely already allowed to host large crowds. There may yet exist licensing and registration requirements for the actual donations, but the event itself may not necessarily require a special set of permissions from a government agency.
In order to solicit tax-deductible contributions, an organization must register with and be granted permission by the Internal Revenue Service to operate as a federally recognized non-profit organization. As part of the regulations related to section 501, contributions must be reported as part of the nonprofit’s regular business activities. Occasionally, when large donations are involved, additional paperwork may need to be filed by both the organization and the contributor in order to qualify for certain kinds of deductions at tax time.
By and large, political events are a whole different animal when it comes to both the event itself, and any fundraising that takes place. Because the Constitution prohibits Congress from restricting assembly, the press, or protests, political fundraisers operate under a different set of rules. Naturally, contributions to a campaign or cause aren’t deductible, but a professional fundraiser often must still register with the state. Federal Election Commission regulations may apply to any material distributed by a campaign or political cause as well, even if the purpose of the material is to organize a campaign event, rally, or registration drive.
Some organizations hold events which are primarily meant to be social entertainment and serve only secondarily as fundraisers. Raffles, charity auctions, bingo tournaments, and so forth are popular options for these organizations because they serve a number of purposes in addition to their function as fundraisers.
With any game of chance, fundraising event organizers must exercise considerable caution – as there are both civil and criminal penalties for crossing the line from harmless fundraiser to unsanctioned gambling. Any organization considering such an event should contact a qualified attorney in advance. The rules and procedures for running these sorts of public games can be more than a little complex.
For most intents and purposes, the registration and licensing requirements for fundraising aren’t all that burdensome. They do require advance planning and following the rules may affect some details of the event. But with the number and variety of events that take place on a regular basis across the country, it is pretty clear that even a moderately well-prepared campaign or drive can obtain permission and schedule a successful event without unusually high levels of effort. Usually, the best option is to find someone who has gone through the process at least once and learn from them how the licensing process works.