Fundraising online has opened doors to a whole new world of possibilities for nonprofit organizations. Never before has it been so easy to reach donors all across the country and share your mission and impact with so many people at once. But with great innovation comes a new set of challenges. Savvy donors are wary of organizations they only interact with online and require proof of trustworthiness before opening their wallets.
Building trust has never been more important for nonprofit organizations looking to stand out in a busy digital world. The question then is how can an organization build trust when fundraising online? To assist your organization begin laying a foundation of trust, we’ve provided some helpful insight to set you on the right path.
Ensure Your Fundraising Registration Compliance is in Order
Online fundraising is a great cost-effective way for nonprofits of all sizes to reach more supporters. However, online fundraising opportunities often come with the challenge of managing compliance regulations in multiple states. Mobile asks, virtual events, website “Donate Now” buttons, and online peer to peer campaigns are common tools of mission advancement. These online ways to solicit donations make it possible for you to solicit everywhere and may require your nonprofit to register in multiple states or even nationwide.
Fundraising is not regulated the same way in every country. In the US, each state’s initial registration and ongoing reporting process is different. There are 45 states that regulate fundraising, and 40 require nonprofits to register before soliciting potential donors within their borders. The majority of nonprofits are required to register. Some states do offer exemptions from registration to certain categories of nonprofits such as small nonprofits, religious institutions, schools and hospitals, however, these exemptions usually must be applied for and generally renewed. Your compliance obligations don’t end with initial fundraising registration. You’ll need to renew each one of your organization’s state fundraising registrations each year.
But where must your organization specifically register when fundraising online or by traditional methods? Understanding how states define solicitation is essential to understanding where fundraising registration is required. Solicitation is defined as asking for funds for charitable purposes, regardless of the solicitation method, and without regard to whether a donation is received in response. Solicitation occurs where a request for a donation is received, meaning wherever the prospective donor your soliciting is located. This means that if your organization is fundraising online trying to reach donors across the country, you may need to register in all 41 states that require nonprofits to fundraise. Some states including Michigan and New Mexico also require the prior appointment of a registered agent for service of process. Others like California and Illinois, require that nonprofits who were formed in another state both foreign qualify and appoint a registered agent before soliciting.
Fundraising registration is one part of US state regulation of fundraising. Fundraising disclosures are the other part. At present, 25 states require nonprofits who solicit donations within their borders to include charitable solicitation disclosure language in donor correspondence, including solicitations and donation receipts. These required disclosures provide the public with information on where to find information on the soliciting nonprofit, either from the state regulating authority or the nonprofit itself. Not only are fundraising disclosures a necessary step in the compliance process, they are an opportunity for your organization to prove and message your trustworthiness.
Make Compliance Part of Your Story
Once you have done the necessary work of getting your fundraising compliance in order, the next step is sharing that information in ways that donors understand. As any good nonprofit organization knows, a well-informed team that can message your organization’s story can make all the difference in the execution of an organization's goals.
Trust building between your organization and your donors requires providing open access to information about your mission, your impact, and your compliance practices. If you message all three consistently across channels and across the donor spectrum, you will have a compelling message that will resonate with supporters. Prospective donors, lapsed donors, monthly donors, and corporate sponsors all need to hear about your nonprofit’s mission and the impact their gift will make. It will reassure them that they are making the right decision placing their trust in you and give them the confidence they need to become a long-term partner with your organization. In addition to including state fundraising disclosure statements on your donation page, include additional trust indicators such as badges from third-party evaluation groups, as well as security certificate icons from a reliable nonprofit payment processor like iATS Payments by Deluxe® to reinforce donor confidence.
Your staff and your website should broadcast your mission, your impact and your organization’s dedication to transparency and accountability. Set your staff, board members, and volunteer solicitors up for success by training them on how to communicate a strong, consistent message on your commitment to best practices including fundraising compliance. A clear, unified message is vital to your success and will help prove that your organization is legitimate and worthy of investment.
Include Disclosure Statements in Your Solicitation Materials and at the Point of Donation
It’s also important that you message compliance in fundraising materials like planned giving and capital campaign brochures as well as on the donation page of your website. Include state-mandated disclosure statements in all solicitations as required. Make sure there are trust indicators at all points of donation. This means including trust indicators on your donation reply cards as well as online donation forms.
Do not hide an affirmation that your nonprofit’s financial statements are a matter of public record and that you have met your legal obligations for fundraising. Use fundraising disclosures and other trust indicators to broadcast your nonprofit’s legitimacy, accountability, and transparency to current and potential supporters. Harness the power of fundraising disclosures to gain the confidence of prospective supporters, boost their giving, and improve your donor retention rates.
Make Building Trust a Top Priority Today
The best time to begin building trust with donors is right now. Invest the time to properly manage your fundraising compliance today and enjoy the benefits for years to come. Successful and compliant online fundraising can strengthen the impact your nonprofit can make in your community. Prioritizing fundraising compliance is a way for you to both honor your donors’ support of your shared mission and maintain long-lasting relationships with your supporters that are built on trust.
Harbor Compliance does not provide tax, financial or legal advice. Use of our services does not create an attorney-client relationship. Harbor Compliance is not acting as your attorney and does not review information you provide to us for legal accuracy or sufficiency.
About the Author
Sharon Cody, J.D. is the Nonprofit Partnership Manager at Harbor Compliance. Sharon is passionate about educating nonprofits on the role of compliance as both a best practice and an industry differentiator. Her more than 30 years of experience as an attorney, charitable fundraiser, foundation executive, and nonprofit board member give her unique insight on the use of fundraising compliance as a strategic tool to enhance an organization’s reputation and increase its revenue.
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