CORPORATE TRANSACTIONS & COMPLIANCE BLOG

The Challenge of Obtaining a Charitable Solicitation License in Washington, D.C.

By: Ron Barrett, COGENCY GLOBAL INC. on Tue, Aug 29, 2017
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The Good, the Bad and the Ugly

If your organization is soliciting charitable donations in the District of Columbia and is thinking about filing for a charitable solicitation license, be forewarned that you’ll likely need a fistful of dollars and the patience of Job; that is if you want to attempt to do this on your own. You’ll also likely be delayed by months if you attempt this process via mail, or you’ll need to make several trips to multiple offices and become comfortable with frequently repeating “I’ll be back” to achieve this goal.

For charities and other nonprofits soliciting in Washington, D.C. (including applications for federal grants), unless exempt by statute, a charitable business license from the D.C. Department of Consumer and Regulatory Affairs (“DCRA”) is needed. The form used for this purpose is ironically named the BBL-EZ, with BBL standing for “Basic Business License” and EZ allegedly standing for “Easy”. This is surely a misnomer, because there is nothing basic or easy about obtaining a charitable solicitation license in Washington, D.C.

THE GOOD: Help with Obtaining an Elusive License

The good news is that you found this article, which provides helpful information on the common problems and errors that cause delays when trying to obtain a charitable solicitation license in D.C. By being aware, you can hopefully save yourself time and aggravation when you need to file for a charitable solicitation license.

THE BAD: Beware of Incorrect Guidelines and Websites

The bad news, unfortunately, is that online instructions and other resources relating to charitable registration in D.C. are inaccurate and misleading, including the guidelines created by the Multi-State Filer Project (“MSFP”), the organization that created the Unified Registration Statement (“URS”). Below are just a few of the inaccuracies in the URS guidelines for D.C.:

Incorrect Correct
BBL fee is $303 It's actually $412.50
Mail filing to 941 N. Capitol St., NW         Hand deliver filing to 1100 4th St., SW or
Mail to 7175 Columbia Gateway, Columbia, MD
URS is required D.C. does not require the URS
Period covered: 1 year Nope... it's 2 years
Renewal date 9/1 Renewal is due biennially before license expires 
Notarized signatures required Notarized signatures are required on the Certified Resolution only
IRS Form 990 is required No, it isn't

 

As for required financial reporting requirements with respect to D.C.’s requirements, nearly all of the information in the financial reporting section of the URS guidelines is inaccurate.  In addition to this and the above inaccuracies, the URS guidelines only briefly touch on the additional documents required and filing requirements in D.C., by alluding to “a host of local licensure requirements.” I’ll discuss this more fully in the next section.

To be fair to the MSFP though, I should note that their guidelines have not been properly updated, and that the sources from which they likely obtained the information reported in their guidelines, probably various DCRA web pages, are also riddled with errors.

AND THE UGLY: Required Prerequisites for Filing DC BBL-EZ

Before attempting to file the BBL-EZ with the Business License Division of the DCRA, you’ll need to first take care of some prerequisites. There are several documents that are required in support of the BBL-EZ and organizations located outside of D.C., who are not otherwise exempt, must first qualify to conduct business in D.C. and obtain a tax exemption from the D.C. Office of Tax and Revenue (“OTR”).

The BBL-EZ requires the following documents in support of the application:

  • Certificate of Occupancy, or information therein

  • Registered Agent Written Consent

  • Clean Hands Self Certification (a sworn statement that no outstanding debts are owed to D.C.)

  • Certified Resolution

For organizations located outside of D.C., the filing of a Foreign Registration Statement (Form FN-1) is required at the Corporations Division of DCRA. This form requires the naming of a registered agent in D.C., and an original Certificate of Good Standing (Certificate of Existence) from the registration authority in the state/country of incorporation that is not over 90-days old.

In addition to the above corporate filing, D.C.’s tax authority (OTR) requires the filing of an Application for Exemption (Form FR-164), along with an IRS Determination Letter or a copy of the filed IRS Form 1023 or Form 1024 (Application for Recognition of Exemption). OTR  also requires the filing of a Combined Business Tax Registration Application (Form FR-500).

I know what you're thinking. Did he fire off six documents or only five? Well to tell you the truth in all this excitement I've kind of lost track myself. But since this is the most difficult filing jurisdiction for nonprofits, with the most onerous charitable registration requirements in the U.S., you've got to ask yourself one question: “Do I feel lucky?” Well, do ya?!?

For a Few Dollars More, Outsourcing Can Save You Time and Headaches

Given the complexity of the filing process in D.C., many find it to be much more efficient and worth the additional expense of enlisting the assistance of an attorney, accountant or knowledgeable service company. These professionals can assist you in navigating the regulatory gauntlet surrounding the charitable registration licensing process in D.C.

 

This article is provided for informational purposes only and should not be considered, or relied upon, as legal advice.

Topics: Charitable Solicitation Registration, Nonprofit Registration and Compliance