In many states, it’s not always clear whether a registered agent is required when a nonprofit needs to file for fundraising registration. Here are some important considerations when making that decision.
Unified Registration Statement (URS) Can Be Misleading
Many nonprofits that solicit charitable donations nationwide use the Unified Registration Statement (URS) to meet their filing obligations relating to initial and renewal charitable registration and compliance filings. These filings are broadly required in 37 states and in D.C. pursuant to state charitable solicitation acts.
Question 17 of the URS asks for the name of a charity’s registered agent for the state where they are registering to solicit. However, a registered agent is not required in all of the states that accept the URS.
Unfortunately, the instructions on the URS related to the registered agent requirement provide poor guidance and in some cases, are outright misleading, making it difficult to determine when a registered agent is actually required.
So, who can be a registered agent for a nonprofit, and where and when is a registered agent needed for a charity that is soliciting nationwide?
In answering this question, it’s important to first make a distinction between statutory representation requirements relating to corporate formations/qualifications and how that differs from naming a registered agent in connection with charitable registration filings.
The Difference Between Statutory Representation and Special Agency Representation for Nonprofit Organizations
Most corporate statutes are clear on the requirements and role of a registered agent, which is mandatory in nearly every state.
Charitable solicitation statutes are less clear on the requirements of a registered agent, though the role is generally understood to be the same as statutory representation for the purpose of service of process.
However, since this role is not exactly the same as the corporate requirements, most registered agent companies refer to appointments of a registered agent at other state and federal offices as ‘special agency representation’. This is also the case at the various state charity regulatory offices, usually a division under the Office of the Attorney General, Secretary of State or Consumer Protection Office.
Another important consideration that causes a lot of confusion for nonprofits is that, in most states, charitable solicitation – absent any other nexus with a state (e.g. presence, conducting business, etc.) – does not require a charity to obtain a Certificate of Authority (i.e. to qualify to conduct business in a state). Notable exceptions like Washington D.C. and North Dakota do require corporate qualification before a charitable solicitation license is issued and these qualifications require the naming of a registered agent. Be careful not to confuse corporate qualification with charitable solicitation registration or you’ll find yourself needing to unravel an expensive mistake.
Clarification of Various State Fundraising Registration Requirements Regarding Registered Agents
Going back to Question 17 on the URS, the good news is that registering a charity to solicit does not require a registered agent in most states. Many of the states that do require a registered agent will allow for the Secretary of State or Office of Attorney General to be designated as the agent for service of process.
Unfortunately, though, there are a few states where the fundraising registration requirements are misleading or need clarification regarding the necessity of a registered agent. Let’s take a look.
- Special Agency Appointment With or Without Statutory Representation.
In Michigan, a charity need not incorporate or qualify in order to obtain a charitable solicitation license and, thus, statutory representation is not needed on the corporate side unless the organization is conducting business in Michigan. However, a registered agent must be named on the URS or state-specific charitable registration and renewal form (a special agency appointment).
- Corporate Qualification Required for Charitable Registration.
In North Dakota, with few exceptions, corporate formation or qualification is required prior to charitable registration. Unlike some other states, this corporate requirement must be met before a charity can register to solicit in North Dakota. No registered agent is required for the charitable registration itself.
- Statutory and Special Agency Representation.
In Washington, D.C., statutory and special agency representation are both required. In D.C., a charity that solicits donations, unless otherwise exempt, must obtain a charitable solicitation license. This license requires the naming of a registered agent. In addition, there is a prerequisite for charities seeking a charitable business license in D.C. With few exceptions, they must incorporate or qualify (obtain a Certificate of Authority to conduct activities by filing a Foreign Registration Statement) and name a registered agent.
- Qualification Required, Independent of Charitable Registration.
In California and Oregon, the mere act of soliciting donations for charitable purposes, regardless of presence in the state or lack thereof, constitutes doing business in the state. Thus, corporate qualification for foreign (out-of-state) entities is required, which, in turn, requires a registered agent.
Similarly, in Colorado, an out-of-state nonprofit entity must file a statement of foreign entity authority if it is required to register with the Secretary of State pursuant to the Colorado Charitable Solicitations Act. In all three of these states, however, corporate qualification is not a prerequisite for filing an initial charitable registration.
- Misleading Qualification and Registered Agent Requirements.
State-specific charitable registration forms in Illinois seem to indicate that a registered agent is required. Illinois takes this a step further and also implies that formation or qualification is required as part of the charitable registration process, as the form specifically asks when your charity was formed or qualified in Illinois and asks for the name of the organization’s registered agent in Illinois. However, if a charity does not maintain an office in Illinois or conduct business in the state, then corporate qualification and a registered agent is not required. (This is not mentioned on the form, in the instructions or on the state’s website.)
Moreover, if you leave these items blank, the state presumes that the organization does have an office or conducts business in Illinois and demands the filing of a corporate qualification with a registered agent named. Simply indicating on the registration form that this is not required is sufficient for the state not to insist on qualification and a registered agent.
- Optional Registered Agent.
In Virginia, a registered agent is optional. If no agent is designated in Virginia, the organization shall be deemed to have designated the Secretary of the Commonwealth.
- Registered Agent Not Domiciled in State of Representation.
In Utah a registered agent must be named, but the agent need not be in Utah and any person at any address can be designated.
- Must Specifically Name the Secretary of State and Specify the Address.
South Carolina’s state-specific charitable registration and renewal form requires the naming of a registered agent. For domestic nonprofits incorporated in South Carolina, a registered agent is required. A foreign nonprofit may designate the South Carolina Secretary of State for service of process, but must specify that on the form and provide the address for the Secretary of State (1205 S. Pendleton, Columbia, S.C.).
- Consent or Designation.
Arkansas requires non-resident charitable organizations file an Irrevocable Consent for Service of Process providing that service upon the Attorney General shall be as valid and binding as if service had been made on the non-resident organization itself.
In Georgia, by signing the URS or state-specific Charitable Organization Registration, the signer irrevocably appoints the Secretary of State as the organization's agent for service of process for any action arising from the Charitable Solicitations Act.
Hawaii does not require a registered agent, but the Attorney General is irrevocably appointed upon charitable registration (see HRS 467B-16).
In New Mexico, the named registered agent can be located outside of New Mexico or you can file a consent to service of process with the Attorney General.
In Washington, the applicant irrevocably appoints the Secretary of State to receive process in non-criminal cases against the applicant and under the conditions set out in RCW 19.09.305.
- No Registered Agent Designated.
In Mississippi, if no registered agent is designated, then service of process shall be upon the Secretary of State of Mississippi.
- Custody of Books and Records.
In Minnesota, the name of a registered agent or the name of the person who has custody of the organization’s books and records is requested as part of the charitable registration process. If no person is designated, a copy of the process shall be mailed to the charitable organization’s last known address (Minn. Stat. § 309.56).
As you can see, it is not always clear when a registered agent is needed for nonprofit fundraising registration. Careful review of each state’s charitable solicitation statutes is recommended to ensure a nonprofit is in full compliance with the applicable state requirements.
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This article is provided for informational purposes only and should not be considered, or relied upon, as legal advice.