Fortunately, educational institutions, such as colleges, universities and other primary and post-secondary organizations, are exempt from state charitable solicitation registration and nonprofit annual report requirements in most states. Unfortunately, it can be quite challenging to determine which states allow the exemption and, in those that do, it can often be difficult finding out how to obtain it. This is further complicated by conditions or exceptions in some of the state charitable solicitation acts that can negate an otherwise available exemption for an educational institution.
Solicitation Must Be Confined to Certain Groups
An educational institution that solicits charitable donations from Maryland is exempt from charitable registration, but only if it does not engage a professional solicitor and its solicitation is confined to students, former students, parents of a student or former student, present or former board members and staff members of an accredited school, college or university. Michigan, New York and Ohio have similar limitations with respect to who is solicited (i.e. solicitation outside of these groups will negate an exemption).
Not Much of an Exemption in South Carolina
South Carolina has similar limitations, but expands the list to include students and their families, alumni, faculty, friends and other constituencies, trustees, corporations, foundations and individuals who are interested in and supportive of the programs of the institution. Also, South Carolina requires the limitation of fundraising activities that are not conducted by professional solicitors, professional fundraising counsel or commercial co-venturers. If an exemption from charitable solicitation registration is desired, both of the above conditions must be met. Notwithstanding these exceptions, even if an exemption is applicable in South Carolina, the state requires the filing of an Application for Exemption, which must be renewed annually.
Of the states that broadly require charitable solicitation registration, about half require that an educational institution be accredited by a state, regional or national accrediting agency or association in order to receive an exemption from registration. Educational institutions that are not accredited will not be able to file for an exemption in at least 20 states.
Generally, there are no exemptions for educational institutions in nine states: Alaska, Colorado, D.C. (unless the educational institution is under the supervision and control of a church or religious organization), Massachusetts, Michigan (though an exemption sometimes applies), Nevada, New Hampshire, Oregon (unless the educational institution holds no property in Oregon and limits solicitations in Oregon to alumni) and Washington. Not only is registration required in these states for educational institutions, but annual compliance or renewal filings are also required (with the exception of D.C. which requires biennial renewal).
Nine other states require the submission of a charitable solicitation registration exemption form or online filing (Alabama, Arkansas, Connecticut, Hawaii, Minnesota, Mississippi, South Carolina, Utah and Virginia). Two states, Maryland and Missouri, require an exemption letter.
In 20 remaining states, no filing is required to obtain an exemption, but a letter placing the state on notice that the educational institution considers itself exempt is advisable in up to 16 states, and optional exemption applications may be filed in four states (LA, NY, NC & OH).
The following 9 states do not have a charitable solicitation act and, thus, a registration or exemption is not applicable: Delaware, Idaho, Indiana, Iowa, Montana, Nebraska, South Dakota, Vermont, and Wyoming. Similarly, Arizona and Texas have narrow charitable solicitation registration requirements that do not apply to educational institutions.
Careful Review of Each State’s Requirements is Critical
As you can see from the conditions, exceptions, accreditation and state-by-state requirements, fundraising for organizations that are educational institutions requires careful attention to the specific state charitable solicitation registration and exemption requirements. This is most easily done by reading the applicable statutes and regulations or by engaging a reputable law firm or service company to assist in the registration and exemption filing process.
This article is provided for informational purposes only and should not be considered, or relied upon, as legal advice.