Below are follow-up questions to the Philanthropy Center webinar, What Every Nonprofit Needs To Know To Comply With Florida’s New Laws on Fundraising.
Prepared by Justine Thompson Cowan, Cowan Consulting for Nonprofits, PLLC. Email: firstname.lastname@example.org
What is the statute that governs fundraising and where can I find it?
The Solicitation of Contributions Act (hereinafter the “Act”) begins at Section 496.401 and can be found here:
Is a museum exempt as a member-based organization?
The exemption for member-based organizations under the Act is very limited. The term “member” has a number of common meanings, but for the purposes of this statute, a member is someone who is assessed dues or fees and has a role in the governance of the organization. In addition, fundraising by the organization is limited to its membership. In non-legal terms, you might think of a member-based organization as some sort of “club”, a professional trade organization or perhaps certain homeowners’ associations (provided that they meet all of the statutory requirements).
While I do not know the structure of your museum’s membership, based on my general understanding of museum memberships, it is unlikely that you are exempt. I would assume that you seek donations from members of the public, and do not allow your members to have any actual control over the governance of the organization.
Here is the language from the statute that describes what is needed to be exempt:
- A member would have certain “privileges, professional standing, honors, or other direct benefit [sic] of the organization in addition to the right to vote, elect officers, and hold office in the organization.”
- The organization “limits solicitation of contributions to the membership of the charitable organization or sponsor.”
- Membership “does not include those persons who are granted a membership upon making a contribution as a result of a solicitation.” Instead, the member paid “bona fide fees, dues, or assessments . . . [where] membership is not conferred solely as consideration for making a contribution in response to a solicitation.”
Does your comment about the Florida legal requirements that you must provide the “amount that can be deducted” upon request include goods and services rendered?
As you may recall, I made a statement that the requirement contained in the Florida Solicitation Act that a nonprofit is required to provide the “amount that can be deducted” may be at odds with IRS guidance. I was referring to a particular situation – an individual donates an item such as a computer and the organization provides a receipt. Based on IRS guidance, the nonprofit should not be valuing that computer for tax purposes. Instead, the nonprofit should provide a description (but not the value) of non-cash contributions. However, as indicated by the question posed, it is equally true that IRS guidance states that, if the organization provides goods and services, the nonprofit should make a good faith estimate of the value of those services.
The point of my comment is to be aware that there may be a contradiction in the duties stated by the state and the IRS. Standard practice is to follow IRS guidance on how to acknowledge different types of donations which can be found here:
If we have donors in other state, will we have to pay solicitation fees in all of those states?
Each state has its own laws and requirements for fundraising. You will need to check with the state where you would like to conduct fundraising. Fortunately, many states allow an organization to file a “Unified Registration Statement” which can make this process easier. More information about this can be found here:
Does the signage requirement for receptacles apply to “cash” donations?
The signage requirement only applies to receptacles “used to collect donated clothing, household items, or other goods for resale.”
What about crowdfunding such as gofund.me – is that covered by the Act?
There are no exemptions for crowdfunding. As such, you would need to analyze the fundraising activities as was discussed during the presentation. There are exemptions for some of the activities that you typically see on crowdfunding sites (e.g. raising money for an individual), but those activities would have to meet the requirements described in the statute, something that was not addressed in detail during the presentation.
Can you set up one form that all board members can sign indicating compliance with the Conflict of Interest Policy?
Yes, the statute merely requires “annual certification” that “shall be submitted to the department with the annual registration statement.” It does not prescribe a particular format for these submissions. With that said, it is possible that in the future, the Department of Agriculture may create a form for these types of submissions.
View the blog post What Every Nonprofit Needs To Know To Comply With Florida’s New Laws on Fundraising July 2014.