What Every Nonprofit Needs To Know To Comply With Florida’s New Laws on Fundraising July 2014

Blog post courtesy of: Cowan Consulting for Nonprofits, PLLC; providing legal and strategic counsel to nonprofit organizations.

Sign up for the Rollins College Philanthropy Center free webinar on Friday, August 8th – What Every Nonprofit Needs To Know To Comply With Florida’s New Laws on Fundraising. Register here

Successful nonprofits need no reminders about the importance of guarding their reputation – they know that even the best fundraising efforts will fail if the organization does not maintain the trust of its donors. While Americans are known worldwide for their quick and generous response to those in need, they are equally swift in taking their support elsewhere at even the hint of scandal. And it is not just money that is at stake – it is difficult for a nonprofit to fulfill its mission if it cannot maintain the trust of its supporters and the public at large.

That is why the Florida legislature wasted little time in enacting tougher laws governing charitable solicitations in the wake of the Tampa Bay Times exposé that revealed a darker side to some of our nation’s charities. The result of an investigation by the newspaper, conducted in partnership with the Center for Investigative Reporting, confirmed a donor’s worst fears – millions of dollars contributed to causes that help veterans, terminally ill children, firefighters and people with cancer were not reaching those in need. Instead, they were lining the pockets of professional fundraisers and nonprofit executives. To make matters worse, the report identified the worst offender as a Florida-based charity, Kids Wish Network, which was accused of raising millions of dollars in the name of dying children, with only 3 cents of every dollar actually going to help children.

The response by the Florida legislature focused on increasing penalties against bad actors and tightening up the regulation of professional fundraisers. However, the legislation, which consists primarily of amendments to the Florida Solicitation of Contributions Act (“SCA” or “the Act”), also makes significant changes that apply to all nonprofits regardless of whether they use professional fundraising consultants or have a history of ethical or legal problems.

Below is a step-by-step guide to ensure compliance with the new requirements. A word out caution: every nonprofit organization is different and may have unique circumstances that impact the applicability of the new provisions. Moreover, while the law became effective on July 1, 2014, the Florida Department of Agriculture and Consumer Services (hereinafter “Department of Agriculture”), the government agency charged with oversight of charitable solicitations, has yet to provide any information on how it intends to implement the new law. If your organization is unclear about how to fulfill its obligations under the Act, please consult with an attorney or contact the Department of Agriculture for guidance.

Step One: Ensure that your Organization is Properly Registered to Raise Funds in Florida.

Regardless of the size of your organization or how much money it raises each year, if you have not been in contact with the Department of Agriculture in over a year, chances are you are not in compliance with the Florida Solicitation Act. With the exception of government agencies and certain religious and educational institutions, before asking for any financial support, organizations must obtain a permit from the Department of Agriculture or submit a claim that requesting exemption from the permit requirements. The exemptions are limited and include organizations that raise under $25,000 in a fiscal year, certain fundraising efforts undertaken on behalf of individuals, organizations that only solicit from their members, and veterans’ service organizations granted a federal charter under Title 36 of the United States Code. All organizations, even those exempt from registration, must renew their status annually. The permitting requirements are not new, but given the increased focus on charitable fundraising, it is recommended that organizations ensure that their permits (or exemptions) are current. Click here to see if your organization’s registration is up to date.

Step Two: Review your Conflict of Interest Policy.

It has always been good practice to have a conflict of interest policy in place. Indeed, the IRS Form 990 asks tax-exempt organizations whether they have a conflict of interest policy that requires disclosure of potential conflicts, and whether that policy is adequately enforced. Florida has gone one step farther and, under the new law, nonprofit organizations that are required to register with the Department of Agriculture must adopt a Conflict of Interest Policy. The policy must also should require that each director, officer and trustee certify annually that he or she is in compliance with the policy. The certifications must then be submitted to the Department of Agriculture at the time that the annual registration statement is due.

Step Three: Update your charitable solicitation disclosures.

Under existing law, an organization fundraising in Florida must display statutorily prescribed language on its solicitations. The law now requires that this language be included on your website on any webpage that identifies a mailing addresses where contributions can be sent, provides a telephone number to call to make a contribution, or has an online processor for contributions. The prescribed language has also been modified to include the Department of Agriculture’s website address where registration and financial information about nonprofit organization can be found.

Here is a sample disclosure:

A COPY OF THE OFFICIAL REGISTRATION AND FINANCIAL INFORMATION FOR [ORANIZATION], A FLORIDA-BASED NONPROFIT CORPORATION (REGISTRATION NO. CHXXXXX), MAY BE OBTAINED FROM THE DIVISION OF CONSUMER SERVICES BY CALLING TOLL-FREE 1-800-HELP-FLA (435-7352) WITHIN THE STATE OR VISITING THEIR WEBSITE HERE. REGISTRATION DOES NOT IMPLY ENDORSEMENT, APPROVAL, OR RECOMMENDATION BY THE STATE.

Step Four: Determine whether you need to provide the State with updated information.

Existing law requires that an organization inform the Department of Agriculture of changes to the information provided in the initial registration on an annual basis. For example, if the organization becomes authorized by another state to solicit contributions, it must inform the Department at the time of its annual renewal. It must also disclose information that might indicate malfeasance on the part of the organization or its officers. For instance, if the organization has been enjoined from soliciting contributions in another state or any of its directors or officers have committed a crime relating to theft or fraud, the organization must divulge this information when filing its initial registration and update that information on an annual basis. Under the new law, an organization must file an update “within 10 days after the change occurs” on a form provided by the Department. The penalties for failure to disclose can include automatic suspension of an organization’s registration until the appropriate information has been submitted.

Step Five: File your annual registration and financial statements on time.

In the past, the Act allowed the Department of Agriculture to grant an extension for filing an annual renewal statement or financial statements for up to 60 days. During that time, the prior registration remained in effect. The new law eliminates the ability of the Department of Agriculture to grant an extension for the annual registration. The Act does contain a provision that allows an extension of filing a financial report for good cause. In either case, failure to file within the time allowed results in an automatic and mandatory expiration of an organization’s registration.

Step Six: Determine whether your organization is subject to more stringent financial reporting.

The Act requires that an organization file an annual financial statement that includes, among other things, a balance statement and an income statement. The Act provides an option for organizations to file an audited statement or a Form 990. Under the new law, filing an audit prepared by a certified public accountant (CPA) is now mandatory for organizations that receive over $1 million in contributions. In addition, an organization that receives more than $500,000 in annual contributions but less than $1 million must submit a financial statement that has been “reviewed or audited” by an independent CPA. An audit or review remains optional for smaller organizations although the Department has the authority to require an audit or review of any organization if there are discrepancies in financial statements such as irregular or inconsistent information.

Step Seven: Determine whether other provisions apply to your organization.

The measures listed above apply generally to all nonprofits. The law contains many other provisions that may apply to your nonprofit including but not limited to:

  • Additional financial reporting for organizations that raise over $1 million but spend less than 25% of their income on program expenses,
  • Signage requirements for organizations that use collection receptacles,
  • Requirements for organizations that solicit contributions in response to disasters,
  • Exclusion of certain blood establishments from the Act,
  • New penalties for bad actors that may impact an organization’s sales tax exemption,
  • Sweeping changes to the registration requirements for fundraising consultants and solicitors, and
  • Fundraising restrictions on individuals with criminal records.

The new law also provides for increased penalties that can include the revocation of the sales tax exemption allowed for certain charities in Florida.

CONCLUSION

Florida’s residents have shown themselves to be compassionate people donating generously to a multitude of important causes. It is unfortunate that responsible nonprofit organizations have to suffer, both in terms of reduced donor confidence and additional regulatory requirements, as the result of a few bad actors. However, the new law sends a clear message to those seeking to gain at the expense of Florida’s nonprofit community – that preying on the kindness of Florida’s residents for personal gain will no longer be tolerated. While the law is in its early stages of implementation, the small inconveniences created by this law will likely go far in preserving the excellent reputation of Florida’s nonprofit community.

 

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Job Postings!

Many of the Philanthropy Center members post jobs on our website. Our job posting board is visiting by over 450 people in the month of May. Many organizations have commented on how they are received many qualified applicants from viewers of our Job posting Board as well as others stating they found their current position there. Take advantage of this great resource for your nonprofit! Member organizations of the Philanthropy Center can post a job for 30 days at a time for free.

To make the job posting easier for you we created a step-by-step user guide with images. The guide is below but as always if you have questions or problems, I am always willing to help. If I am not available, Nicole and Barbara can also answer your questions. Just give the office a call at 407-975-6414.

–Angela Carey, Program Coordinator

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How to Be a Fabulous Development Director

KED logo for web copyby Karen Eber Davis
www.kedconsult.com

In preparation for writing a series of articles and a book proposal I’ve been interviewing successful CEO and development staff. What does it take to bring in donated money? What are the characteristics of an excellent development director? Here is what I’ve found so far:

1. Be a Self-Starter

What does this mean?

  • When the board (or someone else you need) won’t help, find another way.
  • Treat your time as your most valuable asset. Set a goal for what you will do in the next 90 minutes. Beat the clock.
  • Use butt glue when necessary. Don’t leave your chair. Don’t check your messages or answer your phone. Don’t fidget with your pens. Make the call.
  • Learn to recognize and handle your fear. Hint: You’re scared when you avoid calling 3 new donors more than 48 hours. You’re scared if you’re waiting for the perfect moment to ask for a donation.
  • Reward your efforts, not the results. Set your standards higher than any assigned to you.
  • Measure your results. Tweak your actions. Improve by a small percentage such as .5 or 1 or 1.5 today. Repeat tomorrow.
  • Grow your self-confidence: Do something that scares you once per day. It’s important. The reward? Next year, today’s scary task will be easy.

2. Be Exceptional at Relating

What does this mean?

  •  Make five contacts a day. Make two of the five to new prospects.
  •  Seek one face-to-face meeting per-day with someone with the potential to provide resources to your nonprofit.
  •  During interactions with others, focus on connecting and then on the agenda. After meetings ask yourself: Did we connect? How can I connect better? To be exceptional at relationships, practice daily.
  •  Match your behaviors and approach to your donors or whomever you encounter. CEO’s with fabulous development directors mention this trait frequently.
  •  Manage up, manage down, and manage next to you. If people aren’t helping with the development process and fundraising; educate, motivate, and help them to succeed. You need them. Keep trying. You can’t do this alone.
  •  Know when the yeast is working and you need to give it time. Know when donors need to process what you offer and own the decision to give. Ecclesiastes advises us, “There is s time to be silent and a time to speak.”
  •  Excel at relationships skills. Classes in social media and writing annual appeal letters are nice but not essential. Learn how to master relationship fundamentals such as how to make super telephone calls, thank people, be present, and share stories. These are the critical.

3. Help Your Nonprofit Raise Money

 What does this mean?

No matter what else you are asked to do, if your title has “Development” in it, you are expected to obtain donated income. Figure out how to do this. Make it happen.

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What is #GivingTuesday… and why does it matter to nonprofits in Central Florida?

Image#GivingTuesday™ is a campaign to create a national day of giving at the start of the annual holiday season. It celebrates and encourages charitable activities that support nonprofit organizations.

We have a day for giving thanks (Thanksgiving). We have two for getting deals (Black Friday and Cyber Monday). Now we have #GivingTuesday, a day for giving back.

On Tuesday December 2, 2014, global charities, families, businesses, community centers, students and more will come together for #GivingTuesday.

It’s a simple idea. Just find a way for your family, your community, your company or your organization to come together to give something more. Then tell everyone you can about how you are giving. Be a part of a national celebration of our great tradition of generosity.

  • Consider trying a one day mobile or online giving campaign…
  • Ask a board member to put up a matching grant…
  • Invite donors, employees and your neighbors to get together to celebrate giving by creating a day of service…

In Central Florida, the Rollins College Philanthropy & Nonprofit Leadership Center has been designated the local partner organization to those at the national level. The Philanthropy Center will serve as the hub for ideas, collaborations, sharing of best practices, and resources.

Register now for a free session that will cover what #GivingTuesday is, and what it isn’t. We’ll share some ideas for local nonprofits and set the stage for potential collaborations among peer groups. We’ll also have examples and case studies of what has worked for organizations so you can use those as a launching point for your own #GivingTuesday campaign.

Tuesday, July 15, 2014
8:30 a.m.:  Registration and Networking
9:00-10:00 a.m.:   Presentation
Cost: Free
Register >

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You Can’t Teach Old Dogs New Tricks and Other Fundraising Myths

They say that you can’t teach an old dog new tricks. But, if we truly want to raise more money for our nonprofit organizations we must first “unlearn” the myths that are holding us back.

Myth # 1 – It is all about asking for money. The majority of fundraising work is about building relationships. Everyone can play the crucial role of introducing others to the wonderful work of the nonprofit. Every day we tell our friends, neighbors and co-workers about terrific things we have experienced. Instead we should make a conscious effort to tell our nonprofit success stories —the child who beams with pride because he has a new backpack like the other children, the working mom who moves from the shelter into her very first apartment, the feeling in the pit of your stomach as the symphony begins the overture. Yes, it is important that someone within the organization actually says the words, “Will you consider supporting us with a donation of…” but the big first step is making people aware of the good you do.

Myth # 2 – We sent a thank you letter that is enough. One size does not fit all when it comes to thanking donors. They want to be thanked in ways that are meaningful to them. Most do not want you to spend money on token gifts. They prefer to get a handwritten note, a quick phone call, or a personal visit. By getting board members to help say thank you, your organization can reach more donors with a positive message about what their donation accomplished. You might be surprised how much board members enjoy being thankers. They may just start asking for donations in order to get to say thanks.

Myth #3 – Board members only need to give their time. One of the most important roles of a board member is to be a visible leader of the organization. They can open doors to possible funding and add credibility to the organization. Others will ask before making a donation whether or not all the board members give. If those closest to the mission do not believe in it enough to give then why should anyone else.

Be a myth buster. Learn as many new tricks as possible to increase funding and sustainability for your nonprofit.

- Emily Furlong is the Senior Program Manager at the Rollins College Philanthropy & Nonprofit Leadership Center.

 

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