Online Giving Platforms and State Regulations: What Every Nonprofit Needs to Know

In the evolving landscape of nonprofit fundraising, online giving platforms have become indispensable tools for reaching donors. However, these platforms are subject to various state regulations that nonprofits must navigate to ensure compliance. Here’s what every nonprofit needs to know:

Understanding Online Giving Platforms

Online giving platforms facilitate digital donations, offering crowdfunding, peer-to-peer fundraising, and donation processing services. While they provide convenience, they also introduce regulatory complexities.

State Registration Requirements

Many states mandate that nonprofits register before soliciting donations from their residents. This requirement often extends to online solicitations, meaning that if your organization accepts donations through an online platform accessible to residents of a particular state, you may need to register there. 

Regulations for Online Giving Platforms

Some states have enacted specific laws targeting online fundraising platforms:

• California: Assembly Bill 488, effective January 1, 2023, regulates online charitable fundraising platforms and platform charities. The law requires these entities to register with the California Attorney General’s Office and adhere to specific reporting and disclosure obligations.  The Law also requires any charity fundraising online to register in California if they have donors who live there.
• Other States: While California’s legislation is among the most comprehensive, other states may have their regulations or be in the process of developing them. It’s crucial to stay informed about the laws in each state where your donors reside.

Key Compliance Considerations

1. Registration: Ensure your nonprofit is registered in all states where you solicit donations, including through online platforms.
2. Disclosure Requirements: Be transparent about your fundraising activities. Some states require specific disclosures on solicitation materials, including online appeals.
3. Contracts with Fundraising Platforms: Review agreements with online giving platforms to understand fee structures, data ownership, and compliance responsibilities.
4. Data Privacy: Protect donor information by adhering to data privacy laws, which may vary by state.

Staying Informed

Given the dynamic nature of state regulations, it’s essential to:

• Consult Legal Counsel: Work with attorneys specializing in nonprofit law to navigate complex regulatory environments.
• Attend our Webinar: Stay updated on new regulations by attending our webinar Nonprofit Fundraising A Legal Update on State Regulations https://hedgemanlaw.com/nonprofit-fundraising-a-legal-update/
• Engage with Professional Associations: Organizations like the National Council of Nonprofits provide resources and updates on regulatory issues.

By understanding and adhering to state regulations governing online giving platforms, nonprofits can build trust with donors and avoid potential legal pitfalls.