Penalties for Not Filing Charity State Registrations

Penalties for Not Filing Charity State Registrations

Failing to file charity state registrations and soliciting contributions without being registered is against the law. State statutes prohibit charitable solicitation unless the organization is registered with those states. There can be severe penalties for not filing charity state registrations prior to soliciting contributions. Failing to register will often lead to fines and legal action by the states. States fines typically average $2,000 per each year when a filing was not received. Some states are more lenient, where as some such as Maryland and South Carolina can assess fines of thousands of dollars just for missing one year’s filings. Along with a fine, a state will typically send a cease and desist letter asking the charity to stop soliciting until it is registered and is in compliance with the law. States, such as Mississippi, will also send a consent agreement, right away that a charity must sign stating their noncompliance with the law and that they intend to follow the law going forward.

If the initial cease and desist letter does not lead to registration, most states will take legal action and can enjoin an organization from soliciting in the state going forward. Perhaps more worrying is that there is an association of the state regulators, The National Association of State Charity Officials (NASCO), where state regulators can communicate and so there is the potential that if an organization that runs afoul of the law in one state it may lead to issues with other state regulators.

In addition, there is always the risk or reputational risk if it becomes know that a charity is not complying with the law. A number of states publish lists on their websites of charities that are not in good standing or which have been reprimanded by the state charity regulator and there is always the risk of bad publicity regarding lack of registration. Similarly some donors look at the state lists of registered charities to ensure that a charity is registered prior to the donor making a gift and that too can cause a loss if an organization is not registered.