Fiscal Sponsor Organizations

This is a great topic. I’m curious to hear from the community on this. I have not heard about any FS orgs getting “caught” for not being registered but I have worked with other nonprofits who have gotten letters from a state if they were doing some sort of promotion in-state but weren’t registered there. There wasn’t any penalty but the org had to pay to register.

OCF registered with every state that requires since it is a national organization and we wanted to make sure we covered all our bases. We work with Harbor Compliance.

To my knowledge, we have gotten communications from CA and MA about our registrations in the past, for example when someone who didn't understand FS was trying to say that an FSP was not properly registered.

We are registered in all states because we've been told that if a donor moves (and we don't know it) and we send a solicitation we can be out of compliance. One issue that is frustrating is that while the IRS offers an extension to file our 990 by November 15 (we are on calendar FY), the states don't seem to acknowledge an extension can occur so they will fine us for being late. Hawaii has been particularly challenging. We used to use a company someone mentioned here but then caught them skimming off the top. If you want to learn more you can email me directly and I'll share details jennifer@saveourplanet.org We now use Labyrinth and are happy.

In my experience, if a state charity regulator gets wind you're soliciting in that state without registration, they'll send you a letter requesting you to register. This may include for back years. But, in general, I don't think they want to bust you, they just want you to get compliant and get your fees.

If you're definitely actively soliciting in all the states requiring registration, use a vendor. But not all vendors are created equally and I've heard HC merged with another shop and clients have been departing. Granted, I heard this from two other vendors so draw your own conclusions.

If you're primarily in a handful of states, you may want to register in those jurisdictions but evaluate additional registrations on a case by case basis. After all, if you register everywhere, you're on the hook to pay in each of those states and if you become inactive, you need to go through steps to "unregister". Some vendors have attorneys on staff to make legal recommendations and others have folks that can't make legal recommendations but will offer their perspective based on years of experience.

Ultimately, as with most things FS, this is a question of risk tolerance.

SOCIAL IMPACT FUND - Craig Cichy
1. are you registered in all states that require charitable registration? YES
2. If not how did you decide to choose certain states over others?
3. Has anyone ever actually gotten “caught” or is this kinda a perceived issue that we are all working to be compliant with when in reality nobody is enforcing it? We were given the advice that if you aren't registered and there is a complaint in a state about, they require you to become compliant. We decided early on in our formation to properly register in every required state, so no matter where our projects operate, we are covered.
4. Anyone have a lead on a good subject matter expert who could provide some insights on where we should be registered? We use Labyrinth, and have since our founding. I find them ok. We budget about $12k for the full slate of filings and the fees that come along (and the fee to Labyrinth).