Knowledge and Insights

Nonprofit finance professionals often identify compliance as a significant burden that has become costlier over time, especially within the past two to three years. Ensuring compliance with the various finance-related rules and regulations that govern the sector continuously proves to be a challenge for nonprofits. It can be especially difficult for smaller organizations that depend heavily on fundraising as a major source of revenue, to keep up a progressive pace when the rules and regulations are constantly changing.

To legally fundraise in 39 states, a nonprofit organization must annually renew their certifications and licenses. This requirement can be both expensive and time-consuming for charities that fundraise across state lines. Because each state has its own forms and deadlines in place, compliance can be a major challenge.

• It would cost between 7 and 12 thousand dollars for a nonprofit to file in all 39 states.
• Each state has a different definition as to what constitutes ‘fundraising.’
• Each state asks for different data, often in different ways.
• Renewal dates and fees vary by state.

For these reasons, nonprofit organizations that fundraise in multiple states often hire professional consultants to (1) determine if their activities will require licensure and (2) to submit the required paperwork and oversee the process.

Industry experts and regulators recognize that the current process to obtain licensure in multiple states is duplicative, time-consuming and expensive. Federal and state regulators are working to develop an online system that will allow nonprofit organizations and their professional fundraisers to comply with all states’ registration and annual filing requirements through a single online portal.

Formally known as the Multistate Registration and Filing Portal (MRFP), this initiative will serve as a single, web-based database where nonprofits can enter their data (one time) to obtain the licensure to legally fundraise in multiple states.

According to the project’s website, mrfpinc.org, the portal will:

• Promote efficiency, data transparency and information sharing
• Prevent the duplication of data entry
• Store searchable, interactive data
• Allow academics, policymakers and the public to download data
• Reduce administrative costs for multistate registrants
• Enable the population of data fields from electronically filed Forms 990
• Aid attorney generals in multistate fraudulent investigations

The single portal initiative is still in the early stages of development. Currently, project coordinators have selected thirteen states to participate in a pilot program. We will continue to monitor the progression of the MRFP and keep you appraised. Contact me today at [email protected] or 609-689-9700 for more details.