How to Stay Solicitation Compliant with Nonprofit Grant Funding
Grant proposals are a great way to achieve the funding of your nonprofit needs. But before you submit a proposal, it’s important to read through the fine print carefully. Many states have charitable solicitation laws, which can hurt your chances of receiving a grant if not followed correctly.
These charitable solicitation laws are often overlooked, and could get you in trouble if they aren’t abided by. In this blog, we’ll go over the fine lines of applying for grants without solicitation, and how to avoid these common mistakes.
Are grants considered charitable solicitation?
Yes, most states categorize foundation grants as a type of charitable solicitation. In general, you should consider applying for grants as part of your compliance strategy. There are a few states that exempt government grants, so we advise researching state and grantmaker requirements before you submit a proposal.
If my nonprofit has an IRS determination letter, can you apply for grants anywhere?
Many organizations are guilty of assuming that having a 501(c)(3) determination from the IRS is all it takes to fundraise without limits, which includes applying for grants. However 41 states require you to file a separate registration, where you’ll provide the determination letter and additional information regarding your leadership team, finances, other fundraising activities, etc.
If my organization wants to apply for funding, where should we register?
In general, you should register in whatever state your funder is located in. In fact in every state except California, you’re required to register before any sort of solicitation. With that in mind, make sure you’re planning your registrations and grant applications ahead of time, and allow yourself extra time for any fallback.
When submitting a grant proposal, does my nonprofit need to submit proof of charitable registration?
The short answer is yes. It might depend on who issues the grant, but it’s very likely you’ll submit an IRS determination letter as proof. Especially living in a day and age where anyone can apply in a digital world, it’s important to show proof to distinguish your application from a large stack of noncompliant applicants. It’ll show the funder that you’re credible and qualified!
Does the grant total amount affect registration?
The only way the total would affect registration is if the amount is so big that your nonprofit can’t qualify for the exemption anymore. And even then, exemptions could take other streams of revenue into consideration, so you might have to register regardless. Make sure you’re taking all added costs into account.
What happens if my nonprofit registers but we don’t receive any grant money?
Remember, applying for the grant does not guarantee you’ll receive it. And by registering to solicit in order to apply for the grant, your application might be turned down. So be prepared, as you may register to solicit and not get a whole lot back. It’s super important to budget out for compliance and apply for funding wisely (especially in other states).
How does my nonprofit stay compliant?
If you want to do the most, you can register in every state that has registration. It’s tedious, but it’s a proactive way of ensuring you’re complying without fault. Most nonprofits don’t have the budget for this, so at the very least, register in the states you do most of your fundraising.
If you need help with your grant proposals, RBW Strategy can help! We provide a variety of services, from prospect research to overall project management. Visit our services page and contact us on LinkedIn today!