What Do I Need to Do to Expand My Nonprofit to Other States?
If you aim to expand your charitable activities to multiple states, it’s important to follow all relevant rules in both states. You’ll need to take certain measures in order to maintain compliance in the state of incorporation as well as the additional states in which you will be acting. The requirements vary by state as well as by the nature of the activities conducted in other states. To ensure full compliance with all state, local, and federal laws, talk to a knowledgeable Illinois nonprofit compliance lawyer.
Conducting Activities in Other States May or May Not Constitute “Operating”
When reviewing the steps necessary to expand your nonprofit to other states, you should first consider which activities you plan to conduct outside of the state of incorporation. The requirements for conducting certain activities in other states may be lower than for actually “operating” in multiple states.
To be considered as operating in multiple states, the charitable organization must be conducting its tax-exempt activities in other states. If your organization’s purpose is feeding the homeless, for example, and you open a shelter in another state, you will be “operating” in that state. You may need to obtain a Certificate of Authority or similar permission in the new state in order to operate in that state. In many states, you’ll need to obtain such a Certificate if you hold an event or conduct any activity that would require liability insurance.
On the other hand, if you merely participate in an event or you engage in simple fundraising in another state, you might not be “operating” in that state. Depending on the state, however, you may need to register for charitable solicitations. Charitable solicitations are discussed below.
Soliciting Funds in Multiple States Requires Registration
In a similar vein, soliciting donations from multiple states requires strict adherence to state laws. Even if you send solicitations via mail, phone, or email, rather than set up a physical location within the state, if you intend to accept donations from residents in other states you’ll need to comply with the rules for those states. Unfortunately, the rules vary significantly by state.
In most states, you’ll need to officially register your nonprofit for charitable solicitations before soliciting donations. When you file your Form 990 with the IRS, you’ll need to certify that your organization is acting in compliance with all state laws that may be triggered by your activities. Any funds you obtain from other states will need to be reported to your state of incorporation and the IRS as appropriate.
State and Local Law Compliance
In addition to obtaining the appropriate permissions and licenses, you’ll need to comply with state and local laws pertaining to the activities you intend to conduct. If, for example, your purpose is feeding the homeless, you’ll need to comply with municipal rules about where shelters may be established. Make sure to consult with an attorney familiar with both nonprofit law and local law before engaging in activities that could create unnecessary liability.
Reach Out to an Experienced and Thorough Illinois Nonprofit Compliance Attorney for Help With Multistate Compliance
If your religious organization or other nonprofit entity requires assistance with governance, compliance, or legal matters in Illinois, get thorough and effective legal assistance by contacting the Chicago nonprofit attorneys at MacDonald, Lee & Senechalle in Hoffman Estates at 847-310-0025 and in Des Plaines at 847-298-5030.