On June 20, 2013 Governor Jan Brewer signed House Bill 2457 abolishing Arizona’s charitable solicitation laws. As a result, Arizona charities are no longer required to file annual Charitable Organization Registration (or Renewal) forms with the Arizona Secretary of State.
Why Did Arizona Have the Charitable Solicitation Requirement in the First Place?
Americans are the most generous people in the world. Unfortunately, there have been those that have tried to take advantage of this generosity and profit from deceptive or misleading fundraising practices. In order to protect citizens from these unscrupulous individuals, fundraising regulations were enacted. One such regulation is a state requiring charities to register with the state prior to soliciting donations from the state’s residents. By registering, the state is put on notice as to who is soliciting donations in their state. This also ensures that the state can contact a party responsible for the organization if there are any complaints.
A problem with this system is that each state has a different registration requirement. Also, many states annual registration renewals. Nonprofit organizations have stated that this inconsistency and complexity of compliance has created an undue burden. Although the states have a valid interest in protecting their residents from deceptive fundraising, the result has made it difficult for legitimate charities by creating excessive regulation. Although many states, including Arizona, accept the Uniform Registration Statement which has provided some relief, complying with the laws of all states is still difficult, if not impossible, for all nonprofit organizations. And, since many nonprofits raise funds online, it is easy to inadvertently solicit funds in a state in which the nonprofit has not registered.
Flaws in Arizona’s System
Arizona’s charitable registration system suffered from numerous flaws. First, it required two notarized signatures and had to be filed on a annual basis. This put an unnecessary burden on nonprofit organizations. Second, the law did not allow exemptions for very small nonprofit organizations, churches, charter schools or other nonprofits that typically solicit funds from their own members and supporters. Third, although the Secretary of State was responsible for administering the registration system, the Arizona Attorney General was responsible for enforcing violations. This created issues as a result of a lack of coordination between the two agencies.
What Happens Next
Arizona is now only one of four states that does not have a charitable solicitation registration requirement. Only time will tell if this will benefit legitimate nonprofits or lead to a rise in deceptive fundraising. Stay tuned…
Do you want to help others? Get started by forming an Arizona nonprofit corporation. Call Arizona charity lawyer Abigail Neal at (480) 699-7992 today.