How to set up a non-profit, tax-exempt organizations (Part IV)

May 28, 10:56 AMSeattle Pet Laws ExaminerJean-Pierre Ruiz

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The author is not associated with the IRS

In the final part to this series on setting up non-profit, tax-exempt, organizations, we look at Washington State’s Charitable Solicitations Act (RCW 19.09) which applies to anyone who, or any organization which, seeks to raise money for charitable purposes.

RCW 19.09 , and associated administrative rules under the Washington Administrative Code (WAC 434-120-010 to -280 ), may apply to any individual, consulting firm, non-profit entities, or anyone else involved in raising money for a “charitable purpose.” RCW 19.09 and its associated WAC rules regulate:

• Solicitation of a charitable contribution
• Fund-raising practices of “charitable organizations”
• “Commercial fundraisers”
• Contracts between “commercial fundraisers” and “charitable organizations”

RCW 19.09 intends primarily to prevent fraud conducted in the name of a charity, and to make sure the funds raised are used properly.

RCW 19.09 defines “charitable contribution” much like the Internal Revenue Service and means any religious, charitable, scientific, public safety testing, literary or education purpose, or any other purpose that is beneficial to the community. This includes environmental, humanitarian, patriotic or civic purposes, the support of national international amateur sports competition, the prevention of cruelty to animals or children, the advancement of social welfare, or the benefit of law enforcement personnel, firefighters, and other persons who protect public safety. The term “charitable” is also defined very broadly and includes relief of the poor, the distressed, or the under-privileged, the advancement of religion, education or science, the erection or maintenance of public buildings, monuments or works, lessening the burden of government, lessening neighborhood tensions, eliminating prejudice and discrimination, defending human and civil rights, and combating community deterioration and juvenile delinquency.

RCW 19.09 defines the term “solicitation” in very broad strokes and intends to cover any type of communication where the listener would conclude that his/her donation will benefit a charitable organization. As an example, even a flier with the logo or name of a charity would be considered a “solicitation.” It is irrelevant whether the person donates or not, or whether the “campaign” is connected to a charity or for a charitable purpose. Therefore, most organizations or individuals who raise funds in Washington State must register with Washington State’s Secretary of State’s Charities Program, as well as file certain reports on a regular basis. This includes fund-raising organizations, attorneys or consultants to the extent they help charitable organizations design fund-raising campaigns, which includes planning, advising, consulting or preparing materials to be used for soliciting. It is important to note that fund-raising attorneys many not manage, conduct, or carry a fund-raising campaign, nor solicit contributions personally, through employees or third-parties. Fees cannot be a percentage of the funds raised, nor may the attorney have control or custody of the funds.

There are various solicitations rules (e.g., telephone calls are prohibited between 9pm and 8am, as is harassing phone calls) which everyone must comply with, regardless of whether or not the solicitations are made by someone or some organizations which is required to be registered. Violations can result in sentences of 90 days in jail and/or a $1,000 fine.
Contracts between charities and commercial fund-raisers must contain certain terms and conditions.

RCW 19.09 excludes from registration: churches and their “integrated auxiliaries”, fund raising for a named individual where all funds are given to the individual , fund raising by a volunteer group that raises less than $25,000 per year, political organizations, bingo and other games regulated by the Gambling Commission, requests for membership renewals addressed to existing members and offers of memberships conferring rights and privileges , sale by established retailers donating part of the sale, and fund-raising attorneys.