Giving Tuesday: 10 Legal Tips for Nonprofits

Here are 10 legal tips for nonprofits for Giving Tuesday:

Ensure your charity’s fundraising communications (written and oral) are all accurate and truthful and do not contain any material misrepresentations.
Ensure that your charity is properly registered to engage in charitable solicitations in any applicable states and jurisdictions (including any foreign countries). See The Unified Registration Statement website and The International Center for Not-for-profit Law website for resources.
If operating or running fundraising events in another state or jurisdiction other than your charity’s state of formation, make sure your charity is qualified to operate there (this is separate from the charity registration requirement) and determine whether it should apply for state tax-exemption.
Be intentional if soliciting funds for a specific program, project, or purpose as you may be creating restricted funds that need to be accounted for separately from your general operating funds.
If using independent contractors to assist in or operate your Giving Tuesday fundraising campaign, make sure they are registered commercial fundraisers or fundraising counsel or fall outside of the definitions of those regulated positions. See definitions on the Office of the Attorney General website.
Provide a proper form of donation receipt to your donors to allow them to take a charitable contribution deduction.
- All receipts should state the name of the donor, the amount of the contribution, and the date of the contribution.
- For a charitable contribution of $250 or more, the receipt (written acknowledgment) must include a statement that provides either (1) that the charity did not give any goods or services to the donor in return or (2) that the charity did give goods or services to the donor in return (in which case, the acknowledgment should describe the goods or services, including a good faith estimate of their value).
- If the charity provided goods or services back to the donor in exchange for a payment of more than $75, the receipt (written disclosure) must include a good faith estimate of the value of goods or services provided to the donor and a statement that the amount of the contribution that is deductible for federal income tax purposes is limited to the excess of money (and the fair market value of property other than money) contributed by the donor over the value of goods or services provided by the charity.
If using a crowdfunding platform, be aware of and prudently manage any associated risks. Make sure your charity is aware of and manages any crowdfunding campaigns raising funds on the charity’s behalf (sometimes well-intentioned and not-so-well-intentioned individuals will start campaigns claiming to benefit a charity, which may be unaware of the campaigns).
Have policies regarding the acceptance of restricted gifts or noncash gifts that may not be easily marketable.
Prevent donor-intent disputes and communication problems that may be associated with major gifts with restrictions or conditions. See Major Gifts – Part II: Considerations for Legal Compliance and Avoiding Lawsuits.
If soliciting pledges, understand whether your charity and the donor intend the pledge to be legally enforceable. If there is a contract and the charity either (a) provides some consideration for the pledged amount (e.g., promise to do something or not do something) or (b) relies on the promised pledge to its detriment (e.g., puts a down payment on a building), the pledge may be legally enforceable. But that doesn’t necessarily mean that a charity should always sue a donor that reneges on a pledge. See Legal Issues Related to Unfilled Charitable Pledges (Perlman & Perlman).