Do Online Donations Count as Soliciting in Every State?

SPEAKER_01 (0:00): Welcome to the Nonprofit Compliance Brief, where we explain charitable solicitation and multi-state fundraising requirements in clear, practical terms for nonprofit leaders and finance teams. This podcast is produced by Ironwood Registrations.

SPEAKER_00 (0:15): It is really great to be here.

SPEAKER_01 (0:17): Yeah, we are doing a deep dive today into something that I think seems pretty dry on paper, but in reality, it is the exact thing that keeps Executive Directors wide awake at two in the morning.

SPEAKER_00 (0:30): Yes. The “Donate” button.

SPEAKER_01 (0:31): Exactly, the “Donate Now” button. It’s supposed to be the hero of the story, right? You put it up on your site and the internet just does its magic.

SPEAKER_00 (0:41): Exactly. But there is this creeping dread that comes along with it because the internet is everywhere. And if the internet is everywhere, the logical fear is: well, am I legally soliciting everywhere?

SPEAKER_01 (0:53): That is the classic “be careful what you wish for” scenario. You want global reach because you want to help more people, but you definitely do not want global regulation. No one wants to deal with 50 different state registrations if they don’t have to.

SPEAKER_01 (1:07): Let’s picture a scenario: you are a mid-sized nonprofit based in, say, Kansas. You launch a beautiful new website. Suddenly a donor from Florida gives 50 bucks. Then someone from Maine gives 20. Then Oregon chimes in. The Finance Director looks at the monthly report and thinks, “Did we just break the law in three different states before lunch?”

SPEAKER_00 (1:34): It is such a valid fear. If you look at the letter of the law, strictly speaking, charitable solicitation statutes were written a really long time ago—long before any of this existed. They were written when solicitation literally meant physically knocking on a front door or sending a physical piece of mail.

SPEAKER_01 (1:52): So the boundaries were completely physical. If I didn’t buy a stamp for North Dakota, I definitely wasn’t soliciting in North Dakota. The physical boundary was the legal boundary.

SPEAKER_00 (2:01): That is exactly right. Intent and geography were linked by a physical action. But the internet shattered that link. Now, simply by existing online, you have a presence in North Dakota, Florida, and Maine simultaneously.

SPEAKER_01 (2:16): Which creates this massive gray area where nonprofit leaders feel like they are basically walking through a minefield blindfolded. So our mission for this deep dive is to clear that minefield. We need to distinguish between just existing on the internet—which we call Passive Presence—and actually asking for money, which is Active Solicitation.

SPEAKER_00 (2:47): It really is. And to do that, we have to look at how the people enforcing these laws actually interpret the digital age. Despite all the new tech, it really boils down to two very old concepts: Intent and Outreach.

SPEAKER_01 (3:07): Let’s drill into that. I feel like there is a massive misconception that solicitation just equals receiving money.

SPEAKER_00 (3:25): Oh, that is the biggest misconception right there. Solicitation is not the receipt of funds. You can receive money all day long without ever actually soliciting it. Think about it legally: solicitation is the act of requesting. The asking. It is the encouragement. It is the speech, not the actual transaction.

SPEAKER_01 (3:48): So if I am sitting in my office in Kansas, minding my own business, and a check from New York just slides under my door, I haven’t solicited New York?

SPEAKER_00 (3:58): You have not. You accepted a gift. That is purely passive. But if you pick up the phone and call that person in New York and say, “Hey, thanks for the check, can you send another one next month?” Boom. You just solicited in New York.

SPEAKER_01 (4:10): Okay, that makes total sense in the analog world. But how does that translate to the web? Is a “Donate” button a request?

SPEAKER_00 (4:23): It is. But regulators have had to adapt to reality. They realized that if they required every charity with a website to register in all 41 states that require it, they would crush the sector. So in the early 2000s, state charity officials drafted something called the Charleston Principles.

SPEAKER_01 (4:46): The Charleston Principles. I have heard of this. This isn’t a federal law, though.

SPEAKER_00 (4:50): It is not a binding federal law, but it is the widely accepted framework that most states use to interpret online fundraising. It basically divides the world into two camps: Passive and Active.

SPEAKER_01 (5:03): Let’s give our listeners a way to audit themselves right now. What does Passive look like?

SPEAKER_00 (5:11): Passive is essentially accessibility without pressure. Think of it like the “Open” sign in a shop window. If you have a website that describes your mission and there happens to be a “Donate” button in the header, that is generally passive. You aren’t pushing it into someone’s face in a specific state; you are just making it available should they stumble upon you.

SPEAKER_01 (5:34): So if someone in Oregon Googles “Save the Whales” and finds my site and decides to give, I am safe.

SPEAKER_00 (5:41): Generally, yes. You didn’t target Oregon; Oregon came to you. Passive solicitation usually does not trigger a registration requirement outside of your home state because you didn’t initiate the contact.

SPEAKER_01 (5:54): Okay, so that is the safe zone. Where do we cross the line? What does Active look like in a digital context?

SPEAKER_00 (5:59): Active is about targeting. It is about deliberately pushing the message out to a specific audience. The clearest, most common example is Email. If you buy a list of email addresses for residents in California, or even if you segment your own list to send an appeal specifically to your donors living in California, you are actively soliciting in California. You rang their digital doorbell.

SPEAKER_01 (6:32): What about Social Media? If I post on my Facebook page, “We need $5,000 by Friday,” isn’t that active?

SPEAKER_00 (6:43): If you just post it organically to your followers, it is arguably passive or semi-passive because they already opted in. But the moment you boost that post, you have entered the realm of advertising. You are paying for placement and choosing an audience. If you go into the Ad Manager and select “People living in the United States,” you are effectively knocking on doors in all 50 states. That is active.

SPEAKER_01 (7:22): That is a really helpful distinction. It is the difference between leaving a brochure on a counter and using a megaphone in the street.

SPEAKER_00 (7:32): I love that analogy. Brochure versus megaphone. If you are using your website as a brochure, you’re usually fine. If you use it as a megaphone to shout at specific states, you need to be registered in those states.

SPEAKER_01 (7:46): Let’s talk about the fallout. There’s this “One Donor Myth”—the idea that one $50 donation from Ohio triggers an avalanche of paperwork. Is that true?

SPEAKER_00 (8:07): In almost every single case, no. Regulators are rational people with limited budgets. They are not looking for a single accidental transaction; they are looking for patterns. They look for “deliberate and repeated activity.” If you get that gift and then put that donor on your mailing list and send them quarterly appeals, now you have the pattern. You are turning a passive occurrence into an active strategy.

SPEAKER_01 (8:53): So if I get that check from Ohio and I just send a generic thank-you receipt, that is probably fine?

SPEAKER_00 (9:00): Perfectly fine. But if I call that donor and say, “Hey, do you have any friends in Ohio who might also like our mission? Can we host a Zoom call for your neighborhood?” Now you are building a fundraising foothold in that jurisdiction. That is very different from a one-off gift from someone’s aunt who moved to Cincinnati.

SPEAKER_01 (9:24): What about the technology? There is an assumption that if I use a massive tech company like GoFundMe, Classy, or PayPal, they handle the legal stuff.

SPEAKER_00 (9:50): We call that the Platform Fallacy. It is a very dangerous trap. Legally, most of these platforms are “conduits” or “payment processors.” They are just the plumbing—the pipes. They move money, but the voice asking for the money is still you. The nonprofit is the entity making the solicitation.

SPEAKER_01 (10:33): So if I use a telephone to commit a crime, I can’t blame the phone company.

SPEAKER_00 (10:38): Precisely. Their terms of service almost certainly say—in very small print—that the user is responsible for all local legal compliance.

SPEAKER_01 (11:16): Okay, let’s play Mythbusters.

• Myth #1: We are too small for the states to care.
  • Reality: Size does not equal immunity. While some states have thresholds (e.g., under $25,000), you often still have to file for an exemption. You can’t just ghost them. Smaller organizations are often at higher risk because they don’t have a legal team to dig them out of a hole if they get a nasty letter.
• Myth #2: I only need to register if I have “boots on the ground.”
  • Reality: This is 1980s thinking. Solicitation alone triggers registration in about 41 states. If you send a targeted email from Vermont to Florida, you are subject to Florida law.
• Myth #3: The software covers my registration.
  • Reality: False. Unless you have a specific contract with a compliance partner, the responsibility sits with your Board and Executive team.

SPEAKER_01 (13:34): How does an organization actually check itself?

SPEAKER_00 (13:40): The Self-Audit. Look at four specific data points:

1. Promotion: Review where your campaigns are promoted. If you’re targeting “West Coast Donors” on Facebook but aren’t registered in CA, WA, or OR—pause that campaign.
2. Geographic Trends: Pull a report for the last fiscal year and sort by state. Look for clusters. If 20% of your funding is from Texas, you are effectively a Texas-funded organization in the eyes of regulators.
3. Frequency: Is it a random spike (like a memorial gift) or a steady drip (ongoing engagement)?
4. Strategic Plan: If you plan to expand to the Southwest next year, your compliance plan needs to be there before the fundraising starts.

SPEAKER_01 (15:29): This brings up a core theme: Compliance tends to expand alongside fundraising growth. They’re entirely linked.

SPEAKER_00 (15:39): They have to be. We need to reframe this. Usually, compliance is viewed as the “No” department or the “broccoli on the plate.” But if you have to worry about multi-state solicitation, it means you are winning! It means your mission is resonating. Receiving donations from multiple states is a massive victory.

SPEAKER_01 (16:35): Reactive vs. Proactive. Reactive is getting a letter from the PA Attorney General demanding a $500 late fee. Proactive is getting registered before you go in so you can proceed with absolute confidence.

SPEAKER_00 (16:57): And transparency builds trust. Seeing “Registered with the state of Florida, registration number #123” on an appeal looks like legitimacy to a donor. It tells them you are a professional organization. It becomes a marketing asset.

SPEAKER_01 (17:27): So, the internet made the world smaller, but it didn’t erase state lines.

SPEAKER_00 (17:36): Right. You don’t have to block IP addresses or put up a firewall. You just have to be mindful. If you’re going to use the megaphone, make sure you have the permit to make the noise.

SPEAKER_01 (18:19): Before we wrap up, a final provocative thought. We are seeing the rise of crypto donations and AI-driven fundraising that operate globally by default. If a smart contract processes a donation from a wallet with no geographic location, where did that solicitation happen?

SPEAKER_00 (18:48): That is the next frontier.

SPEAKER_01 (18:50): The lines are only getting blurrier. If you are terrified of soliciting outside your home state, you are effectively putting a ceiling on your own growth just as the tools are becoming limitless. The goal isn’t to stay small to avoid paperwork—it’s to grow with transparency and trust.

SPEAKER_00 (19:25): Well said. Enabling the mission, not hindering it.

SPEAKER_01 (19:29): If you found this discussion helpful, you can find additional compliance guides and visual resources at ironwoodregistrations.com. Thanks for listening.