Question: How have the requirements for charitable solicitation registration in Arizona changed with new legislation? What does this mean for my organization? Are we still required to file annual reports? What about internet based fundraising? Are we required to register with other states? Is this good or bad for nonprofits in Arizona?

The Arizona legislature recently passed legislation that repeals Arizona’s solicitation registration laws and the requirement that nonprofit organizations file annual solicitation registration or renewal forms with the Secretary of State. This should not be confused with the Corporate Annual Report required by the Arizona Corporation Commission, which is still required.

Most states typically regulate nonprofit organizations through solicitation laws that are concerned with charitable solicitations from the general public. These laws were designed to protect the public from misleading or unethical fundraising practices.

The passage of House Bill 2457 eliminates the requirement that nonprofit organizations register and report on charitable solicitations in Arizona, except in the case of veteran’s organizations. According to the Senate Fact Sheet for H.B. 2457, the purpose of the bill is to remove charitable organizations from the purview of the secretary of state.

Charity Lawyer suggests the fundraising registration requirement was poorly designed and created issues of coordination between the secretary of state and the attorney general who is tasked with enforcing violations.

If Arizona charitable organizations actively solicit or regularly receive funds from individuals in other states, they are still required to register and report with other states; there is a multi-state filing system designed to ease the burden of multiple filings. Most states determination of  “active solicitation” or “regularly receiving donations” from a state are based on the Charleston Principle, which provides helpful guidance.

Is deregulation of charitable solicitations good or bad for Arizona? Most nonprofit organizations expect and support regulations that protect the public and our ability to make positive impact as a sector. Unscrupulous fundraising practices harm reputable organizations and the vulnerable populations served by legitimate groups. Let’s hope deregulation of charitable solicitations in Arizona does not increase unethical and misleading fundraising in our state.

At age 23, Anne Byrne was the founding executive director of Denver’s rape crisis center, an organization that continues to flourish today, over 28 years later. Byrne went on to build a nationally recognized, multi-site summer and after school tutoring program for inner city youth. With 25 years of experience as an executive director of emerging nonprofit organizations, Byrne, who is aProfessional-in-Residence at the ASU Lodestar Center, brings valuable expertise and perspective to the "Ask a Nonprofit Specialist."

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