Your nonprofit’s fundraising events are valuable opportunities to bring in donations and build connections with supporters. Plus nonprofits just getting started can use events as a way to introduce their cause to their community. However, new nonprofits should also take care to ensure their new events are legally compliant before getting too far in the planning process.

Events on Mightycause

Every event your nonprofit runs should be in compliance with state and local regulations. For many nonprofits, event compliance involves obtaining needed licenses, preparing necessary health and safety forms, and following any other specific laws for their area of operation. 

Compliance laws can seem overwhelming, especially due to the high cost of failing to properly follow regulations. To help your nonprofit create a compliance checklist for your next event, this guide will explore fundraising event legal requirements all nonprofits should take into consideration. 

At Labyrinth, we’ve helped thousands of nonprofits reach and maintain compliance for all kinds of fundraising efforts and advised them on key event compliance considerations, including:

  1. Charitable Solicitation Registration
  2. Waivers and Release Forms
  3. Games of Chance Licenses 
  4. Alcohol Licenses 
  5. Capacity Guidelines 

Keeping track of different licenses and legal restrictions can increase stress for your event planning team. However, navigating the necessary legal channels to ensure your nonprofit is operating within local regulations is well worth the effort to host a fun, successful event. 

1. Charitable Solicitation Registration

Before a nonprofit can collect donations, they must get approval from their state by completing their charitable solicitation registration process. Your nonprofit must be registered to solicit donations in your state before you can fundraise at your event. Nonprofits that fail to register can receive severe penalties and a significant drop in reputation amongst donors. 

The charitable solicitation registration process can be quite complex in states, and it’s easy to make mistakes if it’s your nonprofit’s first time applying. However, for most nonprofits, the registration process can usually be broken down into three straightforward steps:

  • Research state guidelines. 41 states and the District of Columbia currently require nonprofits to register to solicit charitable contributions before fundraising. Most of these have unique registration requirements, meaning you’ll need to research your state’s guidelines thoroughly while preparing your application. Make sure to check-in on your guidelines regularly as they are subject to change. 
  • Prepare necessary documents. Once you know what forms you’ll need for your application, begin gathering necessary documents and copies. Some documents will require more time to obtain than others. For example, some states might require nonprofits to perform an audit, which can take several months, before submitting their financial documents.  
  • Renew registration as needed. After receiving approval, you can begin fundraising and soliciting donations within your state’s guidelines. Make sure to keep an eye on your renewal deadline, so your team can assemble all needed documents and get your renewal application approved without losing fundraising time. 

Remember that charitable solicitation registration is required for all forms of fundraising in a state, including events. While you can begin planning some aspects of your events before receiving approval, make sure everything is confirmed before you market your event to guests and potential donors. 

2. Waivers and Release Forms

You might be surprised how many common nonprofit fundraising events require guests to sign a waiver before attending. While usually perfectly safe, 5Ks, sporting events, and any event with animals present do pose a certain degree of risk for guests and may require release forms. Additionally, COVID-19 waivers have also risen in popularity and might be needed for events with large crowds and enclosed venues. 

To help your nonprofit’s staff keep your waivers organized, Re:Charity’s guide to online waiver software poses three questions all event should ask themselves when considering waivers:

  • What types of information will you require? Most waivers require basic information such as a guest’s name, age, emergency contact, and signature. However, you may need to make special forms for minors who need a parent or guardian to sign on their behalf. 
  • How many waivers do you expect to collect? If your event requires all guests to sign waivers, and you’re expecting more than one hundred people to attend, it may not be practical to only have paper waivers available at arrival. 
  • How often will you search through the waivers? After a guest fills out their waiver when checking in, will you need to retrieve it? For most events, the answer will be “no, unless something happens.” However, some nonprofits such as sports teams host similar events with the exact same risks and can have guests fill out a waiver that applies over a set period of time rather than a specific event. 

If your nonprofit requires guests to fill out additional forms such as waivers, review your fundraising calendar to determine which of your events will require access forms and give guests the time to review and fill them out well in advance. 

3. Games of Chance Licenses 

Nonprofits can earn valuable fundraising revenue from events that feature games of chance, such as auctions and raffles. However, most states and municipalities require organizations to obtain the necessary licenses before hosting any activity that could be considered a game of chance. 

In addition to researching local regulations, you should also take into consideration a few other legal compliance requirements specific to games of chance, including:

  • The potential need to deposit earnings from your games of chance into a special, separate bank account reserved for revenue generated through games of chance.
  • Nonprofits may need to pay a gaming excise tax on the revenue they earn through games of chance. 
  • Auction winners will need a written acknowledgement form as a receipt for their prize. 

Additionally, donations made through games of chance are not tax deductible and your nonprofit should take care to avoid implying that they are to donors. Keep careful records at these types of events both for your nonprofit and for your guests so that the earnings can be reported correctly when you file your tax returns

4. Alcohol Licenses 

A few popular fundraising events such as galas and auctions commonly serve alcoholic drinks. Guests who are legally allowed to drink can enjoy these offerings responsibly and participate in certain traditions like toasting with champagne. 

States laws vary regarding who can serve alcoholic beverages and what licenses and permits are needed. Most states have a department that oversees and manages alcohol licenses, such as California’s Alcoholic Beverage Commission or Pennsylvania’s Liquor Control Board. Each of these organizations have their own unique rules about who can receive a license to serve alcohol. 

Some less stringent states and municipalities will allow nonprofits and similar organizations to obtain limited permits that give them permission to serve alcoholic beverages for a few days. By contrast, others will require your nonprofit to register for a permit like any other organization would. 

Additionally, be sure to check specific guidelines related to who can serve alcoholic beverages at your event and put a system in place at your event to ensure only guests who are above the legal drinking age can access alcohol. For example, some nonprofits give guests special drink tickets or bracelets to keep track of who is allowed to drink. 

5. Capacity Guidelines

COVID-19 has heightened awareness of the importance of social distancing and potential risks of gathering together in enclosed spaces. These public health concerns—especially amid the rise of the new Delta variant—should be taken seriously, and many of your guests may also feel uncomfortable attending events hosted at packed venues.

Ensuring your event does not exceed your venue’s capacity has always been a matter of safety, even before COVID-19. For example, overcrowded venues can be a hazard in emergencies, especially if an evacuation is needed. 

When choosing your event space, pay close attention to capacity guidelines and other health and safety regulations. This includes checking in with the owners of your venue and your state and city guidelines. Then, determine an appropriate max capacity before selling your event tickets to ensure you don’t promise a spot to more guests than you can safely house at your venue.

While obtaining all necessary licenses may sometimes feel like an insurmountable task, events are fun, memorable fundraising activities that are more than worth the effort. Take your time to thoroughly research local and state guidelines before planning your event to check if there are any legal restrictions to be aware of. Then, factor in the time it will take to help your nonprofit follow local compliance guidelines into your event planning timeline.

About the Author

ceo of labyrinthDr. Stephen Urich, CEO of Labyrinth

Dr. Stephen Urich is the CEO of Labyrinth, Inc., an organization that assists charitable organizations with all aspects of charity state registration and compliance. He is also a Certified Public Accountant and specializes in nonprofit accounting. He has been working in the nonprofit sector for 25 years.

 

Leave a Reply