Originally Published March 14, 2024; Updated on January 3, 2025
Tennessee and Utah have revised the scope of their charitable fundraising laws. These changes will affect how and what nonprofit organizations registered to solicit in those states must disclose to state charity regulators.
Update January 3, 2025: Utah promulgated a new rule, effective January 1, 2025, that confirms the Form 990 filing requirement applies narrowly. See the section below, “Utah Eliminates Charitable Sales Promotion Filing Obligations, Simplifies Charitable Solicitation Registration Obligations,” for more information.
Tennessee Adds New Charitable Sales Promotion Obligations, Simplifies Charity Renewal Requirements
Tennessee’s changes include giving the law a new name: the “Charitable Solicitations Act.” The Act revises the legal framework for fundraising in the state; the resulting changes will take effect July 1, 2024. Among other reforms, the law will affect filing and disclosure requirements for charitable organizations soliciting and benefiting from charitable sales promotions in Tennessee; affect the requirements for charitable organizations registering to solicit or seeking exemption from those obligations; and impose new requirements on persons who maintain charitable collection bins in the state.
- Adds Charitable Sales Promotion Filing Requirements. The law introduces a new disclosure requirement for charitable organizations that benefit from charitable sales promotions conducted by commercial coventurers in Tennessee. Beginning July 1, 2024, charitable organizations (as opposed to commercial coventurers) must file a copy of the written, signed agreement governing the charitable sales promotion from which they will benefit with the secretary of state at least five business days prior to the start of each promotion. The secretary of state will provide forms for these submissions.[1]
- Simplifies Charitable Organization Registration. Nonprofit organizations registered to solicit charitable contributions in Tennessee are currently required to disclose financial information on a state-specific form six months after the end of the registrant’s fiscal year end. This form requires the registrant to input financial information from the organization’s IRS Form 990 return. However, once the law takes effect, registered organizations will no longer need to complete the state-specific financial renewal form. Rather, the registered organization will instead submit a copy of its Form 990 return filed with the IRS to complete the annual renewal process. The elimination of the Tennessee-specific form will simplify registrants’ renewal filing obligations in the state.
- Adds New Rules for Clothing/Household Goods Donation Collection Bins. Any person or organization that places or maintains a collection receptacle for the purpose of collecting donated clothing, household items, or similar goods must maintain a comprehensive list of the locations of all collection receptacles placed or managed by the organization or person within Tennessee. The list must be filed with the secretary of state on an annual basis, and an updated list must also be filed within 14 days of the placement of a new bin or the change of a bin’s location.
Utah Eliminates Charitable Sales Promotion Filing Obligations, Simplifies Charitable Solicitation Registration Obligations [Updated January 3, 2025]
In Utah, House Bill 43 passed and was signed into law by the governor on March 13, 2024. Most provisions of the law will go into effect on January 1, 2025. Under the new law, a charitable organization is not required to register to solicit contributions prior to doing so in Utah, nor must it annually file a copy of its Form 990 with the state unless the organization is incorporated or registered as a foreign nonprofit corporation in Utah.
- Simplifies Charitable Organization Registration Compliance. The law removes the previous obligations for nonprofit organizations to register with the state prior to soliciting contributions in Utah.
Utah issued a new Charitable Solicitation Act Rule that requires domestic nonprofit corporations and foreign nonprofit corporations registered to do business in the state to submit unredacted copies of their IRS Form 990 as part of their registration and annual corporate reporting obligations in the state.[2] Thus, unless an organization is incorporated in Utah or is otherwise registered to do business as a foreign nonprofit corporation in Utah, it will not be required to file its Form 990 with the state.
- Clarifies That Political Organizations and Political Fundraising Efforts Are Not Charitable. The law clarifies that a “charitable organization” for purposes of Utah’s state charitable solicitation law does not include a political organization. A “political organization,” in turn, is defined as any party, committee, fund, or other organization organized and operated primarily for the purpose of directly or indirectly accepting contributions or making expenditures for an exempt function. An “exempt function” comprises various activities that are political in nature, like attempting to influence the selection, nomination, election, or appointment of an individual to a government office.
- Eliminates Charitable Sales Promotion Filings. Further simplifying compliance requirements in the state, Utah’s amendment eliminates the current requirement that a charitable organization give notice to the state of any charitable sales promotion conducted for its benefit in Utah. When considering the amendments to Tennessee’s law, too, this means that the states where a charitable organization (not the commercial coventurer) must file certain materials related to charitable sales promotions will be Arkansas, Connecticut, New Hampshire, New Jersey, Tennessee (beginning July 1, 2024), and Utah (until December 31, 2024).[3] Each of these states requires the registered charitable organization to provide a copy of the contract or otherwise submit specific state forms for each charitable sales promotion from which the charitable organization will benefit.
Legislative Horizon in Other States
Other states are also considering changes to their charitable solicitation laws. In Ohio, for example, through House Bill 184, lawmakers are considering extending the state’s current professional solicitor regulations to cover operators of “collection receptacles,” an increasingly popular vehicle for charitable giving. Under the draft bill, “collection receptacles” are defined as containers used to collect donations of clothing, books, household items, or other goods. If the bill is passed, a person who operates a collection receptacle for compensation and purports to be collecting items for a charitable organization or purpose would be considered a professional solicitor in Ohio.
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Venable LLP will continue to monitor state legislative proposals affecting charitable solicitation compliance. In the meantime, charitable organizations soliciting contributions or benefiting from charitable sales promotions in Tennessee and Utah should be aware that they will be subject to the new requirements in those states later this year.
[1] The underlying contractual obligations related to charitable sales promotions in Tennessee remain unchanged. A commercial coventurer must execute a written agreement with the charitable organization on whose behalf the charitable sales promotion is to be conducted prior to the start of the promotion. The agreement must be signed by an authorized representative of the commercial coventurer and two officers of the charitable organization.
[2] Although the Form 990 to be filed must be unredacted, an organization is not required to submit a copy of its Schedule B. Utah Code Ann. § 13-22-15(2)(a)(i).
[3] The list of states in which charitable organizations must make filings related to charitable sales promotions is different from the list of states in which commercial coventurers have filing obligations for the charitable sales promotions they sponsor.