Does Your Nonprofit Have a Donation Page? Here’s What You Need to Know
Almost every nonprofit’s website has a donation page, but have you ever noticed the content varies a lot? Some mention federal and state laws, some don’t. Some talk about tax-deductibility, others leave it a mystery. It turns out, while there is a lot of flexibility in how you word your nonprofit’s donation page there are specific legal requirements depending on your state and nonprofit type.
Your donation page is legally considered a solicitation — a formal request for funds from a donor. A solicitation potentially triggers legal requirements under federal law, and often under state law too. Federal tax law requires explicit disclosures in some solicitations to make sure donors aren’t mistakenly taking deductions they aren’t allowed to take. State laws vary, but the majority require charitable organizations to register with them if they solicit donations to their residents. Before the rise of the internet, that was straightforward, but complying with these laws became substantially trickier when residents of one state clicked on the donate now buttons on the solicitation pages of charities across state lines.
Federal tax law applies to every nonprofit, and it has a clear requirement for every solicitation. If your nonprofit is not a public charity — for example, a 501(c)(4) social welfare organization — no donations to your group can be deducted on your donors’ federal income taxes. Contrast that with donations to public charity 501(c)(3)s — those are eligible for tax-deductibility. But because many donors aren’t aware of the differences between tax-exempt organizations the IRS wants to make sure anyone giving to your 501(c)(4) is crystal clear they can’t deduct their donation. That’s why you’ll need to include an express statement that is clear and recognizable, saying so. For instance, Sierra Club has this statement on its donate page:
Note: Contributions, donations, gifts, and dues to the Sierra Club are not tax deductible.
It’s in the same font size as the rest of the text on the page, and clearly and unambiguously states donations cannot be written off on one’s taxes. That’s all you need. There are no precise magic words to use but take a cue from Sierra Club and make sure your statement is as clear as theirs. The IRS has some guidelines too.
What about charities? There’s no specific legal requirement for a notice of deductibility, but it’s generally best practice to be clear that donations to the charity are “deductible to the fullest extent of the law.” The reason for the hedging language is because the precise value of deductibility will depend on whether the donor is taking the standard deduction, how much they give, and a host of other factors. So, while that makes things simple for your donation page, don’t forget the written acknowledgment you need to send donors afterward.
State Solicitation Laws
As noted earlier, the internet made nonprofit fundraising easier, but it also broadened the number of states nonprofits had to register with to comply with solicitation laws. Every state is different, but generally speaking if your nonprofit solicits donations on the internet, and you receive a substantial amount of money from more than a few donors in any given state, it’s a good idea to check to see if that state requires registration. That might mean a lot of state registrations, so consider using the Unified Registration Statement to save some time with your filings.
A few states require you to disclose information in your online solicitation. For instance, Florida requires disclosure of your registration number. States like New York and Virginia require giving information on how people can see your financial information. Be aware of these state requirements, and include them alongside your deductibility statement.
While it’s not legally required, being explicit about what type of nonprofit you are can help some donors understand what they are supporting. Sierra Club includes this helpful information about donations and who they are:
They support our effective, citizen-based advocacy and lobbying efforts. The Sierra Club is a non-profit, tax-exempt, 501(c)(4) organization.
Consider putting a short statement like this on your online donation page too. And you have any questions, you can always reach out to us at Bolder Advocacy.