1. You might need a special fundraising license
Here’s something a lot of new nonprofits miss: just being registered as a 501(c)(3) isn’t always enough. In most U.S. states, you also need something called a charitable solicitation license before you can legally ask for donations.
This applies whether you’re sending emails, hosting a fundraising event, or even posting donation asks on social media. Approximately 40 states require it, and if you plan to raise funds across state lines, you may need to register in each one.
A heads up: many states require you to renew that license every year.
💡Tip: Don’t panic, this is more common than you think! To get started, search for your state’s licensing department (it’s usually through your state's Secretary of State or Attorney General’s office).
2. You need to protect donor privacy and data
Data privacy is a big deal (and yes, it applies to nonprofits, too). With new laws popping up in many states, tons of information online, and AI tools now in the mix, it’s more important than ever to treat your supporters’ information with care.
That means:
- Posting a clear privacy statement on your website that explains what data you collect and how it’s used
- Keeping donor data secure and well-organized with a reliable system (like Click & Pledge)
- Making sure your staff, volunteers, and board members are trained to respect data rights, such as removing or updating records when asked
Not only can this help you stay legally compliant, it also shows your supporters they can trust you with their personal information.
3. Know the rules when donors get something in return
Did you know that if someone donates to your nonprofit and receives something in return, like event tickets or a thank-you gift, you may need to tell them that only part of their donation is tax-deductible? (PS - This also counts when people buy something through your nonprofit’s silent auction!)
This is referred to as a quid pro quo contribution, and the IRS requires nonprofits to disclose it clearly. If the donor gives more than $75 and gets something of substance in exchange, your nonprofit must provide a written statement that includes:
- The total amount they gave
- The fair market value of what they received
- The tax-deductible amount
This doesn’t include insubstantial tokens of appreciation (like stickers or thank you cards). But for example, if someone donates $100 and receives a concert ticket worth $30, only $70 of their donation (the difference) is considered tax-deductible.
💡Tip: If you're planning an event or giving donor gifts, be sure your thank you notes or receipts include these details. It’s a small but vital step to keep your nonprofit compliant and build trust with your supporters.
4. Yep, Raffles might require special licenses
Is your nonprofit thinking of hosting a raffle, bingo night, or poker fundraiser? I have done my fair share of these for sure. They are a fun idea – BUT before you print those tickets, make sure to check your state’s rules.
These types of fundraisers are often considered “games of chance” and can fall under gambling laws. In some states, you’ll need a special license to host them. Others might have specific limits on the number of raffles a nonprofit can hold per year or on where and how they can occur. Some states even regulate whether you can serve alcohol in the same room as a raffle!
The IRS also has a say. If your nonprofit offers prizes, you may need to report income from raffles on your Form 990. You might even be required to withhold and report taxes on certain prizes. The same applies to auctions or casino nights, where chance is involved.
Before you get too far in planning, look up your state and IRS requirements. A quick check now can save you headaches (and fines) later.
Want to stay on the safe side?
These four fundraising laws are just the beginning, and the more you know, the easier it is to protect your mission, your donors, and your team.
Want to learn more about how these and other laws apply to your nonprofit?
👉 Watch the full video: 8 Nonprofit Fundraising Laws You NEED to Know
Try It This Week 🚀
Pick one of these four fundraising laws and do a quick self-check:
- Are you registered to fundraise in your state?
- Does your website have a clear privacy policy?
- Are your donor thank-you letters covering quid pro quo rules (if applicable)?
- Hosting a raffle soon? Have you looked up your state’s requirements?
Choose one to review with your team this week. It doesn’t have to be perfect. Taking that first step can help your nonprofit stay on track and build trust with supporters.
