Glossary of Terms

Abandonment

An outbound telephone call is “abandoned” if a person answers and the telemarketer does not connect the call to a live sales representative within two (2) seconds of the person’s completed greeting.

Audited Financial Statement

This statement is an organization’s financial statement that has been prepared and certified by a Certified Public Accountant (CPA). The CPA (the auditor) certifies that the financial statements meet the requirements of the Generally Accepted Accounting Principles (GAAP).

Certificate of Authority

Generally, a certificate of authority is required in each state where an organization, which is not incorporated in the state, but has a physical location, has a presence in the state, or transacts business in the state. Most state statutes explain that transacting business in interstate commerce does not amount to “transacting business” in the state and alone does not require an organization to obtain a certificate of authority. Thus, if a charity or fundraiser only calls residents of a particular state and does not otherwise have any physical presence or other contact with the state, it will most likely not be required to obtain a certificate of authority in that state. There are, however, five (5) exceptions to this rule. California, the District of Columbia, Georgia, Michigan, and North Dakota will require an organization to obtain a certificate of authority if it solicits residents of the state via telephone even though the organization has no presence or other contact with the state.

Charitable Gift Annuity

A transfer of cash or other property by a donor to a charitable organization in return for an annuity payable over one or two lives, under which the actuarial value of the annuity is less than the value of the cash or other property transferred and the difference in value constitutes a charitable deduction for federal tax purposes.

Charitable Organization

An organization that is tax exempt under Section 501(c)(3) of the Internal Revenue Code or any organization established for any voluntary health and welfare, benevolent, philanthropic, patriotic, educational, humane, scientific, public health, environmental conservation, civic, or other eleemosynary (charitable) purpose.

Charitable Prize/Promotions and Other Games

Many states allow certain charitable organizations to conduct charitable games including bingo, raffles, and other games; other states forbid these games altogether. The state statutes impose a wide range of restrictions and limitations upon these charitable games. As such, your organization should first determine where you want to conduct the charitable game and carefully review those state statutes regulating the conduct of charitable games.

Charitable Purpose

Any purpose described in Section 501(c)(3) of the Internal Revenue Code or any voluntary health and welfare, charitable, benevolent, philanthropic, patriotic, educational, humane, scientific, public health, environmental conservation, civic, or other eleemosynary (charitable) purpose.

Charitable Raffle

A game conducted by a qualified charitable organization in which a participant buys a ticket for a chance at a prize with the winner determined by a random drawing to take place at a set location and date.

Combined Federal Campaign

The Combined Federal Campaign (CFC) was established by a Presidential Executive Order by President John F. Kennedy in 1961. It is a program allowing certain charitable organizations to solicit contributions from employees of the Federal Government of the United States. The CFC is the largest workplace charity campaign in the United States. In addition, the CFC is the only campaign authorized to solicit and collect contributions from federal employees in the workplace on behalf of charitable organizations.

Commercial Co-Venturer

A commercial co-venturer is any person or firm who, for profit, regularly conducts a charitable sales promotion or underwrites, arranges, or sponsors a sale, performance, or event of any kind which is advertised to benefit a charitable organization.

Contribution

The promise or grant of any money or property of any kind or value, including the promise to pay.

DNC or “Do-Not-Call” List

The federal government, through the FTC and FCC administers the national “do-not-call” registry of consumers (not businesses) which do not wish to receive commercial telephone solicitations.  Several states still maintain their own similar lists, which sometimes have different exemptions than the federal registry.  Prior to undertaking a campaign, you should determine whether the national “do-not-call” registry or state “do-not-call” list apply to it, and if they do, “scrub” your calling lead file against those lists.

Educational Institutions

Some states exempt educational institutions from the state registration requirements to solicit contributions. The states with these exemptions generally exempt education institutions that are accredited by some accrediting authority or organization. Some states also exempt from the registration requirements foundations having an established identity with the educational institution. As such, your organization may qualify as an Education Institution exempt from registration requirements in some states and must register in other states. Thus, the applicable state exemptions related to Educational Institutions must be examined in each state where your organization anticipates soliciting contributions.

Franked Communication

The franking privilege allows Members of Congress to transmit mail matter under their signature without postage.

Fundraising Counsel

A person who for compensation under a written agreement plans, manages, advises or consults with respect to the solicitation of contributions by a charitable organization, who does not at any time, whether directly or indirectly, receive or have custody or control of contributions.

Internal “Do-Not-Call” Lists

Businesses and charities are required to keep a list of consumers who have expressed a desire not to be called in the future by that entity.  There are no exceptions to internal “do-not-call” lists which should be honored if received in any form from a consumer.

Internal Revenue Service Form 990

The Form 990 and Form 990-EZ are used by tax-exempt organizations, nonexempt charitable trusts, and section 527 political organizations to provide the IRS with financial information. The form is an information return and, as such, an organization’s completed Form 990, Form 990-EZ, and the Form 990-T of 501(c)(3) organizations is available for public inspection. Schedule B (Form 990, 990-EZ, or 990-PF), Schedule of Contributors, is open for public inspection for section 527 organizations filing Form 990 or Form 990-EZ. For other organizations that file Form 990 or Form 990-EZ, parts of Schedule B may be open to public inspection. Most state agencies that regulate charitable solicitations require charitable organizations to file Form 990s annually by specific due dates.

Other Federated Campaigns

In addition to the Combined Federal Campaign, there are also other programs allowing certain charitable organizations to solicit contributions from employees. Various states, municipal governments, and businesses also organize and manage workplace payroll deduction fund drives for charitable organizations.

Professional Fundraiser

Any person who for compensation or other consideration is retained by a charitable organization to solicit contributions for charitable purposes.

Qualified Charitable Gift Annuity

A charitable gift annuity described in Section 501(m)(5) of the Internal Revenue Code (26 USC Section 501(m)(5)), and Section 514(c)(5) of the Internal Revenue Code (26 USC Section 514(c)(5)), that is issued by a charitable organization that on the date of the annuity agreement: (1) Has a minimum of three hundred thousand dollars in unrestricted cash, cash equivalents or publicly traded securities, exclusive of the assets funding the annuity agreement; and (2) has been in continuous operation for at least three years or is a successor or affiliate of a charitable organization that has been in continuous operation for at least three years.

Registered Agent

Whenever an organization incorporates, applies for a Certificate of Authority, or registers with a state in order to solicit charitable contributions, then it will most likely be required to identify a registered agent. A registered agent is the contact of the organization for legal purposes. The registered agent can be a business or an individual, depending on the applicable state law, designated to receive service of process when a business entity is a party in a legal action or for other correspondence.

Religious Organization

Many states offer an exemption for religious organizations from the registration requirements to solicit contributions. However, how a particular state defines “religious organization” is not consistent. In addition, some states’ definition is much more restrictive than others. As such, your organization may qualify as a religious organization exempt from the registration requirements in some states and must register in other states. Thus, the definition of religious organization and the applicable state exemptions must be examined in each state where your organization anticipates soliciting contributions.

Robocalls

These are prerecorded messages sent to voters by or on behalf of candidates in political campaigns concerning ballot issues.

Solicitation or “Solicit”

The request, directly or indirectly, for money, credit, property, financial assistance, or any other thing of value on the plea or representation that such money, credit, property, financial assistance, or any other thing of value or a portion of it will be used for a charitable purpose or will benefit a charitable organization.

Tax Exempt Determination Letter

Upon application and recognition of an organization’s tax exempt status, the IRS will issue an organization a determination letter indicating that the organization is a tax exempt organization as described in a certain section of the Internal Revenue Code (i.e. Section 501(c)(3)). This letter is important for the organization to keep in its records because it demonstrates to potential donors that, in the case of a Section 501(c)(3) organization, contributions are tax deductible. As such, a potential donor may request a copy of your organization’s tax exempt determination letter from the IRS. In addition, most state agencies regulating charitable solicitations require that your organization submit its IRS determination letter to the respective agency within a certain number of days upon receipt (i.e. within 30 days in some states). Only a few states, including Maine, Maryland, and Oklahoma require that an organization obtain tax exempt status from the IRS prior to registering to solicit contributions in these states. There is some real question as to whether this requirement passes constitutional muster.

Telemarketing Registration

There is no federal telemarketing registration.  Some states require commercial telemarketers to register by paying a fee and sometimes posting a bond prior to calling into their state with commercial telephone solicitations,.  These registration statutes often have many types of exemptions.  State telemarketing registration is different than compliance with the federal “do-not-call” registry or state “do-not-call” lists, although sometimes regulators refer to “registration” with regard to their “do-not-call” list.

Telephone Consumer Protection Act of 1991

TCPA, enacted in 1991, banned prerecorded calls - absent express consent - to cell phones, emergency and public safety numbers, and required some minimal disclosure as to the caller’s identity and telephone number.

Unified Registration Statement (URS)

This is a multi-state charities registration form that represents an effort to consolidate the information and data requirements of all states that require registration of nonprofit organizations performing charitable solicitations within their jurisdictions. The National Association of State Charities Officials and the National Association of Attorneys General collaborated in creating the form in order to standardize and simplify registration. Despite the goal of standardization and simplification, most states only accept the URS in lieu of the respective state’s specific form as long as it is submitted with additional state-specific addendums and other information. Our firm has found that it is often easier to complete the state specific forms and avoid the often patchwork of convoluted addendums and other information that is required when a URS is submitted in lieu of the state specific form.