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Q: Fundraising w/o being a non-profit ( Answered,   0 Comments )
Subject: Fundraising w/o being a non-profit
Category: Relationships and Society > Law
Asked by: annefu-ga
List Price: $5.00
Posted: 18 Oct 2003 05:32 PDT
Expires: 17 Nov 2003 04:32 PST
Question ID: 267416
I would like to start a small fundraising group to raise money for the
utility bills for low-income, mentally ill adults. I'm in Ohio. Do I
need to be a non-profit? Do I need any organization status at all? Or
can I just go out and raise money?
Subject: Re: Fundraising w/o being a non-profit
Answered By: byrd-ga on 18 Oct 2003 13:53 PDT
Dear Annefu,

Please note the disclaimer below, and allow me to reemphasize that
nothing in this answer is to be construed in any way as professional
advice, either legal, financial, or any other, nor intended in any way
to substitute for such advice. I would strongly encourage you to make
an effort to obtain such professional advice before undertaking any
activity such as you’ve described above.  A 30-minute consultation
with an attorney wouldn’t cost very much and could save you a lot of
grief later.

But what I can do here is give you some general information, along
with leads to more, which you may then use to better guide your
decision as to how to proceed.

I commend you on your charitable instinct and desire to help others. 
And, if you plan to keep your activities on a very small scale, say
under a few hundred dollars, then I suppose it’s possible you could
forego establishing an organization and simply collect some funds from
within your circle of friends and family to help those you know to be
in need.  However, if you plan to raise and disburse money in the
community at large, or even farther afield, then it would be greatly
to your benefit to consider setting up a tax-exempt charitable
organization (often known as a 501(c)(3) after the IRS’ designation)
to do so.  This could keep you out of a lot of trouble, and also
likely allow you to raise more money than you might otherwise.

For example, regardless of whether you get money from working at a
job, selling a product or service, or collecting it from your friends
and neighbors, the IRS considers that you are obligated to pay taxes
on it because it is income to you.  You’re going to have to declare it
as income somewhere.  And if you don’t think you should have to pay
taxes on it, because, for instance, you’ve collected that money to do
good deeds with it, then the IRS expects you to explain to them
exactly why you shouldn’t have to pay taxes, how much money you’re
talking about, how you got it, under certain circumstances from whom,
and exactly what you did do with it, how, when and where.  Again, I’d
urge you to consult with an attorney or accountant for more specific
professional advice.

Furthermore, if you plan to go around and ask people to give you money
to help other people, you may find a few who’ll just toss some dollars
your way and ask no questions.  However, most people will at least
want some assurance that you’re going to do what you say you’re going
to do with their money, some means of holding you accountable for it. 
One way, probably the best way, is to have a legitimate organization
with records and accounts that can be examined and verified.  Also,
many people will want you to give them a receipt for their donation
that will allow them to write it off on their taxes.  If you’re not an
approved/official charitable organization, no receipt from you will be
worth the paper it’s written on for that purpose.

With the above in mind, it would be a good idea for you to take some
time to educate yourself on how fundraising is currently regulated in
this country, as well as in your state and locality.  Here are some
links that may help you get going in the right direction.

Here’s a great article entitled “Understanding Fundraising Law” by
Sandra K. Pfau Englund, CAE in the “Noodle Soup for Nonprofits”

The author of the above article maintains a website on nonprofit law,
which has much good information you should take the time to read: has a fairly comprehensive overview of nonprofits, how-to’s,
dos-and-don’ts, laws, regulations, advice, etc.   Check out some of
their links here:

Charitable Solicitation Regulations

Lots of general information on nonprofits and fundraising:

Ohio Legal Guide for Non Profit Organizations (*Note: this guide has
detailed instructions on how to set up a legal non profit organization
in Ohio):

Listing of nonprofit resources in Ohio:

Here is a link to some Ohio laws.  However, I have not been able to
get these links to go through this afternoon. My internet connection
is sound, so I think the problem might be that it's Saturday and the
state’s servers may be closed down for the weekend. I’ll post these
links, but I’ll go back on Monday morning and verify them then. If
they still don’t work, I’ll let you know and see if I can find
alternate sources for Ohio law:

Cornell Legal Information Institute – this is a little heavy going,
but there’s good information here, with links to U.S. law about

IRS Information for NonProfits:

I hope you’ll take the time to educate yourself about the legalities
of fundraising for a charitable purpose such as you have in mind. 
What you're planning is a very worthwhile thing to do, but because
some unscrupulous people have in the past used people’s desire to help
others in order to swindle them and abscond with their money, many
rules and laws have arisen to regulate these activities.  Though they
can be burdensome, their purpose is to protect legitimate charities,
including those who solicit, those who give and those who receive
funds.  I encourage you not to become discouraged, but if you see a
real need, to continue to move forward in your efforts to find a way
to meet it.

If anything isn’t clear, please be sure to ask for clarification.  I
wish you all success in your efforts.


Search terms used:

fundraising regulations “united states” OR US
fundraising regulations Ohio
fundraising laws OR regulations OR restrictions
Ohio “charitable solicitation act”
laws regulations “charitable solicitation” OR fundraising

Clarification of Answer by byrd-ga on 20 Oct 2003 08:03 PDT
As promised, I checked those links to Ohio's laws this morning, and
found them to be still inaccessible.  However, I have located an
alternate source for you to check out Ohio law:
 You will have to type the term "charitable solicitation" in the
search box, and it will then return links to the applicable portions
of the law.  You might also try terms such as "fundraising,"
"soliciting donations," "raising funds," and similar in order to find
as many pertinents parts of the law as possible, and try using the
"Advanced" search option in addition to a general search.

Here is one other link that may be of use, to the official Ohio state
page, which also has a search feature:

One interesting additional note: Ohio law (Revised Code 1716.03)
exempts a group from state registration as a charitable organization
under a number of strict guidelines, one of which includes exemption
for those raising less than twenty-five thousand dollars a year, *and*
who do not pay a particular individual to do fund raising.  See "Worth
checking into - it might be a loophole that could allow you to start
small without having to jump through too many hoops.  Again, though,
please be sure to get some professional advice for your own protection
before you start.

Please let me know if anything else needs clarification.  

Best wishes,

Additional search terms used:
Ohio state
Ohio laws online
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