SayPro Compliance Verification: Ensure that All Fundraising Activities Comply with Applicable Laws and Regulations, Including Tax Compliance.

Objective: To verify that all fundraising activities carried out by SayPro comply with relevant laws, regulations, and tax requirements. This process ensures that the organization remains legally compliant, maintains its tax-exempt status, and upholds transparency and accountability in its fundraising operations.

1. What is Compliance Verification?

Compliance verification is the process of reviewing and ensuring that SayPro’s fundraising activities align with all applicable laws, regulations, and internal policies. This includes adhering to federal, state, and local regulations, as well as specific tax laws governing charitable donations, crowdfunding, sponsorships, and fundraising events. The purpose of this step is to confirm that all aspects of SayPro’s fundraising are conducted in a legally compliant manner, reducing the risk of penalties or the loss of tax-exempt status.

2. Key Areas for Compliance Verification

A. Tax Compliance for Donations and Fundraising Activities

• Confirm Tax-Exempt Status:
  • Ensure that SayPro’s tax-exempt status is up-to-date and valid with the IRS and any relevant state authorities. This includes ensuring that SayPro’s 501(c)(3) status (or equivalent) is active, and that any necessary filings or renewals have been completed.
  • Verify that SayPro is listed in the IRS database of tax-exempt organizations and that any changes in the organization’s status are reflected accurately in both IRS records and state-level records.
• IRS Form 990 Compliance:
  • Ensure that the most recent Form 990 (Return of Organization Exempt from Income Tax) has been filed accurately and on time. This form provides a comprehensive financial summary of the organization, including revenue from donations, sponsorships, and crowdfunding, as well as expenses and programmatic spending.
  • Review the form for accuracy, ensuring that all donations, sponsorships, and fundraising revenue are fully disclosed.
  • If applicable, confirm that Form 990-EZ or Form 990-N has been filed according to the organization’s revenue size.
• Donation Acknowledgment for Tax Deductions:
  • Verify that all donation receipts comply with IRS guidelines, particularly for tax-deductible donations. Acknowledgment letters for donations should include:
    • The donor’s name, address, and donation amount.
    • A statement indicating whether any goods or services were provided in exchange for the donation.
    • For donations over $75, a specific statement confirming that no goods or services were exchanged for the contribution.
• Unrelated Business Income (UBI):
  • If SayPro earns revenue from activities that do not directly relate to its tax-exempt purposes (such as hosting a fundraising event with entry fees), verify that any unrelated business income is properly reported on Form 990.
  • Confirm that SayPro pays the appropriate taxes on any unrelated business income (UBI) if applicable and that it is properly segregated from other donations and sponsorships.

Action Steps:

• Ensure SayPro’s 501(c)(3) status is valid and up-to-date.
• Confirm that Form 990 is filed accurately and on time.
• Review all donation receipts to ensure they meet IRS guidelines for tax-deductible contributions.
• Monitor unrelated business income (UBI) to ensure it is properly reported and taxed.

B. State and Local Compliance Requirements

• State Fundraising Registration:
  • Verify that SayPro is registered with all relevant state authorities where it conducts fundraising activities. Many states require nonprofit organizations to register before soliciting donations, and failure to do so can lead to penalties.
  • Review the registration process for each state in which SayPro operates, ensuring that any required annual renewals or updates to the registration are completed on time.
  • Ensure that SayPro complies with any state-specific rules regarding solicitation, such as donor disclosure requirements or restrictions on fundraising activities.
• Sales Tax and Fundraising Expenses:
  • Confirm compliance with state and local sales tax laws. While donations are generally not subject to sales tax, certain fundraising activities (e.g., ticket sales, auction items) may be taxable.
  • Ensure that all applicable taxes are paid on revenue generated from taxable fundraising activities and that records are kept for tax filings.
• Local Permits for Fundraising Events:
  • Ensure that any live events (e.g., galas, auctions, charity runs) are compliant with local regulations, including obtaining necessary permits or licenses.
  • Verify that permits for fundraising events, such as raffles, auctions, or large-scale events, are obtained in advance and that all legal requirements are met.

Action Steps:

• Verify registration with relevant state authorities for fundraising activities.
• Confirm that SayPro complies with state sales tax laws and fundraising regulations.
• Ensure that permits for live events and fundraising activities are acquired and up-to-date.

C. Sponsorship and Crowdfunding Compliance

• Sponsorship Agreements:
  • Ensure that all sponsorship agreements comply with tax-exempt guidelines. The agreements should clearly outline the value of sponsorships and the benefits provided in return, such as recognition at events or logo placement in promotional materials.
  • Confirm that any goods or services provided to sponsors are accounted for and documented accurately.
• Crowdfunding Platform Regulations:
  • Verify that crowdfunding campaigns conducted by SayPro are compliant with the regulations of the specific crowdfunding platform being used (e.g., GoFundMe, Kickstarter).
  • Ensure that the platform’s terms and conditions are adhered to, particularly regarding transparency in fund allocation and donor acknowledgment.
  • Ensure that crowdfunding campaigns do not inadvertently violate any platform-specific policies or tax rules, such as improperly using funds for non-approved purposes.

Action Steps:

• Review sponsorship agreements to ensure compliance with tax-exempt status and legal requirements.
• Verify that crowdfunding campaigns comply with platform regulations and tax rules.

D. Compliance with Advertising and Marketing Laws

• Truthful Advertising:
  • Verify that all advertising materials related to fundraising activities (e.g., emails, social media posts, event flyers) comply with truth-in-advertising laws. Claims about how donations will be used should be accurate and transparent.
  • Ensure that SayPro avoids any misleading or exaggerated claims about fundraising goals or expected outcomes, and that all messaging is clear and truthful.
• Donor Privacy and Data Protection:
  • Ensure that SayPro is compliant with data protection laws, such as the General Data Protection Regulation (GDPR) if applicable (for donors in the EU), and other relevant privacy regulations.
  • Verify that donor data is securely stored and that all donor communications (e.g., acknowledgment letters) are handled in a way that respects privacy laws.

Action Steps:

• Review all advertising materials to ensure compliance with truth-in-advertising regulations.
• Ensure compliance with data privacy laws and donor protection policies.

3. Steps for Compliance Verification Process

To ensure that SayPro’s fundraising activities are fully compliant with all applicable laws and regulations, follow these steps:

Step 1: Review Legal Documentation and Tax-Exempt Status

• Review all documents related to SayPro’s tax-exempt status, including IRS determination letters, state filings, and Form 990 filings.
• Verify that all necessary registrations for state and local fundraising activities are up-to-date and that any required renewals are completed.

Step 2: Verify Compliance with Donation and Sponsorship Guidelines

• Ensure that all donor acknowledgment letters comply with IRS guidelines for tax-deductible donations.
• Review sponsorship agreements to ensure they are compliant with tax-exempt regulations and do not provide excessive benefits to sponsors that could jeopardize SayPro’s status.

Step 3: Cross-Check Fundraising Events and Crowdfunding Campaigns

• Verify that any fundraising events comply with local laws, including obtaining the necessary permits and paying applicable taxes.
• Ensure that crowdfunding campaigns comply with both platform policies and relevant tax regulations, and that all funds are used according to the stated purpose.

Step 4: Confirm Data Protection Compliance

• Review SayPro’s practices related to donor data, ensuring compliance with data privacy laws and donor confidentiality.
• Ensure that donor information is stored securely and that data collection processes align with legal requirements.

Step 5: Document Compliance Checks and Address Issues

• Maintain thorough documentation of all compliance checks, including any discrepancies or issues discovered during the review process.
• Develop an action plan to address any compliance issues and ensure that any identified problems are promptly resolved before the audit begins.

4. Conclusion

Ensuring compliance with all applicable laws and regulations is essential to maintaining SayPro’s tax-exempt status, preventing legal risks, and building trust with donors, sponsors, and other stakeholders. By verifying that all fundraising activities comply with tax regulations, state and local laws, sponsorship guidelines, and data protection requirements, SayPro can demonstrate its commitment to transparency, accountability, and legal integrity in its fundraising efforts. Compliance verification not only prepares the organization for a smooth audit process but also protects its reputation and ensures that donations and funds are used effectively and ethically.