Are there any legal concerns when collecting money on behalf of a charity?
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Are there any legal concerns when collecting money on behalf of a charity?
We are creating an on-line business where we will be raising money for charities. Our company is not a charity, but we will be raising money for charities. Is there any paperwork we need to file with the state if we are collecting funds on behalf of charities? We accept the donation (plus a small fee), and the money is held for a short period of time (while the user tries to collect more money, and build a collection of donations). Then the money is sent to the charity. Do we need to get the charity’s permission, or can we just collect the funds and send a check to the charity?
Asked on January 11, 2011 under Business Law, New York
Answers:
M.T.G., Member, New York Bar / FreeAdvice Contributing Attorney
Answered 13 years ago | Contributor
You want to professionally solicit money on behalf of charitable organizations, correct? It is my understanding that you can not use the name of the charitable organization without their permission so start there. Next the Executive law in New York actually regulates solicitation by charities of New york State Residents. Although you claim that you will be a for profit rather than a non for profit, you are raising money ON BEHALF of these organization and there may be a fine line on what you are doing. The IRS also regulates solicitation as well but again, in a 501(c)(3) corporation. You really need to speak with an accountatn and a business attorney in your area. Good luck.
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