In this podcast, Sally Ehrenfried, the leader of government relations for Blackbaud, interviews Kim Wickersham, the director of public charities division for the South Carolina Secretary of State’s Office, and Beth Short, the outreach and education coordinator for the Ohio Attorney General’s Charitable Law Section. They discuss the role and activities of the National Association of State Charity Officials (NASCO), the charitable registration requirements and best practices for nonprofit organizations in different states, and the importance of nonprofit governance, accountability, and transparency for the sector and the public.
Resources:
- SC Secretary of State
- 2024 NAAG/NASCO Charities Conference – National Association of Attorneys General
- National Association of State Charity Officials
- Charitable Ohio
Transcript:
Sally:
Hello, everyone. My name is Sally Ehrenfried, and I lead government relations for Blackbaud.
Joining me on this podcast are Kim Wickersham from the South Carolina Secretary of State’s office and Beth Short with the Ohio Attorney General’s Office. With that, I’m going to turn it over to Kim to introduce herself.
Kim:
Hi, everyone. I am Kim Wickersham. I am the director for the public charities division of the South Carolina Secretary of State’s Office. And in my role as the director, I oversee the administrative, functions of the solicitation of charitable funds act, which means that we complete all the paperwork filings required by charities, fundraisers, commercial co ventures, and anyone wanting to conduct a raffle in the state of South Carolina.
Also work with our legal team and our investigative team on the enforcement of the act when people find themselves out of compliance with the statutory requirements in South Carolina.
Great. Thanks, Kim. And Beth?
Beth:
Hi. I’m Beth Short with the Ohio Attorney General’s Charitable Law Section.
We’re the regulators of the charitable sector here in Ohio, and we do that in a number of different ways. We handle the charitable registration aspects that Kim discussed that are headquartered in her office in South Carolina. We also handle investigations and take enforcement actions when, things have gone wrong within a charity.
We also get engaged in certain types of litigation whenever there are charitable assets at risk, like in probate cases, certain types of transactions involving nonprofits.
And then I spend a good portion of my time, handling outreach and education issues so that we can help ensure that board members know what their legal obligations are to try to keep their organizations out of trouble. And so we create a number of trainings and brochures and resources that we help, try to help good people do good things the right way.
Sally:
Wonderful. Thank you both.
Can you tell me a little bit about the National Association of State Charity Officials? I know you’re both members. I’ve had the opportunity to attend some of some of the NASCO events. So why don’t you tell our audience a little bit more about NASCO what NASCO does and how they affect change and educate the nonprofit sector and also other regulators.
Beth:
Sure. The National Association of State Charity officials is a group of folks from across the country that do the same type of work that Kim and I just outlined.
And every state has different ways of setting things up. So you’ve already heard about registration and how that takes place in the secretary of state’s office in South Carolina. In Ohio, it happens to take place in the attorney general’s office, and so every state sets things up differently.
But most states do have a registration function of some sort. Anyone working in that area is a member of NASCO.
Attorney generals often have, the common law authority to force trustees to do the right thing. So attorney general’s offices from across the country are involved in the work of NASCO.
And we come together and, share resources, conduct trainings for each other.
I’m going to be, installed as president of the group in October at our annual conference in Baltimore. And so trying to take advantage of the expertise that we have in different states and sharing it with other others, I think, is one of our prime goals and priorities as well as creating official relationships with other stakeholders that are important in, the regulation of charities, such as the IRS, the FTC, national organizations of charitable organizations. And so we’re all just trying to, be the best that we can in doing the work that our state has asked us to do in protecting charities for the beneficiaries and for the donors of those groups.
Sally:
Kim, is there anything you’d like to add?
Kim:
So NASCO is really truly a great way for all of us who have common interest in not only protecting donors, but also working with nonprofit organizations to help them do their job in a way that, suits both sides of of the aisle as far as them wanting to, help the public and us wanting to provide accountability.
And so, I really one aspect I enjoy of NASCO is the ability at our conference every year is to be with the charitable organizations and hear what they’re going through and what they’re experiencing out there, in the public and working with the public that they serve. And them getting an opportunity to hear from us what we experience on our end. I think it’s a great opportunity for both, people, both groups of people to, learn from each other. And I it’s one of the things that I really appreciate that people probably don’t realize about the group in general is that we do have that relationship with the nonprofits as well as with each other.
Sally:
Great. Thank you. And I know that I’m looking forward to the conference this fall in Baltimore, so I’ve will definitely be there. So going on to our next question, understanding that all fifty states have different charitable registration requirements, Kim, can you talk at a high level about what is typically required for charitable registrations?
Kim:
The, there are about, maybe ten organization or ten states, I’m sorry, that do not have registration requirements. But for those of us that do, there are a little bit of differences, but, mostly a lot of commonality. You’re gonna have to provide us with your typical demographic information about where you’re located at, what it is that you do, what is your charitable purpose.
You’re gonna have to provide your officer and board member information along with any history of maybe criminal convictions and relationships with other professional fundraisers or if officers and directors are related to each other, we’ll collect that kind of information for accountability purposes.
But also financial reports. Financial reports are, important in the registration process because it provides accountability to donors, who do give their hard earned money to the nonprofit organizations.
We collect that information and we make not only the registration documents, but also the financial reports available for inspection to the public so that they can see exactly what’s being reported to our offices.
Sally:
Great. Thank you. And so how can nonprofit organizations learn more about their states and other states registration requirements? So for example, you know, is it a general rule that if a nonprofit is fundraising in a state, especially one where they’re not headquartered, that they also must be registered in that state?
And then also with the ever increasing, trend of online giving, how do nonprofits ensure that they’re registered across the necessary So in South Carolina, we have a search feature on our website, and I think most states also do, where you can search who is registered, with their offices and what documents are on file with them.
Kim:
So in South Carolina, the statutory requirement is that if any organization solicits in South Carolina, you must be registered with us.
We have a very small margin for not being required, but I see well, we’re different than other states in the way that if you require if you solicit from or reach out to someone in South Carolina, whether it’s a thank you for your initial donation, if you’d like to give again, or if you provide a newsletter that has an updated appeal in the new in the newsletter or if you simply send an email into a resident of South Carolina with an appeal. Even if you’re not in South Carolina, you are required to register with South Carolina. So we are different than some states in that area where just reaching out into our state does require the registration if it has a solicitation with it. Not all states have that specific of a requirement, but ours is ours is pretty tight per statute.
Organizations can find out their registration requirements.
One of the places that they can go to for that information would be the NASCO.org. We do have, some resources for the public on there that give information on the requirements by state as far as whether they need to register, provide financial reports, whether online registration is required by their state. Some some folks require it online only, some folks will take it by paper as well. So it just varies by state.
Beth:
I’d like to add that, you know, if you ever have questions, the very best thing to do is to reach out to the regulators in that state and just talk to them. We’re regular folk. We love talking with folks involved in the charitable sector, and we’ll talk about what’s going on and whether it meets our requirements for requiring a registration. And so, we’re always eager to talk to folks within the sector, and so use that list that’s on NASCO net and, reach out and see what the state requires and expects, and that’s the very best way to make sure that things are gonna go smoothly for you.
Sally:
Great. Thank you, Beth and Kim. So while articles of incorporation, bylaws, and boards of certain sizes are typically required across states, Beth, can you share best practices when it comes to nonprofit governance? For example, are there best practices with regards to board composition, size, independence, responsibility, etcetera? And then when nonprofit organizations face enforcement actions from regulators, is it typically due to a failure of governance?
Beth:
So I think whenever we do see problems going on in a charity, and that can include things like fraudulent solicitations, embezzlements from executive directors or board members, At their basic level, those are all failures in board board governance practices and not adhering to best practices and probably not being aware of the obligations and the legal duties that go with being a board member and running a charitable organization.
And so that’s why, in our office, attorney general Yost has invested a lot of resources in developing training, materials and initiatives. And so we just last year launched charitable university, which is an online learning platform.
And it’s, you log into the system and there are four different pillars and there are are a range of videos under each pillar. And the pillars represent board governance, governmental filings and record keeping, financial activities, and fundraising. And those are the four areas that we see representing the biggest challenges for charities.
So if people go in and take, one of those webinars under each pillar, then they’re a graduate of charitable university, and their name and organizations they are connected with will be published on our web page. And, attorney general Yost is so serious about this as a way to prevent problems instead of what happens in the other half of our office where we have investigators and accountants and lawyers who have to engage in in, you know, checking things out, doing records requests and interviews, and possibly taking enforcement action. We’d rather spend some time on the proactive side, equipping, you know, all these wonderful people across the country that serve on charitable boards to make sure they know what their jobs are and that prevention can perhaps keep people off that side of our office.
And so, the kind of information that’s included in charitable university as well as all of our publications are geared to what does it look like to live up to your fiduciary obligations of a board member. And with the exception of the one video that we have that deals with registration in the state of Ohio, all of that stuff is based on, you know, common law, assertions about what does it look like when a charitable board member is living up to its duties. So it applies to people in no matter what state you’re in because we’re talking about the legal standards of living up to those duties that make sure that board members are really focusing on living up to their mission and developing policies and practices to protect the assets that they have so that it can be used, you know, exclusively for, those beneficiaries that were intended to, be the focus of the organization.
So, yes, there are specific requirements in every state. Each state has its own nonprofit corporation code. In the state of Ohio, you have to have at least three board members, for instance.
But the more important thing, yes, you should know about that. The far more important thing is making sure that people involved in charities, know what their duties are, are developing policies intended to protect the charity, and really looking at how it’s doing its job in living up to those legal duties and ensuring that the board is, you know, doing its job and taking steps forward that really allow you to focus on those thousands and thousands of really important charities working for, you know, critical causes, and their work making a difference in the quality of life that we, you know, enjoy as citizens. And so the work of being a board member, is not just being a cheerleader for the group, but making sure that it’s living up to having internal controls, complying with legal obligations, knowing what’s going on in the organization and how it’s operating. So in Ohio, as well as in many other states, equipping people to be great board members is part of our job.
Sally:
Great. Thank you very much. So as we wrap up, is there anything that either of you would like to leave our audience with that we haven’t already discussed?
Kim:
I think in South Carolina here, I would just like to add kind of piggyback on to Beth here. I really love the proactive attitude that Ohio has as far as reaching out and educating those organizations that are soliciting in Ohio and, and in other states as well. We like to, in South Carolina, go out and speak in person at places. We try and get large groups of people, whether it’s through universities or maybe other associations and have them gather and, and talk to them about their requirements, not only with South South Carolina, but also what should be the requirements as officers, directors, board members for those organizations.
And although, South Carolina being a bifurcated state where we have an AG’s office that handles enforcement and South Carolina’s, secretary of state that does the registration requirements, it starts with the registration and carrying out your duties as a as a nonprofit organization. Right? So I always encourage people when, you know, we speak when we go out and speak that this is, important for not only you and your individual position with the organization, but in the overall presentation of your organization that you know not only your part, but that you encourage others to know their place, their part, what they contribute to the organization, and how they can do that to the absolute best of their abilities for the betterment of the nonprofit and the people that they serve.
And that can be as as detailed as when you file a financial report and you’re giving your information to your, accountant, you know, what is it that you’re reporting? What is your charitable purpose? I always tell people your nine ninety is more than just a tax return. It’s more than a report.
This is where you get to tell the public what you’ve done with what they’ve entrusted you with. And, know what you’re talking about when it comes to filing that financial report. Share your program expenses. Don’t just say we fed people lunch for three, you know, three sixty five days of the year.
How many people did you feed? How many families did you support? How many children did you, you know, put through college? But but know the details.
Know what your charitable purpose is. Be able to talk about it, explain it, and then report it because ultimately it not only benefits you, the charitable organization, but the, but the main goal is to benefit the public and the more you can express yourselves and your passion and document it for the public, the better you’re gonna be able to serve the people that you are put in charge of serving.
Sally:
Kim, that’s a wonderful way to describe the nine ninety. And I think that’s a really important point for organizations to understand is that so many prospective donors and current donors look look at their nine nineties to get a better understanding of what the organization is doing and how they are spending those donor dollars. Beth, before we sign off, is there anything else that you would like to add?
Beth:
You know, we’re we’re the regulators within the sector. And sometimes when you say you’re a regulator, people assume you have no soul and that you hate bunnies and babies and things like that. But all of my staff members, you know, have family members who benefit from the programs and services of charities across the state. And the work that they do is so important.
And so I think I have one of the coolest jobs in that I get to go out across the state and meet Ohioans who are engaged in making the world better in substantive ways through their involvement often as volunteers, as serving as board members. And, you know, we all only have, you know, we have different size bank accounts each of us, but we all only have twenty four hours in a day and people who are engaged within the charitable sector are doing important work and it’s worth doing it right. And so I’ve mentioned our charitable university, attorney general Yost adopted a policy that any entities receiving funding from our office have to demonstrate that half of their board members have completed charitable university.
Because one of the most heartbreaking things that we see is we find out that there’s been an embezzlement at an organization, and then we interview board members, and they say, I had no idea that I was supposed to be looking after this sort of thing. I didn’t know it was my job. And so we have lots of folks that are hoping to do good good work. That’s their intention by serving on a board when they’re asked.
But if they don’t know what that job is and how to accomplish it, it can end up being heartbreaking because there are far too many worthy colleges out there and a finite amount of resources to support those groups. So we can’t afford to have things leaking out of the system because it’s just too important. And so integrity and transparency and accountability, that’s what the nonprofit sector relies on because we’re not manufacturing widgets. Like, you can check what the earnings are on your investments on Wall Street.
We need charities for the strength of the whole sector to look at their jobs seriously so that when donors are deciding to invest in a cause that they can have some sort of confidence in knowing that good things are gonna happen with the funds that they invest. And so I think that’s what all of us within NASCO are interested in doing and equipping people with the ability to do that well has been our recent focus of us in Ohio, but also in other states, they’re doing that as well. And so it’s rewarding work to do. And, to the extent that, either of us can be helpful for charities in our states, give us a call. Take a look at the NASCO list and, reach out to your charity regulators wherever you are, and you will find people that are really committed to the strength of the sector and trying to make sure it remains that way.
Sally:
Kim, Beth, thank you both so much for joining me today.
I know you are both very committed to the sector, and for that, we appreciate your service.
And, I look forward to seeing you both in person in October. And I know I have found this very informative today, and I know our listeners will too. So thanks so much. And, with that, that’s a wrap on this podcast. Thank you.
