Have you ever considered doing a special holiday toy or canned food collection at your dealership for needy families in your community? Be careful. While your show of goodwill may bring smiles to the faces of those in need, it can cause you serious consternation if your dealership’s solicitation of charitable contributions violates state law.
Virginia, like most other states, carefully regulates charitable organizations to insure that well-meaning citizens are not duped by persons or organizations falsely claiming to be collecting money or goods for the needy. To provide help to people deciding whether it is safe to give donations, Virginia requires all charitable organizations operating in the state to register with the Commonwealth’s Board of Agriculture and Consumer Services. Registration can be onerous. It requires paying a fee, providing detailed information about the operations of the organization, and filing lists of officers, organizational documents such as articles of incorporation/organization, bylaws, and financial statements.
State law defines charitable organizations very broadly. In Virginia, any person or entity that solicits or obtains contributions from the public can qualify as a charitable organization subject to registration. Thus, a dealership that independently solicits contributions of used toys or canned food from the general public would qualify as a charitable organization subject to state registration.
Fortunately, Virginia’s regulation of charities need not turn into a holiday nightmare for your business. Registration is not required for persons or groups which partner with a charitable organization that is registered or exempt under state law. Prior to soliciting any contributions, dealers should contact the charitable organization which will be receiving the donations and obtain an authorization letter. The letter should state that the dealer is authorized to solicit contributions on behalf of the organization and to use the organization’s name during a specified period of time. Once the donated goods – whether used toys, clothes, or canned food—have been received by the dealership, all contributions must be delivered to the charitable organization.
All advertisements made by dealers soliciting the charitable contributions should explicitly state that the dealer is partnering with the charitable organization and that all contributions received by the dealer will be given to the charitable organization. Since the charitable organization must be registered with the Commonwealth, dealers should independently verify the registration online at the following address:
Dealers should also carefully retain the letters received from their charitable organization in the event that the Commonwealth attempts in the future to ascertain whether charitable solicitations were authorized.
By carefully following these simple procedures, dealers can provide needed service and good-will to their communities during the holidays without creating legal headaches in the process.