siloz is not just legal, it abides major fundraising advisories, and applicable laws in all 50 states.
siloz is a for-profit technology service provider and is not a professional fundraising organization, fundraising counsel, a fundraising adviser, a fundraising manager, a fundraising planner, a commercial co-venturer, or a fundraising solicitor. We collect a fee approaching 10% of the total amount raised for the service we provide.
siloz provides only the tools for organizations to conduct their own fundraisers, and/or prepare soliciting materials, makes no representations about the veracity of a fundraiser, and never executes any aspect of a fundraising effort.
A non-profit organization is one that has registered with IRS as such, and therefore is tax-exempt, has an EIN (employer ID number). They typically begin with ‘501’ in the IRS federal code. All 501 organizations can receive donations, but only 501(c)3 (charitable) organizations are always capable of issuing tax-deductible receipts for donations. Charities are a specific type of non-profit, whose objective is philanthropic. There are cases where donations to other 501 organizations (such as 501(c)4’s) may be tax-deductible, if they are claimed as business or trade expenses.
Schools are an unusual. They are not 501(c)3 organizations, but donations to public schools (and some private – talk to the school), are always tax-deductible.
In any case where an organization (wishing to run a community silo) undertakes a fundraiser, it is (in 40 states at the time of this writing) required to register itself with the appropriate governing body in that state.
Any organization registered with the IRS should report funds raised to that authority. Consult an attorney if you are not registered with the IRS and unsure whether you are required to do so.
Your state may require a ‘disclosure statement’ or receipt (Colorado, Florida, Georgia, Illinois, Maryland, Michigan, New Jersey, New York, Pennsylvania, Virginia, Washington State and West Virginia) in order to claim a deduction. siloz issues these automatically, when an item of any price sells.
We permit any ‘not-for-profit’ organization meeting our separate criteria (see or FAQ on which organizations can run a silo) to run a silo, but they cannot all issue tax-deductible receipts. For example: a little league may not be a registered non-profit (and therefore cannot issue produce an EIN or issue tax-deductible receipts), but, provided it is observing applicable laws, it would be permitted to operate a community silo. The same would be true of a neighborhood association.
Note: these organizations may qualify for non-profit status (if not 501(c)3 charitable status), in the event they to organize and register with the IRS.
Laws and Advisories
The Modal Charitable Solicitations Act (MCSA; a federal law) applies specifically to charities, and defines ‘solicitation’ as making written requests for donations, announcements to the press, distributing publications, or otherwise advertising), and ‘charitable organization’ as being registered as such with the IRS.
This Act states siloz cannot be a charitable ‘adviser’ or ‘counsel’ (defined as planning a fundraiser for a charity, managing a fundraiser for a charity, counseling a fundraiser for a charity, consulting on a fundraiser for a charity, or preparing materials for a fundraiser for a charity), for a fee, without also being required to register in a given state as such. The law was enacted to prevent charlatans from collecting money on behalf of (and/or exploiting) charities, specifically.
This Act is federal law, and must be observed in all states, including theDistrict of Columbia. Many states have adopted the language of the MCSA into their own respective code, with some variations in language. siloz is not in violation of this law, as – though it collects a fee – it does not serve in any of the aforementioned capacities.
Typically, the regulatory burden is less for a person who doesn’t actually conduct the solicitation but only advises the non-profit organization. Some states have added language that exempts a ‘person’ (who otherwise meets the definition of ‘fundraising counsel’) from being defined as such, and therefore required to register with the state, provided the funds raised are in the perpetual control and custody of the fundraising organization. These states include Rhode Island and Massachusetts. However, siloz does not meet the definition of ‘fundraising counsel’.
The National Association of State Charity Officials (NASCO) released The Charleston Principles, an advisory guideline on solicitation of charitable giving, indicates that technology providers, who do not charge excessively for their service, are less likely to be seen as charitable advisors. We charge around 7%.
We are proud of sìloz, and believe we can help people help themselves. If you have any additional questions about the legality of fundraising, feel free to reach out to us, through the ‘Contact Us’ link at the bottom of our website, or to consult your attorney.