If an organization is planning to conduct any type of activity outside its incorporated state, certain measures need to be taken to maintain state-level compliance. An organization must have a clear understanding of what it is planning so it can properly meet the requirements of the additional states.
To be considered as operating in multiple states, an organization must be conducting its tax-exempt activity outside its incorporated state. For instance, if an organization’s purpose is to provide children with music lessons in Tennessee and decides to expand its lessons to children in Kentucky, the organization is operating in two separate states. In this situation, the organization needs to file a Certificate of Authority in the state of Kentucky so it can legally carry out its mission in that state. This process is required for every state outside the original incorporated state (though each state varies in their guidelines and filing process). Many states are now requiring a Certificate of Authority if the organization will hold an event or anything that would require the organization to have liability insurance. For instance, a 5K fundraising event may require a Certificate of Authority, in addition to Charitable Solicitations registration (which is discussed below). Information about a state’s process for filing a Certificate of Authority can typically be found on the state’s Corporation’s Division website.