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The following guidelines provide background information on the most common types of filings and the related exemptions in Delaware.
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As of January 2021, Delaware does not require charitable solicitation registration for nonprofit entities. Be sure to review other state registration, annual reporting and tax requirements, and stay apprised of updates by visiting the applicable state agency’s website.
Some states require organizations to appoint a registered agent in the state as part of the organization’s charitable registration. This state does not currently have this requirement as there is no charitable registration requirement, but foreign (i.e., non-Delaware) entities doing business in Delaware must generally appoint a registered agent in accordance with the above-referenced business registration statutes.
This state requires organizations to include specific statements whenever an organization is requesting donations (also called “charitable solicitation”). (See Del. Code tit. 6, Ch. 25 § 2591 et seq.) In particular, the solicitor must identify himself or herself by name and the organization for which the funds are being solicited. Additionally, donors are entitled to question how the funds will be allocated between administrative costs and actual charitable use.
Religious organizations generally are not required to include the specific disclosure statement. However, posting or including the language in a solicitation is often a best practice because it helps build trust with donors and state regulators. Below is sample language to use with charitable solicitations in this state:
This solicitation is made by &NAME& on behalf of &ORG&.
(not applicable)
(not applicable)
(not applicable)
Depending on the type and volume of activities an organization has in this state, the organization may also need to register as an out-of-state business (sometimes called a “foreign business”) with the secretary of state or another state agency. These foreign business registration requirements are separate from the charitable registration. An attorney can assist your organization in determining whether its connections with this state are significant enough to trigger the foreign business registration requirement. Examples of activities which might trigger this requirement include having employees physically located in the state, conducting programs in the state, and having an office in the state.
Del. Code tit. 8, Ch. 1 § 371(b) (corporations); Del. Code tit. 6, Ch. 18 § 18-902 (limited liability companies); Del. Code tit. 6, Ch. 17 § 17-902 (limited partnerships); Del. Code tit. 6, Ch. 15 § 15-1102 (limited liability partnerships); Del. Code tit. 12, Ch. 38 § 3852 (statutory trusts)
In this state, organizations which have received recognition of federal income tax exemption under IRC Sec. 501(c)(3) are automatically exempt from state income tax. Some organizations may choose to send a copy of their IRS determination letter to the state department of revenue to indicate the organization’s position that it qualifies for the exemption. Note that Delaware does not impose a tax on unrelated business taxable income (UBTI) as of the date of this writing (March 08, 2021).
It is also important to consider whether applying for gross receipts tax and property tax exemption would be appropriate for your organization. Exemptions from taxation and assessment for public purposes on a Delaware county level for religious and charitable organizations is governed by 9 Del. Code Sec. 8105. More information about the Delaware gross receipts tax is available on the Delaware Department of Revenue website. Information regarding property tax exemption is available from your local county. For an example, please see this guidance from New Castle County. An accountant or attorney can provide answers to specific questions about your organization’s eligibility.
Delaware Income Tax Statute for Pass-Through Entities, Estates and Trusts: Del. Code tit. 30, Ch. 16 § 1601, et. seq
Delaware LLC Tax Statute: Del. Code tit. 6, Ch. 18 § 18-1107
Delaware LP Tax Statute: Del. Code tit. 6, Ch. 17 § 17-1109
Delaware Partnership Tax Statute: Del. Code tit. 6, Ch. 15 § 15-1208
Delaware Statutory Trust Tax Classification Statute: Del. Code tit. 12, Ch. 38 § 3809
A Volunteer Attorney in Delaware
This resource contains general educational information related to legal concepts, but this information does not constitute legal advice. Anyone seeking legal advice is strongly encouraged to consult with a licensed attorney regarding any of the matters discussed herein. Although licensed attorneys work with Napa Legal, Napa Legal is not a law firm and does not undertake legal representation on behalf of any clients. Further, no licensed attorney working with or on behalf of Napa Legal agrees to undertake legal representation on behalf of any client unless the terms of such representation are set forth in a separate, written representation agreement.
