District of Columbia

Multi-State Compliance Matrix

Updates

What You’ll Learn

If you’re a nonprofit in the District of Columbia, or you’re a nonprofit considering fundraising or other activities in the District of Columbia, you must understand the requirements that the District of Columbia has established for nonprofits operating in the District.

How can you become familiar with these laws? Where should you start?  

Start here. This District profile includes the basic requirements nonprofits must consider. Reading the profile and implementing appropriate compliance measures will help you prepare your organization for success in the District of Columbia.  

Getting to Know the State Nonprofit Corporation Law

Background

*Important primarily for nonprofits incorporated in the District of Columbia

Emma Woodhouse, handsome, clever, and rich, with a comfortable home and happy disposition, seemed to unite some of the best blessings of existence; and had lived nearly twenty-one years in the world with very little to distress or vex her. She was the youngest of the two daughters of a most affectionate, indulgent father; and had, in consequence of her sister’s marriage, been mistress of his house from a very early period. Her mother had died too long ago for her to have more than an indistinct remembrance of her caresses; and her place had been supplied by an excellent woman as governess, who had fallen little short of a mother in affection.

- Emma, Jane Austen

When reading a novel, we get to know a fictional character by the author’s description. The author tells us about the character’s appearance, purpose, actions, mannerisms, and values.  

Nonprofit corporations are something like fictional characters.  

We learn how a nonprofit will look and act and make decisions not by reading a novel, but by reading the state law (called the nonprofit corporation act) and the rules the nonprofit makes for itself (called the bylaws and articles of incorporation). The law and the organization’s own rules tell us the organization’s name, purpose, way of acting, and method of making decisions.  

To get to know your own nonprofit, be sure to review the sections below.

State Nonprofit Corporation Law

Corporate Governance

Conflict Transactions: D.C. Code § 29–406.70; Need to review the basic best practices for conflicted transactions? See Bylaws Module 14: Conflicts of Interest.  

Director Standards of Conduct: D.C. Code § 29–406.30; Need a refresher on the role of directors? See Bylaws Module 6: Directors.

Members: Eligibility and Statutory Powers: D.C. Code § 29–404.01, et. seq.; Not sure what a “member” is? Need to review the basics? See Bylaws Module 5: Members.

Indemnification: D.C. Code § 29–406.50, et. seq.; Not sure what “indemnification” is? Need to review the basics? See Bylaws Module 8: Indemnification.

For Religious Nonprofits

Nonprofit Religious Corporation Act: Washington, D.C.’s nonprofit corporation law expressly: (a) acknowledges an option for nonprofit corporations to incorporate for religious purposes and (b) includes specific provisions to protect the right of nonprofits incorporated for religious purposes to self-government in internal affairs. The law does not include an option to incorporate expressly as a nonprofit religious corporation. D.C. Code § 29–401.02(32); D.C. Code § 29–401.40; Confused about what it means to be a religious nonprofit corporation? See our whitepaper “Why a Religious Corporation?

Reliance on Religious Guidance in Governance: Washington, D.C. law permits a director to rely on guidance from religious figures within his or her faith tradition in the fulfillment of the director’s fiduciary duties. D.C. Code § 29–406.30(f)(4)

Understanding Religious Liberty in this State

Case Study

*Important for all nonprofits doing business in the District of Columbia, whether incorporated in the District of Columbia or elsewhere  

The religious education and formation of students is the very reason for the existence of most private religious schools, and therefore the selection and supervision of the teachers upon whom the schools rely to do this work lie at the core of their mission. Judicial review of the way in which religious schools discharge those responsibilities would undermine the independence of religious institutions in a way that the First Amendment does not tolerate.

- Our Lady of Guadalupe School v. Morrisey-Berru, 140 S. Ct. 2049 (2020).  

Sometimes, the District makes laws that could conflict with your organization’s free exercise of religion or its sincerely-held religious beliefs.  

For example, a law might require employers not to make faith-based distinctions between job candidates. If your organization’s mission is to pass on the teachings of your faith, you will need to make faith-based distinctions in evaluating candidates because their faith commitments will impact their abilities to partner in your mission and witness the faith to your program participants.

So what do you need to do? Be aware of the laws listed below. If any of the laws impact your organization—for example, if you are an employer or a facility open to the public—learn more about how you can protect yourself by reviewing Napa Legal’s religious liberty resources. Talk to an attorney if you have specific concerns.

Religious Liberty Protections

Federal Religious Freedom Restoration Act: Washington, D.C. operates under the federal RFRA, which protects the religious free exercise of all individuals and entities by requiring government burdens on religious exercise to satisfy strict scrutiny. 42 U.S. 21B §2000bb; Not sure what a “religious freedom restoration act” is? Click here to learn the fundamentals.

Constitutional Protections for Free Exercise: Washington, D.C. operates under the federal constitution, and thus protections for religious freedom in this jurisdiction are the required minimum protections of the First Amendment.

Blaine Amendment: Washington, D.C. operates under the federal constitution, which does not contain a Blaine Amendment and has been interpreted by the United States Supreme Court to expressly protect faith-based organizations’ freedom to participate in public benefit programs on the same terms as similarly situated secular institutions. Not sure what a Blaine Amendment is? Review the basics here.

Other Relevant State Laws and Regulations

The District of Columbia currently has a district-wide sexual orientation and gender identity law. Be sure you understand how this law applies to your organization. See D.C. Code § 2–1402.31.

Protections for Religious Exercise in State of Emergency: Washington, D.C. law has no explicit constitutional or statutory protections for religious exercise during a time of emergency, but see Capitol Hill Baptist Church v. Bowser.

Key Employment Laws and Regulations

Religious Freedom for Faith-Based Employers: D.C. Code § 2–1401.03(b)

Religious Freedom for Employees: D.C. Code § 2–1401.03(b)

Conducting Activities or Programs in this State

Understanding the Business Registration Requirement

*Important primarily for nonprofits doing business in the District of Columbia but incorporated elsewhere

If you are fundraising or conducting activities in the District, you must consider whether you need to register as a foreign nonprofit corporation. The District’s law requires entities that are “conducting a…not-for-profit activity” to register. An attorney can help you decide whether you need to register based on the type and volume of activities you have in the District.

Business Registration Statute

Fundraising and Charitable Registration in This State

How to Know (And What to D0) If You're Fundraising In This State

*Important for both the District of Columbia and Foreign Nonprofits

Not sure what “charitable registration” is? Need to review the basics? Read this article for a refresher.

The District generally requires organizations to register prior to soliciting for donations. However, the registration requirement has a religious exemption. Religious organizations must apply to receive the exemption—it is not automatic.

This state has a broad definition of what constitutes solicitation and does not specify what minimum activity level triggers registration requirements. See D.C. Code § 44–1701.  

However, under D.C. Mun. Regs. tit. 16, § 1301, organizations which: (1) do not receive more than $1,500 in total contributions annually, and (2) do not use a paid solicitor are exempt from registration. The District of Columbia’s law does not explain whether the total contribution calculation is for the District of Columbia-source contributions or gross contributions received, regardless of origin.

If You're Fundraising In Multiple States, Make Sure You Understand the URS

In the District, organizations which are required to register have the option of registering through the Unified Registration Statement (URS), which is a standardized charitable registration accepted in many states. Using the URS, rather than a state-specific registration form, has pros and cons. The URS typically must be submitted by mail. The District of Columbia has an online filing system and using that system may be more efficient than completing and mailing the URS manually.

Additionally, creating the online profile will save the organization time in preparing future annual reports, which are processed using the same system.

Evaluate Whether You'll Need a Registered Agent

The District of Columbia requires organizations incorporated in other states to appoint an in-state registered agent. D.C. Code § 44–104.02. This can be done through a commercial service or by appointing a person or entity who supports the organization.

Follow the Rules About Communicating with the Public

Although the District of Columbia does not require specific language for charitable solicitations, a charitable solicitor is always required to disclose, display, produce and possess a solicitor information card when conducting charitable solicitations. See D.C. Code § 44–1705(a). See also D.C. Mun. Regs. tit. 16, § 1307.1. Lastly, there is an exemption for the requirement of using a solicitor information card for churches and religious corporations that have been granted tax exemptions under § 501 of the Internal Revenue Code of 1986. See D.C. Code § 44–1703(b)-(c). See also D.C. Mun. Regs. tit. 16, §§ 1301-03.

Charitable Registration Statute

Charitable Registration Exemption Statute

Annual Report Requirement

Get Acquainted with State and Local Taxes and Exemptions

State and Local Taxes

*Important for all nonprofits doing business in the District of Columbia, whether incorporated in the District of Columbia or elsewhere

In the District of Columbia, organizations which have received a federal income tax exemption are also exempt from the District’s income tax. See D.C. Code § 47-1802.01(a)(3). However, to receive this exemption, organizations must apply. The exemption is not automatic. Although an organization may be exempt, if it has unrelated business taxable income (UBTI) that is subject to federal taxation, that UBTI will be subject to the District of Columbia’s income tax. See D.C. Code § 47-1802.01(a)(3).

It is also important to consider whether your organization might be eligible for franchise tax, sales and use tax, or property tax exemptions. In the District, federal § 501(c)(3) status does not automatically provide an exemption from sales, use, and property taxes. More information about the sales and use tax exemptions and applications is available on the District of Columbia Office of Tax & Revenue website and in the District of Columbia Municipal Regulations & Register. Federal 501(c)(3) status does qualify an organization for exemption from franchise tax if the organization first applies for a letter from the Mayor confirming such exemption. See D.C. Code § 47–1802.01(a)(3). An accountant or attorney can provide answers to specific questions regarding your organization’s eligibility for exemption.

Corporate Income Tax Statute

Washington, D.C. imposes a corporate income tax but offers an exemption to organizations with federal 501(c)(3) exempt status upon application. D. C. Code § 47–1807.02(a)

Corporate Franchise Tax Statute

What You Need to Know About Sales Tax

Sales and Use Tax: Washington, D.C. imposes a sales and use tax on religious organizations’ sales and only provides limited exemptions for certain items. Washington, D.C. imposes a sales and use tax on religious organizations’ purchases but generally provides a broad and comprehensive, entity-based tax exemption for 501(c)( 3) religious organizations’ purchases upon application. D. C. Code § 47–2001, et. seq.; D. C. Code § 47–2201, et. seq.

State Tax Treatment of Unrelated Business Income: D.C. Code § 47-1802.01(1).

State-Specific Special Requirements

Miscellaneous

Reviewed by

A volunteer attorney in the District of Columbia.

Legal Disclaimer

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.

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**Please note that the following state profiles are forthcoming and will be published soon:Hawaii and Washington