Washington
Updates
What You’ll Learn
If you’re a nonprofit in Washington, or you’re a nonprofit considering fundraising or other activities in Washington, you must understand the requirements that Washington has established for nonprofits operating in the state.
How can you become familiar with these laws? Where should you start?
Start here. This state 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 Washington.
Getting to Know the State Nonprofit Corporation Law
Background
*Important primarily for nonprofits incorporated in Washington
Nikita was a peasant of about fifty from a neighboring village, ‘not a manager’ as the peasants said of him, meaning that he was not the thrifty head of a household but lived most of his time away from home as a laborer. He was valued everywhere for his industry, dexterity, and strength at work, and still more for his kindly and pleasant temper. But he never settled down anywhere for long because about twice a year, or even oftener, he had a drinking bout, and then besides spending all his clothes on drink he became turbulent and quarrelsome.
- Master and Man, Leo Tolstoy
When reading a novel, we get to know a fictional character by the author’s description of him or her. The author tells us what the character will look like, what his or her purpose will be, how he or she will act, and how he or she will make decisions.
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 what the organization will be called, what its purpose will be, how the nonprofit will act, and how it will make decisions.
To get to know your own nonprofit, you must be familiar with the sections below.
State Nonprofit Corporation Law
Corporate Governance
Conflict Transactions: See Wash. Rev. Code § 24.03A.615; see also for-profit Corporation Act; Need to review the basic best practices for conflicted transactions? See Bylaws Module 14: Conflicts of Interest.
Director Standards of Conduct: Wash. Rev. Code § 24.03A.495; Need a refresher on the role of directors? See Bylaws Module 6: Directors.
Members - Eligibility and Statutory Powers: Wash. Rev. Code § 24.03A.315 et. seq.; Not sure what a “member” is? Need to review the basics? See Bylaws Module 5: Members.
Indemnification: Wash. Rev. Code § 24.03A.630; Not sure what “indemnification” is? Need to review the basics? See Bylaws Module 8: Indemnification.
For Religious Nonprofits
Nonprofit Religious Corporations Act: Washington’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. See Wash. Rev. Code § 24.12; 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 law permits a director, in the fulfillment of the director’s fiduciary duties, to rely only on the opinions of individuals retained by the corporation, and does not expressly allow a director to rely on guidance from religious figures within his or her faith tradition. Wash. Rev. Code § 24.03A.495
Understanding Religious Liberty in this State
Case Study
*Important for all nonprofits doing business in Washington, whether incorporated in Washington 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 state or local government (like the city or county) makes laws that could conflict with your organization’s free exercise of religion or its sincerely-held religious beliefs.
For example, an ordinance might purport to 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. The United States Constitution protects your organization’s freedom to do this.
So what do you need to do? Be aware of the laws below. If any of them 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
State Religious Freedom Restoration Act: Washington has not enacted a RFRA and has enacted nondiscrimination laws that conflict with the beliefs of many religious organizations (but see Washington Constitution, Art. I, § 11). Not sure what a “religious freedom restoration act” is? Click here to learn the fundamentals.
State Constitutional Protections for Free Exercise: The Washington Constitution has been interpreted by the Washington Supreme Court to provide stronger protections for religious free exercise or worship than the federal First Amendment. State Const. , art. I, § 11, art. XXVI.
State Blaine Amendment: The Washington Constitution contains a Blaine Amendment that broadly restricts faith-based organizations’ freedom to participate in public benefit programs on the same terms as similarly situated secular institutions. Current U.S. Supreme Court precedent has rendered this language ineffective, but it could become effective in the future if Court precedent changes. State Const. art. I, § 11; Not sure what a Blaine Amendment is? Review the basics here.
Other Relevant State Laws and Regulations
Religious Freedom and Public Accommodation Laws: Washington’s nondiscrimination laws generally restrict religious freedom for religious organizations that offer public programming and facilities and provide accommodations or exemptions but only for a narrow spectrum of religious organizations, such as educational facilities operated by a religious institution. See Wash. Rev. Code § 49.60.010, et. seq.; see also Washington Human Rights Commission webpage; Not sure what a public accommodation law is or what it means for your organization’s religious liberty? Learn the basics in this article which discusses the issue in the context of the case Fulton v. City of Philadelphia.
Key Employment Laws and Regulations
Employment Discrimination Laws, Regulations, and Exemptions: See Wash. Rev. Code § 49.60.180, et. seq.; esp. Wash. Rev. Code § 49.60.040(11). Need to review the basics on religious freedom and employment matters? Walk through a self-audit of best practices here.
Conducting Activities or Programs in this State
Understanding the Business Registration Requirement
*Important primarily for nonprofits doing business in Washington but incorporated elsewhere
Depending on the type and volume of activities your organization has in Washington, your 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. Not every out-of-state organization needs to register. An attorney can assist the 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.
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 Washington and Foreign Nonprofits
Not sure what “charitable registration” is? Need to review the basics? Read this article for a refresher.
Under Washington law, most organizations must register before soliciting in Washington. How do you know if your organization is soliciting in Washington? Under Washington law, your organization is soliciting any time you make a request to a Washington resident for a donation, even if the request is made through the internet.
These requirements apply not only to secular organizations, but also to most faith-based nonprofits.
However, if your faith-based nonprofit is an organization such as a church that is exempt from filing the IRS Form 990, you might be eligible for an exemption from the charitable registration requirement. For these groups, the exemption is automatic.
Your organization might also be exempt from the charitable registration requirement if the organization (1) is volunteer-run, (2) receives less than $50,000 in donations from the general public annually, and (3) does not use a professional solicitor. The statute does not specify whether the $50,000 maximum is for Washington-source contributions only or for contributions from all sources.
If You're Fundraising In Multiple States, Make Sure You Understand the URS
If you will be registering in multiple states, your organization may want to complete the Washington charitable registration requirement by using the Unified Registration Statement, which is a standardized charitable registration accepted in many states.
You should consider the following pros and cons when deciding whether to use the URS. If you use the URS, you must complete the form and attachments manually and mail the completed form and related checks to Washington. If you make any mistakes in the form or in the payment, you may end up delaying the process and having to engage in additional communication with the Washington Secretary of State to complete the registration.
If you use the URS, you will not be able to use Washington’s online filing option for the initial registration. When using Washington's online application, you face a lower risk of omitting information or making mistakes in the payment because the system will not allow submission if all information and payment are not complete. Additionally, if you use the online option for the initial registration, the system will save the submission and that can streamline the renewal process in the future.
Evaluate Whether You'll Need a Registered Agent
Some states have laws that 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.
Follow the Rules About Communicating with the Public
This state requires organizations to include specific statements whenever the organizations is requesting donations (also called "charitable solicitation"). See Wash. Rev. Code 19.09.100. Below is sample language to use with charitable solicitations in this state:
This solicitation is made by *REPRESENTATIVE NAME* on behalf of *ORG*, (Washington Charities No. *NUMBER*). For copies of *ORG*’s financial filings and other information, please contact the Washington secretary of state at https://www.sos.wa.gov/charities/ or call (800) 332-GIVE or (360) 725-0378.
Charitable Registration Statute
Charitable Registration Exemption Statute
Annual Report Requirement
Washington Annual Charitable Organization Reporting Requirement: Wash. Rev. Code § 19.09.085; see also Wash. Rev. Code § 19.09.075
Get Acquainted with State and Local Taxes and Exemptions
State and Local Taxes
*Important for all nonprofits doing business in Washington, whether incorporated in Washington or elsewhere
In Washington, nonprofits are taxed like for-profit businesses and should complete an annual return. The state does not have a corporate income tax but does have a similar tax called the “business and occupations tax.”
It is also important to consider whether applying for sales and use tax and property tax exemption would be appropriate for your organization. An accountant or attorney can provide specific information about whether these taxes impact your organization.
Corporate Income Tax Statute
Washington imposes a statewide business and excise tax, provides no automatic exemptions, and offers only fragmented exemptions upon application. Wash. Rev. Code § 82.04.030; Wash. Rev. Code § 82.04.220.
Corporate Franchise Tax Statute
This state does not have a corporate franchise tax.
What You Need to Know About Sales Tax
State Tax Treatment of Unrelated Business Income: Nonprofits and 501(c)(3)-exempt organizations are not generally exempt from Washington state business and occupation tax, regardless of whether the income source is related or unrelated to the organization’s exempt purpose.
Sales and Use Tax: Washington imposes a sales and use tax on religious organizations’ sales and purchases and only provides limited exemptions. Wash. Rev. Code § 82.08, Wash. Rev. Code § 82.12
State Sales and Use Tax and Required Registrations: Washington State Department of Revenue - Taxes & Rates
State-Specific Special Requirements
Miscellaneous
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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