Received a deficiency letter from a state charity office? Don’t panic. These letters are fixable, but the response requirements are specific and time-sensitive. We know exactly how to decode what states really want and ensure proper resubmission.
STATE DEFICIENCIES
Understanding Deficiency Letters
A deficiency letter means the state reviewed your charitable solicitation filing and found it incomplete, incorrect, or missing required information. While this feels alarming, deficiency letters are actually an opportunity – the state is giving you a chance to correct the issues rather than rejecting your application outright.
With over 15 years of experience responding to deficiency letters across multiple states, we know how to interpret state requirements, gather the right documentation, and ensure your resubmission gets approved quickly.
We typically respond within 24 hours and prioritize time-sensitive deficiency responses.
Common Deficiency Letter Issues:
📊 Financial Information Problems
Incomplete Form 990 data: Missing revenue figures, incorrect expense categories, or outdated returns
Audit requirements: States requiring audited financials when you submitted reviewed or compiled statements
Revenue thresholds: Misunderstanding which financial documents are required based on your revenue or contribution levels
Multi-year discrepancies: Financial data that doesn’t align across multiple filing years
📋 Documentation Deficiencies
Missing attachments: Required schedules, financial information, or supporting documents not included
Incorrect forms: Using outdated versions or wrong form types for your organization size
Signature issues: Electronic signatures not accepted, or wrong authorized person signing
Corporate status: Proof of good standing or corporate registration issues
🏢 Organizational Information Gaps
Board member details: Incomplete director listing or missing required information
Organizational changes: Name changes without supporting legal documentation, or names not matching IRS Determination Letters
Bylaws updates: Indicating bylaw changes on forms but failing to include updated bylaws
Fundraising methods: Incomplete descriptions of solicitation methods, fund usage, and operating names – some states require DBA filings
💰 Fee and Payment Issues
Incorrect fee calculation: Wrong sliding scale tier or missed fee adjustments
Payment method problems: Check issues, credit card failures, or processing delays
Late fee assessments: Additional charges that weren’t included in original payment
📅 Timing and Deadline Confusion
Filing period errors: Wrong fiscal year or reporting period selected
Renewal vs. initial confusion: Using wrong forms for your filing type
Extension requirements: Missing deadlines that require additional documentation
Why Deficiency Letters Happen
State-Specific Requirements:
Every state has unique filing requirements, forms, and documentation standards. What’s acceptable in one state may be deficient in another, even for identical information.
Complex Instructions:
State filing instructions can be confusing, contradictory, or assume knowledge that most nonprofits don’t have. Even experienced organizations can misinterpret requirements.
Changing Regulations:
State requirements evolve regularly. Forms get updated, fee structures change, and documentation requirements shift without always being clearly communicated.
Previous Provider Mistakes:
If you’ve switched compliance providers, previous provider errors or incomplete work can surface in deficiency letters months or years later.
Our Deficiency Response Process:
Step 1: Complete Analysis
We thoroughly review your deficiency letter and original filing:
- Decode state requirements – translate bureaucratic language into clear action items
- Identify root causes – determine if this is a simple oversight or systemic issue
- Review your filing history – check for patterns that might affect other states
- Assess deadline urgency – prioritize based on response timeframes
Step 2: Documentation Strategy
We develop a comprehensive response plan:
- Gather required information – exactly what the state needs, in the format they want
- Prepare supporting documents – proper attachments, signatures, and certifications
- Address underlying issues – fix problems that could trigger future deficiencies
- State-specific formatting – ensure compliance with each state’s unique requirements
Step 3: Professional Response Preparation
We handle all aspects of your deficiency response:
- Complete corrected filings with all required information and documentation
- Professional correspondence explaining any circumstances that led to the deficiency
- Proper submission method – electronic, mail, or hand delivery as required by each state
- Follow-up tracking to ensure receipt and processing
Step 4: Ongoing Monitoring
After submission, we continue to manage your case:
- Track processing status with state agencies
- Respond to additional questions if states need clarification
- Ensure final approval and good standing restoration
- Update your compliance calendar to prevent future deficiencies
What Makes Deficiency Responses Complex
State-Specific Nuances:
- California requires specific financial statement formats and electronic submission protocols
- New York has strict audit requirements and detailed board member disclosure rules
- Florida emphasizes fundraising method descriptions and solicitation materials
- Pennsylvania focuses on fee calculations and corporate status verification
Time Sensitivity:
- Response deadlines typically range from 30-90 days from letter date
- Processing delays can occur if responses are incomplete or incorrect
- Registration suspensions may happen if deadlines are missed
- Resubmission requirements can restart the entire review process
Documentation Standards:
- Financial statements must match state-specific requirements (audit vs. review vs. compilation)
- Form versions must be current – outdated forms trigger additional deficiencies
- Signature requirements vary by state and organization type
- Supporting documents must be properly certified and formatted
Common Deficiency Response Mistakes
What NOT to Do:
- Ignore the letter hoping it will go away (it won’t – it gets worse)
- Submit partial responses thinking you can send the rest later
- Use generic explanations instead of addressing specific state concerns
- Miss deadlines assuming you can get extensions easily
- Guess at requirements rather than researching state-specific needs
Why Professional Help Matters:
- We know what states really want beyond what’s written in confusing instructions
- We prevent costly resubmission cycles by getting it right the first time
- We understand state processing quirks that can delay or complicate responses
- We maintain relationships with state agency staff who can provide guidance
Deficiency Prevention: What We Implement
After Resolution:
- Comprehensive filing review to identify potential issues before submission
- State-specific checklists customized to each jurisdiction’s requirements
- Regular compliance monitoring to catch changes in state requirements
- Proactive communication about upcoming deadlines and requirement changes
Quality Assurance:
- Multi-point review process before any filing submission
- State requirement updates incorporated into all future filings
- Documentation standards that exceed minimum state requirements
- Relationship management with state agency contacts for guidance
Ready to Resolve Your Deficiency Letter?
Don’t let a deficiency letter derail your compliance status or delay your ability to fundraise. Professional deficiency response ensures you address state concerns completely and accurately the first time.
Contact us today for deficiency letter help:
Give us a call
Send us an email
The sooner we analyze your deficiency letter, the more time we have to prepare a comprehensive response. State deadlines are firm – but professional help is available.
Dealing with multiple deficiency letters? We handle complex, multi-state deficiency situations and can coordinate responses across all affected jurisdictions. Ignoring deficiency letters can escalate to penalties and even registration suspension. Facing penalties along with deficiencies? Learn about our penalty resolution services → for comprehensive compliance crisis management. Already facing suspension or revocation? Learn about our reinstatement services →