We are used to hearing lots of folks – including yours truly – complain about the “nonprofit birth control” problem in this country. While it is true that too many nonprofits are formed for the wrong reasons – there are also many good reasons to form a new nonprofit. The trick is to learn to tell the difference. … Continue Reading
Nonprofit Law Jargon Buster – Directors and Officers
To folks who are new to nonprofit governance, grasping the difference between directors and officers of a nonprofit corporation can be confusing.… Continue Reading
Compensating Nonprofit Fundraisers
Many small nonprofits without sufficient funds to hire a fundraiser on a fee for service basis view percentage based compensation as a godsend. First, percentage based compensation permits the nonprofit to gain the assistance of a professional fundraiser without any risk to the nonprofit’s bottom line. In addition, the fundraiser is likely to be more motivated if they are paid based upon the funds raised.… Continue Reading
Diversions of Nonprofit Assets
The Washington Post has identified over 1,000 nonprofit organizations that have reported a “significant diversion” of assets. Its important to note that there are over 1,616,000 tax-exempt nonprofits in the U.S. today; thus, these filings represent less than 1% of tax-exempt nonprofits. It’s also interesting to note that a quick review of Arizona’s list includes only 21 organizations – most of which reported the diversions in a clear, transparent, and confidence inspiring manner.… Continue Reading
Negotiating and Documenting Nonprofit Naming Rights
For an increasing number of nonprofit organizations, the sale of naming rights have become a significant source of funding. The assets that can be named are limited only by a nonprofit’s imagination. Nonprofits commonly sell naming rights to programs, scholarship funds, endowed chairs, sections of a building, an entire facility, and even the name of the entity itself.… Continue Reading
Nonprofit Internships - Are the Legal?
Remember that unpaid internship you were so lucky to snag in college? Well, according to both a federal judge in Manhattan and the US Department of Labor (“DOL”) that coffee-delivering-foot-in-the-door opportunity may have violated the Fair Labor Standards Act and entitle you to compensation. But what if you worked for a nonprofit?… Continue Reading
Hurry up and Wait – Expediting Applications for Exemption
In general, 1023 exemption applications are processed in the order of receipt by the IRS, and expedited processing is available only if there is a “compelling reason” for it. There are reports that over 80% of requests for expedited processing are denied. If the organization needs its determination letter in a hurry because of circumstances that are within its control, the IRS is not likely to feel that the situation justifies expedited handling.… Continue Reading
Is It Time to Form A Corporate Foundation?
To better coordinate their philanthropy, many companies choose to create corporate foundations to organize, focus, track, and publicize their philanthropic efforts.… Continue Reading
Annual Report Email Reminders from the Arizona Corporation Commission
Just released this month, the Arizona Corporation Commission now offers annual report email reminders for entities incorporated in Arizona; all you have to do is sign up! All corporations, including nonprofits, incorporated in Arizona must file annual reports with the Arizona Corporation Commission. Due dates are a predictable one year from the date of incorporation; however, with the many things…… Continue Reading
New Interactive Form 1023 Available for Review
In an effort to make applying for tax exemption easier, the IRS Exempt Organizations (EO) office is developing an Interactive Form 1023, Application for Recognition of Exemption (“i1023”). … Continue Reading
Where The &%!?# Is My Exemption Application?
Just a few months ago, we were still telling clients to expect the process to take approximately one year. Now we are telling clients to prepare to wait two full years before they receive a determination letter.… Continue Reading
Nonprofit Dissolution: How to do it Right
Nonprofit corporations are often faced with tough decisions about their future. For a variety of reasons, a nonprofit’s board may determine that dissolution is the best answer. Causes range from dwindling resources to a reduction in the need for the nonprofit’s services. Should the Board determine that dissolution is the best option for a nonprofit, there are business and legal steps that must be taken to properly wind down and dissolve the nonprofit. … Continue Reading
Senate Finance Committee Report Identifies Issues and Proposes Solutions
On June 13, 2013, the Senate Finance Committee released a cooperative, bipartisan report comprised of suggestions on how (and why) to change government regulations on tax-exempt/nonprofit organizations and on the rules of charitable giving. The Committee’s Report set forth a number of issues that need to be addressed in the nonprofit and charitable giving arena, and offer a number of potential solutions.… Continue Reading
Entity Selection for Nonprofits
A major advantage nonprofit corporations have over other forms of charitable entities is if a nonprofit corporation is properly managed and operated, it can provide a greater degree of personal liability protection to its directors and officers. … Continue Reading
Tips for Nonprofit Employers Outsourcing Payroll Duties
Many nonprofits outsource payroll processing as a cost effective way to handle their payroll compliance and human resource functions. We have seen several cases where unscrupulous payroll service organizations have taken advantage of nonprofits so the advice below is timely for our clients.… Continue Reading
CLG is Proud to be a B!
We are often asked – what exactly is a B Corporation? B Corporations are a new kind of company that uses the power of business to solve social and environmental problems. You can think of a B Corporation certification as analogous to a Fair Trade or LEED certification, but for a business instead of a bag of coffee or a building.… Continue Reading
Considerations When Conducting Activities in a New State
From time to time we see nonprofit clients adding employees in states in which they haven’t operated before. Often it is just one employee, perhaps a development person working from their home or a shared workspace. Although hiring an employee in another state may not seem like a significant event, many businesses don’t realize that it triggers several compliance obligations.… Continue Reading
Arizona Abolishes Solicitation Registration
Arizona House Bill 2457 repeals Arizona’s solicitation registration laws and does away with the need for Arizona charities to file annual Charitable Organization Registration/Renewal forms with the Arizona Secretary of State.… Continue Reading
IRS Audits of Tax-exempt Entities
Although there are many reasons a nonprofit organization may be selected for an audit, several things heighten the chance of being selected. Things like irregularities on Form 990s, failure to file a Form 990, citizen complaints, having a relationship with another taxpayer currently being audited or receiving negative media attention can all increase your chance of being audited beyond the random internal IRS computer process.… Continue Reading
Arizona Adopts the Benefit Corporation
Arizona recently passed benefit corporation legislation (SB 1238). Arizona joins fifteen other jurisdictions including California, New York and the District of Columbia that have already passed legislation. While the new law is not effective until December 31, 2014, the Arizona benefit corporation offers social entrepreneurs an important new option to consider when forming a new venture.… Continue Reading