We are often asked whether nonprofits must follow Arizona open meeting law (“OML”). Generally, nonprofits are not required to follow open meeting law; however, there are some exceptions – most notably charter schools. Charter schools are treated as public institutions for OML purposes because they are both funded with state tax dollars and are overseen by the state.… Read the full article
IRS Launches Compliance Check of 1300 Self-declared 501(c)(4),(5) and (6) Organizations
As the IRS Exempt Organizations division indicated in its 2013 work plan, it is conducting a compliance check of self-declared tax-exempt organizations. The IRS recently mailed over 1,300 questionnaires to self-declared Section 501(c)(4), 501(c)(5), and 501(c)(6) organizations. The project is part of the IRS’ plan to gather information about self-declared exempt organizations, determine whether self-declared exempt organizations are complying with applicable tax-exempt law, and increase voluntary compliance.… Read the full article
Top Ten Tips for Preventing Theft and Embezzlement
It seems like a new story breaks every week about a charity being exploited by an insider. Charities lose an estimate of 7%-13% percent of their annual profits to theft, embezzlement, or fraud, to the tune of approximately 40 billion dollars a year.… Read the full article
Obtaining Tax-exempt Status for Your Church
Religion is a charitable purpose and therefore many types of religious organizations qualify for tax-exempt status. However, a “church” is entitled to special privileges under the law.… Read the full article
IRS Unveils Temporary Expanded Worker Classification Settlement Program
t the end of 2012, the IRS introduced a voluntary classification settlement program (“Settlement Program”) to provide an incentive for employers with misclassified workers to comply.[1] The Settlement Program temporarily relaxes previous requirements and provides additional tax savings for those who qualify. … Read the full article
Better Safe than Sorry: Nonprofits’ use of Waivers, Releases and Disclaimers
Many nonprofits use some form of waiver or release in their programs. Typically, volunteers and participants are asked to assume the risk of participation and hold the organization harmless if they are injured. However, waivers and releases are not foolproof as many courts do not favor them. Still, they are often successful, and nonprofit organizations have nothing to lose in requiring them.… Read the full article
Charitable Solicitation Laws – Frequently Asked Questions
The major driving force behind becoming a tax-exempt nonprofit is the ability to solicit tax-deductible donations; yet, too many nonprofits planning to conduct any form of organized fundraising are unaware of their state’s registration laws. … Read the full article
Make it Your Business to Know if Your Corporation is “Doing Business”
An often overlooked aspect of corporate law is the concept of “doing business” in a particular jurisdiction. This determination comes into play when the corporation’s activities go beyond the borders of its home state or “domicile.”… Read the full article
Nonprofit Volunteers – Minimizing the Risks
Minimizing legal exposure is important because volunteers’ acts are generally imputed to the nonprofit organization. Specific, written volunteer policies and procedures are critical. Important components of a good volunteer program include clear and forward-thinking volunteer policies, thorough volunteer applications, screening, and management. … Read the full article
Best of CharityLawyer
Every year we like to take stock of our most popular posts to evaluate what our readers are finding most interesting and useful on the blog. What follows is a list of CharityLawyer’s top 10 posts for 2012 measured by page views:… Read the full article
403(b) Plans – Voluntary Correction Program Updated and Expanded
The IRS recently issued Rev. Proc. 2013-12 which updates its Employee Plans Compliance Resolution System. As anticipated, the new EPCRS allows plan sponsors to retroactively correct the failure to adopt a written plan document for a 403(b) plan by December 31, 2009.… Read the full article
Nonprofit Law Jargon Buster: What is the Doctrine of Cy Pres?
From time to time, charities are faced with what to do with a restricted gift when the terms of the donor’s restriction can no longer be fulfilled. The doctrine of cy pres permits the courts to modify the charitable purpose of a charitable trust to a purpose that reasonably approximates the designated purpose, where the designated charitable purpose becomes unlawful, impossible, or impracticable to carry out or where it becomes wasteful to apply all of the property to the designated purpose. … Read the full article
Is it time for a Legal Audit?
A legal audit is an overview of an organization’s non-financial compliance, governance and risk management issues. Organizations typically consider a legal audit when new management takes over and wants to ensure they are starting with a clean slate or the in the wake of a costly mistake. … Read the full article
Nonprofit Corporations: Eight Items to Do By Year End
Hold Annual Meeting. Most corporate bylaws require that the directors meet at least annually. Many state nonprofit corporation statutes also require an annual meeting. The annual meeting is typically the meeting where the board (or voting members) fill vacancies on the board, appoint officers, approve budgets, circulate and sign conflict of interest disclosures, and ratify actions taken during the year.… Read the full article
The Road To Hell Is Paved With Good Intentions: Top 10 Common Pitfalls for Employers
Sure, it takes a good deal more paperwork and money to maintain an employee versus using an independent contractor. But it’s more than worth it to make sure you are properly categorizing an employee. “Independent Contractor” does not have a finite definition under the law. Certain liabilities also don’t apply to independent contractors, such as worker’s compensation, FMLA, paid family leave benefits, unemployment insurance, and other various potential benefits. So, it can be tempting to try to wedge a person into an independent contractor position when they actually should be classified as an employee. … Read the full article
Abolishing Nonprofit Voting Members – Easier Said than Done
Voting memberships are most useful when an organization wishes to be democratically controlled by its constituents. By way of example, voting membership structures are commonly used by member driven organizations such as social clubs, churches, chambers of commerce and trade associations. In such cases, the organization exists to serve its members and its makes sense… Read the full article
Self-Policing Abuse Cases Can Lead to Catastrophic Failure by Kimberly Witherspoon
Self policing allows serious problems to fall through the cracks. The most significant failure of self-policing seems to be a knee-jerk desire to protect the organization rather than the purported victim. This results in a failure to report allegations of abuse to the authorities, and instead be willfully blind to crimes committed against children. Institutional behaviors of denial, irresponsibility, cover-ups and possible criminal behavior seem to thrive in a self-policing organization. Jerry Sandusky’s case is a clear example of this willful blindness. Tolerating or ignoring abuse to children under the care of charitable organizations that are supposed to nurture and protect them undermines the noble purpose of such entities and thus weakens the organization. … Read the full article
Arizona Corporation Commission Changes Impact Nonprofit Corporate Filings
We applaud the ACC’s sensitivity to nonprofit and tax-exempt issues and we suspect these changes will lead to fewer filings with inappropriate tax provisions. However, the downside is that the free ACC forms are no longer appropriate for nonprofits who wish to qualify for tax-exempt status. … Read the full article
Getting the Most out of Board Meetings by Kimberly Witherspoon
When Board members gather, what are ostensibly shared interests and goals may in fact consist of different or divergent underlying priorities making it difficult to reach consensus. Here is a short list of proven tools to overcome differences and successfully accomplish the goals that will further the interests of your Board The Board Chair Should… Read the full article