Category Archives: Arizona Nonprofit Corporations

DIY Nonprofit Law – Top Five Mistakes

The state form does not include the tax provisions that the IRS requires tax-exempt organizations to have. Would be founders that file using the state’s form Articles of Incorporation without including an attachment with the appropriate tax provisions will end up with a taxable nonprofit – a result almost no one intends. Continue Reading

Nonprofit Law Jargon Buster – What is a Quorum?

n the context of a nonprofit corporation, a quorum is the number of board members that must participate in a board meeting to permit official business to be transacted at the meeting. Continue Reading

When to Start a Nonprofit

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 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

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

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

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.”Continue Reading

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. Continue Reading

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.Continue Reading

Top 10 Tips To Avoiding Bedlam In The Boardroom

In the nonprofit realm, when conflict erupts it is usually in the form of disagreement with external stakeholders such as beneficiaries, funders, media and/or regulatory agencies. Continue Reading

Toyota Announces Return of 100 Cars for Good Program!

Toyota USA is beginning the second run of its widely successful philanthropic program, 100 Cars for Good, where Toyota will award up to 100 vehicles over the course of 100 days to 100 U.S. nonprofits (eligible 501c3 organizations nonprofit Native American or Alaskan tribes with sovereignty). The application submission period ends on March 26th, so be sure yourContinue Reading

Choosing a Fiscal Sponsor

A fiscal sponsorship is often a great idea for small charities that do not have the resources to apply for their own tax-exempt status. It allows them to receive tax deductible donations from donors to accomplish their mission without having to expend their resources on administrative duties. However, as the recent International Humanities Center scandal has shown, it can be dangerous to get into bed with a fiscal sponsor without first performing some basic due diligence.Continue Reading

Forming a 501(c)(3) Booster Club

Section 501(c)(3) of the Internal Revenue Code allows for tax exemption for organizations organized and operated to foster national or international amateur sports competition so long as no part of the net earnings inure to the benefit of any private shareholder or individual. A parent run booster club must be organized so that it benefits the entire class of athletes or participants and does not benefit certain individuals over others.Continue Reading

Start-up Nonprofits Beware: Ensure your Tax Preparer is Registered with the IRS

Charities should be aware that it is now illegal for anyone to receive compensation for preparing a return for someone else if they have not obtained a PTIN from the IRS first; a paid preparer who is not registered with the IRS is perpetrating fraud. If a charity chooses to work with an unregistered paid preparer, it opens itself up to IRS scrutiny and, possibly, denial of tax exemption plus additional attorneys’ fees to resolve any issues arising from the initial filing. Charities also need to keep in mind that the organization, regardless of whether or not a paid preparer was used, is ultimately responsible for the information in it’s exemption application.Continue Reading

Nonprofit Startups: Repurposing An Existing Nonprofit

Often prospective clients call us wanting to know whether we know of any dormant nonprofits that are going out of business that they could take over. The idea is that taking over an existing entity avoids the hassle and expense of incorporation, creating a governance structure and obtaining tax-exempt status for a brand new entity. Presumably, a new board of directors would be substituted in place of the old board and new officers would be elected.Continue Reading

Nonprofit Law Jargon Buster – Voting Members vs. Self-Perpetuating Boards

When considering whether to include voting members in a nonprofit corporation, it is important to understand that voting members of a nonprofit corporation are generally analogous to shareholders of a business corporation. Voting members have statutory rights under state law; therefore, it is important to clarify the right of members to avoid inadvertently creating a voting membership class and vesting ultimate control in the members when that is not your intention. Once a membership has been established, it may be difficult to eliminate, and it may be impossible without the consent of the members.Continue Reading

Nonprofit Law Jargon Buster: What is Proxy Voting?

Proxy voting is legal mechanism for a member of a voting body to delegate his or her voting right to another member of the voting body. In the context of nonprofit corporations, voting bodies include the board of directors as well as voting members. Some nonprofit corporations rely on proxy voting because it allows directors or members who have confidence in the judgment of other directors or members to vote for them and allows the voting body to convene a quorum of votes when it is difficult for all members of the voting body to attend. In proxy speak, the individual delegating his or her voting authority is referred to as the “principal” and the individual exercising the delegated voting authority is referred to as the “proxy” for the principal.Continue Reading

Nonprofit Business Planning – Steal All the Underpants!

Finding support and funding in the nonprofit world is often more challenging than finding funding for a for-profit venture. In addition, contrary to the belief of many nonprofit founders, foundation grant dollars do not grow on trees and are, in fact, the most competitive and scarce source of funding available.Continue Reading

Nonprofit Law Jargon Buster: Social Welfare Organizations

A social welfare organization is an nonprofit organization exempt under Code Section 501(c)(4). It is similar to a 501(c)(3) organization in that its income is generally exempt from tax and is subject to the same limits on private inurement and excessive payments to insiders. It is different, however, in that contributions to it are not deductible as charitable contributions and it is able to conduct unlimited lobbying activities. Section 501(c)(4) exempts:

* nonprofit civic organizations operated exclusively for the promotion of social welfare; and
* local associations of employees whose earnings are devoted to charitable, educational, or recreational purposes.Continue Reading