Nonprofit Asset Purchase vs Merger – Which Makes Sense for You?

When considering acquiring another nonprofit, there are two types of acquisitions that are typically considered – an asset purchase and a merger transaction. Several factors, including due diligence, payment of consideration, assumption of liability, assignment of contracts (including endowment agreements), existence of planned gifts, future operating goals and applicable state and federal laws, should be considered in determining the structure of the potential transaction.

Managing Conflicts of Interest

Whenever nonprofit directors, officers or staff members’ personal interests are impacted by their decision-making on behalf of the nonprofit, conflicts of interest can arise. All nonprofits encounter conflicts and all nonprofits need to understand effective conflict management.

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.

MOUs versus Contracts

Nonprofits tend to view MOUs as a kinder gentler way to document their intentions.  However, a contract is, at its core, an offer by one party to do something, an acceptance by the other party, and the promise to exchange something of value to seal the deal. Under this definition, the MOUs we see nonprofits create are almost always bare bones legal contracts.

Arizona’sTransaction Privilege Tax – How it Applies to Nonprofits

Non-profit organizations that are tax-exempt from federal and state income tax are not necessarily exempt from state and local taxes. In lieu of a sales tax, Arizona imposes a Transaction Privilege Tax (“TPT”) on seventeen separate business classifications. Certain tangible personal property and retail sales transactions are exempt from Arizona’s TPT.

The general rule is that sales made to churches, schools, and other non-profit organizations are taxed. However, under the Arizona Revised Statutes (“A.R.S.”) the following types of transactions are not subject to the State of Arizona’s Transaction Privilege Tax: