Charity Lawyer Blog
Nonprofit Law Simplified
The end of the year is a busy time for all nonprofits. Because of this, some obligations tend to slip through the cracks. Since the consequences can devastate a nonprofit, it is vital to ensure certain responsibilities are met by year-end.
Internal Revenue Code § 513(a)(1) excludes from UBIT unrelated trade or business activity which is performed without compensation (the “Volunteer Labor Exclusion”).
Tax-exempt organizations must allow timely public inspection of their last three annual information returns and their exemption application or risk steep penalties. Many nonprofits are caught off guard when they receive their first request. Below is a summary of what must be provided and when and what may be withheld.
Trademark protection is a valuable tool because it protects your nonprofit’s proprietary intellectual property from theft and unauthorized use. Owning a trademark allows you to prevent others who might try to capitalize on the goodwill your nonprofit has built from using your intellectual property without your permission. Trademarking intellectual property provides an extra layer of protection for your nonprofit’s reputation and goodwill because it ensures your brand identity is not being misused by nefarious copycats masquerading as your nonprofit.
Generally, organizations which are exempt from taxation are listed in § 501(c) of the Internal Revenue Code (“I.R.C.”). Instead, political organizations are governed under I.R.C. § 527. 501(c) organizations are exempt from income tax for various public policy reasons, such as helping to improve lives, strengthening communities and the economy, and lightening the burdens of government. To incentivize social good, the government subsidizes 501(c) organizations by eliminating their tax burden. Conversely, political organizations organized under § 527 do not provide charitable services or improve social welfare. Rather, their sole function is to influence the election of candidates for public office.
The group of individuals charged with the governance of nonprofits are often referred to interchangeably as directors or trustees. These terms are similar in that they both refer to the group of individuals who have a fiduciary duty to oversee the nonprofit organization. However, from a legal perspective, there are important distinctions.