At a baseline, your board needs to meet with sufficient frequency to adequately carry out your basic fiduciary and governance duties. This includes hiring the CEO and monitoring the CEO’s performance, creating a vision and direction for the nonprofit, setting goals and monitoring their progress, developing policies and procedures, ensuring sufficient financial resources, and generally safeguarding the organization and its mission.
Does your nonprofit serve a charitable class? It matters, because, to obtain and maintain IRS 501(c)(3) tax-exempt status, non-profit corporations […]
Beginning January 1, 2020, updated salary thresholds for overtime will become law, resulting in over 1 million Americans becoming eligible […]
In non-profit finance and accounting, restricted contributions are those given by donors in which the donor intends the funds to be used for specific programs or purposes. As in all matters regarding donations, the stated intent of the donor rules when it comes to the purposes for which donation revenue can be allocated. If the donor allocates funds for program B, and states verbally or in writing that such funds cannot be used for administrative costs (back office, IT support, human resources, insurance, operations, etc.) to support such programming, than they cannot be used for that purpose. However, if no such explicit statement is made by the donor, non-profits can use a reasonable amount of the restricted funds received to pay for administrative costs allocable to the program designated by the donor.
In a recent post, Non-Profit Urban Myths Debunked, we discredited the myth that non-profit board members cannot be paid for their service. We related that IRS regulations do allow non-profit board members to be compensated for their services. We explained: “First, non-profits can—and many do—enact board reimbursement policies for reasonable expenses incurred in the performance of board duties, such as travel to organization events, purchasing supplies for board business out of pocket, etc. Second, although most non-profit board members serve as volunteers, board members can be paid as board members for their services.”
There are several misconceptions about the legal requirements of non-profits that not only pervade the general public, but also creep their way into the media and in non-profit governance and management. Below are a few such myths followed by a debunking overview.
The Service announced in Rev. Proc. 2018-38 that it would no longer require most tax-exempt organizations to report the names and addresses of substantial contributors. The change did not apply to purely public charities exempt under Sec. 501(c)(3). Substantial donor information is currently reported on Schedule B, Schedule of Contributors, of Form 990, Form 990-EZ, Form 990-PF and Form 990-BL. The ruling reduced transparency with respect to substantial contributors and was widely seen as a boon to dark-money forces seeking to influence our elections.
The new Revenue Procedure was swiftly challenged in court. Montana and New Jersey filed suit to challenge the rule change on the basis that the federal data is shared with the states and they rely on the substantial-contributor information in enforcing their own laws. On July 30, 2019, a federal district court in Montana ruled that the IRS violated federal law when it adopted Revenue Procedure 2018-38.
The main potential problem areas for nonprofits regarding private inurement are: 1) Compensation agreements for executive employees or trustees; 2) Business relationships with entities in which an organization insider or insider’s family member has an interest; and 3) Benefits paid to an insider or a member of the insider’s family as a member of the charitable class the organization serves. Fortunately, there are steps that non-profits can take to ensure these improper benefits do not occur.
Nonprofit bylaws govern the internal operations of the organization. Too many nonprofits make the mistake of ignoring their bylaws. In […]
In July 2019, the Arizona State Board for Charter Schools (“Board”) approved several measures designed to make the charter schools it sponsors more transparent to the public. The Board also approved an implementation plan that will require all of the charter schools it sponsors to adopt these new charter school transparency requirements for fiscal year 2020.
Nonprofits are increasingly subject to growing regulatory burdens and high expectations from donors, clients and the public. One way nonprofit […]
The establishment and maintenance of a nonprofit endowment fund can be a very important factor in ensuring the sustainability of […]
Many nonprofits question whether they should use an offer letter or employment agreement for new employees. Understanding the general use […]
The Board/CEO relationship can make or break the success of a non-profit organization. The Board of Directors is the collective […]
Board members are passionate, responsive, driven, and engaged. A nonprofit board member usually has a strong interest in the work […]
We have written about how to form chapters and affiliates, but sometimes nonprofits ultimately decide they have created too many […]
The non-profit entity has been formed, the board of directors is in place, and your bylaws have been written. You’re ready […]
When setting up a non-profit organization, many people overlook the importance of crafting nonprofit bylaws that are customized to the […]
You’ve decided to incorporate – congratulations! This is a big step in any non-profit business venture. When you’re finished, your organization […]
A nonprofit embezzlement incident is emotionally devastating, causing nonprofit leaders to question their own judgment and management ability. It erodes […]