Tax-exempt financing offers a powerful tool for 501(c)(3) organizations to fund essential capital improvements at significantly lower interest costs compared to conventional debt options. By issuing tax-exempt bonds, organizations can tap into a pool of investors who are not subject to federal income tax on interest payments, allowing for lower interest rates.
While the calendar year is the default option, nonprofits have the flexibility to choose a different fiscal year that aligns better with their operations and reporting needs.
n the complex landscape of nonprofit corporations, the role of the board of directors is crucial in steering the organization towards its mission. To ensure transparency, accountability, and sound decision-making, boards must establish and implement robust policies and procedures.
Trademark protection is essential for nonprofits to protect their proprietary intellectual property and reputation.
Taxable nonprofits are those entities that are organized as nonprofit entities but do not elect to become tax-exempt.
A corporation’s governing documents are fundamental to how the organization operates. In most states, a nonprofit corporation’s foundational documents generally include Articles of Incorporation and Bylaws. Though, states differ in verbiage.
The extent to which a board participates in its daily operations varies. Whether your board is a hands-on board or a policy-making board, several fundamental decisions must always remain in the board’s hands:
A sizable amount of the funding received by nonprofit organizations consists of restricted gifts meant for specific programs or projects. Many nonprofits use unrestricted operating revenue to cover the cost of managing their restricted funds, leaving the organization with insufficient unrestricted cash. These management costs, however, can often be met by the restricted fund itself.
A nonprofit’s board of directors is responsible for establishing the compensation (salary and benefits) for the chief executive (typically referred to as either the Executive Director, the CEO, or the President). Although the IRS does not provide specific dollar amounts or an acceptable range of compensation levels, they stipulate that compensation must be reasonable and not excessive; “reasonable” is defined as the value that would ordinarily be paid for like services by like enterprises under like circumstances.
Ultra vires is a Latin term conveying that acts outside the permissible scope of authority set forth in a corporation’s governing documents are an unauthorized activity that cannot be ratified by its Board of Directors. Although many states have effectively abolished this common law concept by granting corporations significant autonomy, ultra vires continue to be an important doctrine in the tax-exempt nonprofit context because such organizations are required to limit their powers to qualify for tax exemption.
Most states require you to register your organization if you solicit donations from their residents. Many states also require registration if your organization collects substantial or ongoing donations from their residents, even if you aren’t specifically targeting donors in that state. Download our comprehensive list of each state’s requirements.
Download our free guide to learn about the many elements needed to run a successful nonprofit organization, as well as how to avoid common pitfalls and mistakes.