Tax-exempt organizations (other than private foundations) have the ability to influence legislation either as an insubstantial part of their activities or by making the 501(h) election and measuring their lobbying expenditures. However, state and federal laws often require principals and their lobbyists to register prior to engaging in lobbying and file expenditure reports.
The IRS has announced a new relief program for employers that choose to come forward before they are audited by the IRS. This relief comes in the form of a voluntary program that permits employers to reclassify their workers and avoid being audited on payroll taxes related to misclassified workers for prior years. The program is known as the Voluntary Classification Settlement Program (Settlement ProgramÂť).
[T]o determine who owns a commissioned work, an employer must first determine whether the creator of the work is an employee or an independent contractor. Generally, if the creator of the work is an employee, there is a presumption that the employer owns the copyright. If the creator of the work is an independent contractor, the presumption is that the independent contractor owns the copyright unless there is a work made for hire agreement and the work falls into one of the nine categories of commissioned works.
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.
In light of the heightened interest of the I.R.S., Congress, state regulators, and the media in executive compensation, as well as heightened penalties, exempt organizations should strongly consider increasing the amount of time and attention they devote to investigating, deliberating, documenting, and reporting executive compensation. To facilitate the careful review that is demanded, tax-exempt organizations that employ an executive staff should consider implementing the following practices and procedures:
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.
The idea behind Code Section 502’s prohibition on exemption for Feeder Organizations is that one cannot convert a for-profit business into a charity simply by contributing all of the profits to charitable organizations. The policy rationale is that permitting businesses to operate on a tax-free basis just because they donate their proceeds to charity permits unfair competition in the marketplace.
Many boards include directors who are serving ex officio.Âť There is widespread misunderstanding regarding the meaning of the term. Ex officio members of a board are serving on the board “by reason of their office,” rather than by being elected or appointed to the position.
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.
The Marc Center is a thriving, creative and innovative nonprofit that is thinking strategically about how to achieve its mission through both nonprofit and for-profit ventures that provide vocational opportunities for its clients. The Marc Center is providing vocational opportunities in the areas of food service, packaging services, mailing, filing, and other low tech vocations. During my visit, I had a delicious lunch at a Banner Health facility where a Marc Center of Mesa subsidiary is in charge of food service and even provides catering. Across the country, ventures like these are commonly referred to as double bottom line “social enterprises” because they are making money and fulfilling a social mission at the same time.
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