Nonprofit Law Jargon Buster: Social Welfare Organizations

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.

Carter Law Group Recognized by U.S.News – Best Lawyers®

“We are excited to receive the highest ranking from U.S.News – Best Lawyers® “Best Law Firms” rankings. When I made the decision earlier this year to build my own firm so that I could serve clients in new and better ways, I did not expect to receive national recognition this early on.” said Ellis Carter, founder of Carter Law Group. “The distinction of being selected as one of the best nonprofit/charity law firms in the country is a wonderful affirmation that our efforts to serve clients in innovative ways and create a more socially responsible model are working.”

Nonprofit Jargon Buster Fiscal Sponsorship vs. Fiscal Agency

The term “Fiscal Sponsorship” describes an arrangement between a non-profit organization with 501(c)(3) tax exempt status and a project, often a new charitable effort, conducted by an organization, group, or an individual that does not have 501(c)(3) status. Fiscal sponsorship permits the exempt sponsor to accept funds restricted for the sponsored project on the project’s behalf. The sponsor, in turn, accepts the responsibility to ensure the funds are properly spent to achieve the project’s goals. This arrangement is useful for new charitable endeavors that want to “test the waters” before deciding whether to form an independent entity as well as temporary projects or coalitions that are looking for a neutral party to administer their funds.

Social Enterprise in Action

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.

Worker Classification – Independent Contractors or Employees ?

The distinction between employee and independent contractor lies in the ability of the employer to determine how work will be performed. For identification purposes, an employee is generally considered to be anyone who performs a service for the employer if the employer can control what will be done and how it will be done. In contrast, an independent contractor is someone who follows an independent trade and offers their services to the public. The person for whom the services are performed has the right to control or determine the result of the work, not how that result is achieved.

Small Tax Exempt Organizations: Extension of Time to File Delinquent Form 990s

Two types of relief are available for small exempt organizations – a filing extension for the smallest organizations required to file Form 990-N, Electronic Notice (e-Postcard), and a Voluntary Compliance Program for small organizations eligible to file Form 990-EZ , Short Form Return of Organization Exempt From Income Tax. Small organizations required to file Form 990-N simply need to go to the IRS website, supply the eight information items called for on the form, and electronically file it by Oct. 15, 2010.

Under the Voluntary Compliance Program, larger tax-exempt organizations eligible to file Form 990-EZ (but not eligible to file Form 990-N) must file their delinquent annual information returns by October 15 and pay a compliance fee which is between $100 and $500 depending upon the organization’s revenues. Details about the VCP are on the IRS website , along with frequently asked questions.

Half The Sky – Turning Oppression Into Opportunity For Women Worldwide

Half the Sky, by Nicholas Kristof and Sheryl WuDunn, is a deeply disturbing book that somehow manages to disgust, inspire and move the reader to action at the same time. The book is a thoroughly researched portrait of the systematic cultural suppression of women around the world on a scale that is virtually unimaginable to the average American. The authors confront the harsh realities of taboo topics such as female trafficking, fistula and AIDs epidemics, rape as a war tactic, honor killings, vaginal cutting, and blatant educational and economic bias.

Excess Benefit Transactions and Intermediate Sanctions

Before 1996, the only option the IRS had when faced with a tax-exempt organization that had violated the private inurement rules was to do nothing or to revoke the organization’s tax-exempt status, a penalty that often punished the organization’s beneficiaries more than the insiders who benefited from the inurement. To cure this problem, Code Section 4958 was added to the Internal Revenue Code in 1996 to provide the IRS with an “intermediate” tool between the extremes of either ignoring the problem or revoking the nonprofit’s tax-exempt status.

Six Smart Moves Great Board Chairs Make

3. Think Big. Boards without great leadership can get bogged down in the minutia. The minutia include the compliance and oversight responsibilities of the board. While it’s important to do these things well, it’s not the organization’s raison d’être. Great board chairs help steer the board clear of this phenomenon by keeping the board focused on their vision of the impact the board wants to make on the community the organization serves. Great board chairs understand that focusing on the organization’s breakthrough goals rather than busywork keeps the board energized and engaged.

What is a Private Foundation?

The defining characteristic of a private foundation is donor control. Private foundations are usually privately created, funded, and operated by a single individual, family, or company. As a result, private foundations are generally not dependent upon the support of outside donors and are therefore not subject to the same degree of public scrutiny as public charities that depend on outside funding for their survival.