Nonprofit Asset Purchase vs Merger – Which Makes Sense for You?

When considering acquiring another nonprofit, there are two types of acquisitions that are typically considered – an asset purchase and a merger transaction. Several factors, including due diligence, payment of consideration, assumption of liability, assignment of contracts (including endowment agreements), existence of planned gifts, future operating goals and applicable state and federal laws, should be considered in determining the structure of the potential transaction.

Hurricane Relief – Donor Beware!

Familiarize yourself with the organization, its mission, and its effectiveness before giving. Always ask for information in writing – be wary if an organization will not provide information about charitable programs and finances upon request. Any legitimate organization will be happy to send you information. Check guidestar.org to review the organization’s financial data and learn more about its mission and finances. Understand that its common for scammers to set-up websites with confusing similar names to well-known charities to steal personal information from those trying to donate. Scammers are also known to set up fake GoFundMe accounts.

IRS’ Debuts New and Improved Exempt Organization Search

The IRS has debuted a new and improved exempt organization search page.  Previously, the public could use the IRS’ Select Check tool to lookup an organization by name or EIN. However, Select Check only permitted confirmation of an organization’s tax-exempt status and whether the organization was a public charity or private foundation. 

Nonprofit Board Oversight

A nonprofit’s board of directors is legally responsible for exercising the care an ordinarily prudent person in a like position would exercise in overseeing the organization’s operations. This includes the organization’s finances and legal compliance.

Fundraising – When to Seek Permission

Fundraising to carry-out a nonprofit’s charitable purpose is necessary for the survival of the organization.  However, holding a 501(c)(3) tax exemption does not give unlimited permission to fundraise.  Many nonprofits are unaware of charitable solicitation laws within their own state much less other states where they may be asking for and/or receiving contributions.

Changes to Form 1023-EZ

The IRS has revised Form 1023-EZ, Streamlined Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code, and its instructions which went into effect January 10, 2018. The $275 1023-EZ user fee remains the same. The changes are designed to reduce filing errors and increase compliance with respect to those eligible to file Form 1023-EZ. Form 1023-EZ filers must now complete the following:

Good News for Nonprofits Moving to a New State

The IRS recently issued a favorable ruling for nonprofits looking to move their domicile from one state to another. Common reasons that nonprofits seek to change their state of incorporationinclude a change in physical location, increasing regulatory burdens, or a lack of meaningful connection to the original state of incorporation. In such cases,

Moving a Nonprofit to Another State

Nonprofits leaders often desire to move their nonprofit organization’s legal domicile from one state to another. Leadership may decide to move and wish to take the organization with them. In cases where the work is dispersed around the country, the organization may become frustrated with burdensome regulation in the state where it is domiciled and decide shop for a more favorable legal home.