The Johnson Amendment ensures that 501(c)(3) organizations remain above the political fray by withholding exempt status (or revoking it) from organizations that engage in any amount of political activity. Requiring 501(c)(3) organizations to abstain from involvement in political activity ensures that they are able to remain dedicated to their missions without the distraction and divisiveness that partisan politics creates.
In general, where a charity is holding a public fundraising event, a liquor license is required to sell or serve alcohol. Organizations that have obtained a Special Occasion license may sell spirits, beer, and wine by the individual serving or sell bottles of wine for on premises consumption.
At times, issues will give rise to spirited debate among Board Members who each possess valuable yet different skill sets and different points of view. The Chair should make efforts to mediate differing opinions and encourage consensus on actions or policies that represent the best aspects of all points of view.
To reduce the risk to the tax-exempt organization, the tax-exempt partner should exercise sufficient power and control over the joint venture’s activities to ensure the joint venture operates in furtherance of its tax-exempt purposes. Tax-exempt organizations must be particularly careful when entering into joint ventures structured as partnerships or LLCs because the IRS attributes the activities of such entities to its owners.
The first step to managing conflicts is the disclosure of conflicts. If decision-makers are not required to disclose their conflicts, then there is no way to ensure that their decisions are not tainted by self-interest. Even the most well-meaning individuals can have their decision-making clouded by competing interests. The only way to ensure conflicts are properly managed is to disclose those conflicts and recuse oneself from the decision-making process when conflicts arise.
Rubber stamp boards tend to take a hands off approach to their duties and simply approve everything put in front of them by management without actively participating in deliberation and debate. This approach is dangerous for the nonprofit and the directors.
Last Tuesday, a federal judge in Texas issued a nationwide injunction against a new regulation expanding the number of workers who would be eligible for time-and-a-half overtime pay.
Many tax-exempt organizations in Washington are still subject to business and occupation tax at both the state and local level. For B&O tax purposes, nonprofit organizations are generally presumed taxable in the same manner as for profit organizations.
Forty-five states and the District of Columbia regulate charitable solicitation. Charitable organizations are required to register and submit annual report/registration in forty-two (including DC) of those jurisdictions.
The micro-managing board members show up to their first board meeting and before they have done anything of substance for the organization, they want to revamp the reports, review the nonprofit’s journal entries, question every expense, and critique the Chief Executive’s management style. One might rightly ask whether these activities are adding value. I would argue that nine times out of ten they are not.
Once a potential founder has read our post on Nonprofit Business Planning – Steal All the Underpants, and has determined that a new nonprofit organization would serve a legitimate need in the community and can be supported without stealing any underpants, she must then consider the steps necessary to form the nonprofit corporation in Washington State and obtain tax-exemption from the IRS.
Often companies are blissfully unaware that their charitable sales promotion is a regulated activity and are surprised to learn that there are regulations they must comply with. However, states have an interest in protecting consumers from false and misleading advertising. They also have an interest in protecting charities from being exploited. Accordingly, at least 20 states regulate such cause marketing offers which are referred to interchangeably as “commercial co-ventures” or “charitable sales promotions.”
Newly formed charities often encounter a chicken and egg problem. They wish to begin their operations before they receive formal approval of their tax-exempt status but they can’t attract funding until they receive their federal 501(c)(3) determination.
HB 2592, which becomes effective on August 6, 2016 (“Effective Date”), amends A.R.S. §10-3708 to allow the delivery of member ballots through an electronic voting system. It is important to understand this change does not apply to director votes which do not have a written ballot option.
Code Section 506 aims to remedy this problem by requiring organizations to notify the IRS of their intent to operate as a Section 501(c)(4) organization. The IRS has developed a new form for this purpose – Form 8976 – that organizations should use to provide this notification.
If I could point to the one decision my clients almost always end up regretting, it’s the decision to enter into a comprehensive management contract. Some management companies prey on nonprofits, taking control over the nonprofit’s operations and charging unreasonable fees for services of questionable value.
The State Legislature recently passed increases to the Arizona Tax Credits. For nonprofits, this means that in order to increase contributions to your organization, your tax credit marketing needs to be reevaluated and addressed now.
Recognizing the complicated labyrinth that is the multi-state charitable solicitation registration process, a new organization called the Multistate Registration and Filing Portal, Inc. has been formed as a Delaware nonprofit corporation (“MRFP”). The MRFP is working with the National Association of States Charities Officials and the National Association of Attorneys General to develop an online system that will permit nonprofits and professional fundraisers to comply with all states’ registration and annual filing requirements through a single portal.
The group of individuals charged with the governance of nonprofits are often referred to interchangeably as “directors” or “trustees.” These terms are similar in that they both refer to the group of individuals who have a fiduciary duty to oversee the nonprofit organization. However, from a legal perspective, there are important distinctions.
In practice, a NGO is an organization that is neither a part of a government nor a conventional for-profit business. Therefore, NGO is a broad term that encompasses traditional private nonprofits as well as many other forms of mission-based organizations.