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governance

Who owns a nonprofit?
Governance

Who Owns a Nonprofit Corporation?

Let’s be clear about one thing. No one owns a nonprofit corporation.[1]

While there is no outright ownership, there is control. One of the fundamental questions I ask when forming a new nonprofit corporation is how board members will be selected. This is a key question because those who hold the power to select board members retain the ultimate authority over the corporation.

The possibilities are limited by the nonprofit corporation statute in the state where the corporation is domiciled.

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What is an Endowment
Grantmaking and Gift Planning

What is an Endowment?

Black’s Law Dictionary, 9th ed., defines an endowment as: A gift of money or property to an institution (such as a university) for a specific

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Board Quorums, Non-Profit Strategy, and Technological Innovation

Many non-profit’s use the 51% benchmark for a quorum as a concession that directors will not be able to attend all meetings, but having a majority of board members in attendance for official business ensures a representative cross-section of participation which will not simply reflect the will of a very small clique of directors.  However, organizations that value strong hands-on participation by board members may set a higher quorum requirement to encourage meeting attendance and broader participation. 

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Choosing non-profit directors
Starting a nonprofit

How Do I Choose Non-profit Directors?

The first challenge when founding a non-profit is deciding how to choose non-profit directors. Once you’ve done your non-profit research and created a business plan,

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self-policing can lead to catastrophic failure
Governance

Self-Policing Abuse Cases Can Lead to Catastrophic Failure by Kimberly Witherspoon

Self policing allows serious problems to fall through the cracks. The most significant failure of self-policing seems to be a knee-jerk desire to protect the organization rather than the purported victim. This results in a failure to report allegations of abuse to the authorities, and instead be willfully blind to crimes committed against children. Institutional behaviors of denial, irresponsibility, cover-ups and possible criminal behavior seem to thrive in a self-policing organization. Jerry Sandusky’s case is a clear example of this willful blindness. Tolerating or ignoring abuse to children under the care of charitable organizations that are supposed to nurture and protect them undermines the noble purpose of such entities and thus weakens the organization.

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IRS 2012 Work Plan
IRS

IRS 2012 Work Plan – What’s New for Nonprofits

Each year, the IRS publishes a report detailing what its focus will be regarding nonprofit organizations and compliance during the year to come. The following are some of the highlights from the 2012 Exempt Organizations Work Plan.

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Mechanics of a Nonprofit Merger

Merger proposals are being prompted by reduction of funding sources, the tight economy, the need for succession planning and a desire to consolidate expenses and increase capacity. Also, many funders prefer to deal with fewer providers of the same programs or services and encourage mergers and other forms of collaboration to reduce overhead and increase capacity. There are special challenges for nonprofits considering a merger. Factors, such as increased capacity and cost savings, drive the deal. Because these benefits can be more difficult to quantify, a proposed merger can feel threatening to a nonprofit board who feels they may lose power and influence.

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Nonprofit Law Jargon Buster – Voting Members vs. Self-Perpetuating Boards

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.

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