While board service can be one of the most rewarding ways to give back, a bad fit or poor performance can lead to a difficult and even potentially costly board service experience.
To folks who are new to nonprofit governance, grasping the difference between directors and officers of a nonprofit corporation can be confusing.
Many nonprofits use some form of waiver or release in their programs. Typically, volunteers and participants are asked to assume the risk of participation and hold the organization harmless if they are injured. However, waivers and releases are not foolproof as many courts do not favor them. Still, they are often successful, and nonprofit organizations have nothing to lose in requiring them.
The IRS recently issued Rev. Proc. 2013-12 which updates its Employee Plans Compliance Resolution System. As anticipated, the new EPCRS allows plan sponsors to retroactively correct the failure to adopt a written plan document for a 403(b) plan by December 31, 2009.
// Voting memberships are most useful when an organization wishes to be democratically controlled by its constituents. By way of example, voting membership structures are
In its 2012 workplan, the IRS announced it will be paying closer attention to self-declared 501(c)(4), (c)(5) and (c)(6) organizations. These groups include social welfare organizations; labor, agricultural and horticultural groups; as well as business leagues and chambers of commerce. Such organizations consider themselves to be tax-exempt because of the nature of their activities, but they have not filed for nor received a formal determination letter from the IRS. These groups are allowed to operate without an official IRS determination because, unlike the 27 month filing deadline for 501(c)(3) charities, they are not subject to a deadline for filing an application for exemption.
Forming a nonprofit corporation is not the same as being tax-exempt. To obtain 501(c)(3) status, newly formed entities must apply to the IRS for a formal determination of exemption. Entities seeking 501(c)(3) status apply by filing Form 1023. (Entities seeking exemption under other sections of 501(c) file Form 1024.)
Newly formed organizations applying for exemption face a chicken and egg dilemma. Form 1023 requests considerable detail regarding the charity’s planned programs and activities. The attitude of the IRS is that requiring applicants to articulate detailed plans is a small price to pay for the significant tax benefits associated with 501(c)(3) status.
I receive several calls a week from people who want to start a new non-profit. Looking back on my legal career, I realize that many of the tax-exempt organizations I helped to create early on never got off the ground. Today, I consider it part of my responsibility to the potential new client and to the sector to educate would be founders on the realities of the marketplace. What follows is a walk through the typical discussion that I have with potential founders.
Most states require you to register your organization if you solicit donations from their residents. Many states also require registration if your organization collects substantial or ongoing donations from their residents, even if you aren’t specifically targeting donors in that state. Download our comprehensive list of each state’s requirements.
Download our free guide to learn about the many elements needed to run a successful nonprofit organization, as well as how to avoid common pitfalls and mistakes.