Non-profit Legal Info
Articles with updates on legal matters for non-profits
Recently, several Christian Foundation Grant subscribers have expressed interest in developing advisory boards in addition to their board of directors.
posted @ Friday, June 10, 2011 6:53 PM |
There’s much occurring in the non profit landscape. The astute observer should be and always willing to look behind the covers of what is happening. Here’s a few thoughts to help bring sense to what is happening:
1. 25% of non profits will lose their tax exempt status. Guidestar made this prediction as the result of non profits failing to file their annual 990. While many will seek reinstatement of their status, the implications behind this trend is a continued winnowing of the non profit field. The key trend is the push towards greater accountability and sophistication in how non profits are being run. No longer does...
posted @ Saturday, October 09, 2010 6:12 PM |
By Tim Dykes
www.omniproconsulting.com
Imagine the day you receive a $1 million gift. Then imagine that you see that gift used to impact the healthcare of more than 10,000 patients per year. That day happened for me when I was working for one of the largest healthcare organizations in Kansas City in 2008.This unrestricted gift was immediately put to good use, helping purchase a cutting-edge CT scanner that exposed the patient to minimal radiation. At the time, it was the only such scanner in the country.
If the donor were to have restricted this gift, the law would have required the...
posted @ Thursday, April 22, 2010 9:35 AM |
By William F. High
Are you giving to charity after you die?
Many people would do so if they had confidence that there was someone who could carry out their wishes. In fact, I’ve seen it many times where a person was considering giving to charity but later backed out. Why?
For lots of reasons — perhaps they didn’t have confidence in the charity, or they believed that the charity would change their mission. In truth, all of these reasons can be solved with the right person administering the charitable gifts.
In the case of a person’s will or trust, that person would be...
posted @ Sunday, February 07, 2010 4:27 PM |
Mergers, Closings Plague Charities - that was the headline of a front page article in the The Wall Street Journal this week. The article indicates that poor performing charities may not event make it. I was intrigued by the comment of the charity leader who was surprised that "funders want to see outcomes." When givers invest in a charity they want know their giving is making a difference - they are interested in knowing the ROI. A charity's mission should be the driver but it is clear goals and measurable outcomes that help us know how we are doing in...
posted @ Sunday, February 07, 2010 4:26 PM |
By Michelle A. Adams
Attorney in Georgia
California’s Attorney General filed suit against the L.B. Research Foundation (“L.B.”) and its board members this past September, disclosing alleged areas of “gross mismanagement” and requesting involuntary dissolution of the organization.
The apparent deficiencies noted, as described below, could easily occur in charities that are not aware of pertinent legal requirements.
Failure to Maintain Adequate Books & Records
L.B. was unable to produce many of the many of the documents requested by the Attorney General, including adopted bylaws, grant applications, grant agreements, final grant reports, or meeting minutes for the first 7 years -...
posted @ Monday, December 14, 2009 3:27 PM |
Michelle A. Adams
Attorney in Georgia
Does your organization need “clergy malpractice” insurance? Insurance companies have been offering this since the late 1970’s when clergy malpractice claims first were filed. But courts have yet to recognize claims for “clergy malpractice.”[1] Thus why do insurance carriers offer such coverage?
The term “malpractice” means an instance of incompetence or negligence on the part of a professional responsible for damages.[2] This has been applied successfully in the medical, legal, and advisement fields, but has never been successfully applied to a church. The most common scenario prompting clergy malpractice claims occurs when the clergyperson serves as a...
posted @ Monday, November 30, 2009 8:11 AM |
Changes in Campaign Finance Regulations for § 527 Nonprofits
By Michelle A. Adams
Attorney in Augusta, GA
The US Court of Appeals, D.C. Circuit, recently made a significant ruling regarding § 527 organizations – those nonprofits existing primarily to influence the election or defeat of candidates for federal public office. In the case of Emily’s List v. Federal Election Commission (FEC), decided September 18, 2009, the court majority wrote a 44 page opinion striking down recent (2004) FEC campaign spending limitations applied to these groups.
After the 2004 elections there was significant pressure on the FEC to reform the campaign spending of certain...
posted @ Monday, October 12, 2009 4:01 PM |
In a recent article by nonprofit attorney Jack Siegel of Charity Governance Consulting entitled “Disorder From Robert’s Rules of Order” (http://www.charitygovernance.com/charity_governance/2009/08/disorder-from-roberts-rules-of-order.html), he reiterated his position that nonprofit boards should never assign blanket allegiance to the Robert’s Rules of Order in their bylaws. In an effort to adopt all the policies considered proper for governance, new boards may be tempted to throw in a line encapsulating the whole of Robert’s Rules – without realizing the full extent of the 600+ page document to which they are committing themselves.
Although many people are familiar with the Robert’s Rules of Order by name,...
posted @ Monday, September 21, 2009 8:15 AM |
The term “church” is not actually defined in the Internal Revenue Code but when the IRS determines what a church is for tax exemption purposes, in more recent rulings it has exhibited a disturbing lack of predictability.
The ECFA recently reported on a non-traditional church that was denied church status by the IRS earlier this year. The organization applied for exemption as a church and religious organization (accounting for 60% of its activities) and as an educational organization by way of its seminary (40%). Every service, from sermons to seminary classes was offered online. There was no established physical meeting or...
posted @ Monday, August 24, 2009 7:09 AM |
In the July/August 2009 edition of the American Bar Association’s Business Law Today, nonprofit attorney Gene Takagi and assistant Emily Chan write about the alternatives to setting up a tax exempt charitable organization. They point out that in an environment that is increasingly competitive, the majority of new charities do not succeed.
Charity founders and their attorneys should consider many things before proceeding to file for exemption – beyond the simple questions of how, when, and what are the costs. First, the authors stress the importance of good planning and research. The charity should develop a business plan. “The plan should...
posted @ Monday, August 10, 2009 1:07 PM |
The effects of the recent economic downturn are undeniable in the lives of nonprofits: high operating costs, increased demand for services, and the nagging question of whether donors will continue their support in the midst of trying times are worries that weigh on the minds of many organization leaders. Tim Delaney, president and CEO of the National Council on Nonprofits, has noted the increased pressures on organizations throughout the last few years, and asserts that the economic dowturn can be traced to shabby ethics in the government and giving sectors. At a workshop sponsored by the Philanthropy Journal, Delaney illustrated...
posted @ Wednesday, June 24, 2009 1:12 PM |
Because of the declining economy, many nonprofits are considering mergers in order to survive. A recent survey by the Nonprofit Finance Fund found that almost 1 in 5 nonprofits said they were interested in conducting a merger feasibility analysis, and 5% reported they were planning to or had already undergone a merger. That 5% is in increase from the average merger rate of 1.7% in the for-profit sector and 1.5% in the nonprofit sector over the last decade, according to another report. However, there are pros and cons to mergers.
There are many good reasons to merge: mergers increases a nonprofit’s...
posted @ Tuesday, June 16, 2009 2:26 PM
There are many opportunities for faith based organizations and their participants to benefit from the Stimulus bill. First, there are opportunities for individuals, especially those who have a low to moderate annual income, including those whose earnings have been reduced due to unemployment. The Home Weatherization program can help people save on utility bills by helping them to install insulation and even a more efficient furnace or AC system. Eligibility has been expanded to include families earning up to 200% of poverty level for their area. Contact your local Community Action agency for details.
Job training programs funded through the Workforce...
posted @ Friday, March 20, 2009 6:02 PM
After 18 months of changes, the IRS has released the final Form 990. Charities must be aware of these new requirements. The form will require more information about organizations governance, how they pay their key employees, and how they earn unrelated business income.
According to the Chronicle of Philanthropy, “The new forms include a schedule of 16 accompanying forms that probe details of lobbying, business transactions with insiders, and international activities. There is also a special form just for tax-exempt hospitals that asks about the amounts of charity care, Medicare reimbursements, debt collections, and any joint business ventures that hospitals engage...
posted @ Monday, January 05, 2009 10:22 AM |
Two weeks ago, the IRS released the newest version of Form 990-EZ, which is the short version of its tax form and is for nonprofits with less than $1 million in 2008 revenue. The new form and its instructions are similar to the earlier version of the Form 990-EZ, but its updated schedules correspond with the new Form 990, which also takes effect in the 2008 tax year.
The filing threshold of the longer Form 990 was previously set at $100,000, but that threshold has been considerably raised. For the 2008 tax year, groups with less than $1 million in revenue...
posted @ Wednesday, September 24, 2008 4:28 PM |
U.S. Senators Charles Schumer, a Democrat from New York, and Richard Burr, a Republican from North Carolina, have created a Senate Philanthropy Caucus to find ways to aid foundations and charities.
Late in July, these two men sent a letter to Congress members asking them to join the caucus to “support the long tradition of good works by the philanthropic and nonprofit sectors.” The letter goes on to applaud philanthropy for bettering American society through education, clean water, public health, public libraries, and by allowing towns to research and experiment with new ideas. The letter said, “The work done by...
posted @ Thursday, August 28, 2008 9:04 AM |
There has been a lot of debate surrounding the new 990 changes and charities are anxious to understand these new forms. Many groups have released information and tips on how to comply with the new regulations. Now, the IRS will offer a preview of the new 990. By August 15th, the complete revised instructions will be posted on their website. One of the major changes is a redefinition of “key employees”. This was one of the items that received the most criticism from various groups. To correct an overly broad definition of this term, the IRS has...
posted @ Thursday, August 07, 2008 11:17 AM |
On Friday, July 25, the IRS informed an unnamed organization which claims to work “for the advancement of Christianity and for other charitable purposes” that it is not eligible for federal tax exemption as a church under US tax code Section 501(c)(3). The group stated that it holds “street ministry” activities and wants to rent a facility and purchase musical equipment for indoor services. The group also said it has tentative plans to launch a Christian school once it is “fully established.” The group’s board is composed of its pastor (founder and chairman of the board),...
posted @ Wednesday, July 30, 2008 10:45 AM |
The IRS is taking a heightened approach to their monitoring of charities, and it is already becoming apparent that they do intend to stick with these policies. Last week, a charity had its tax exempt status revoked for not spending enough on their charitable programs. Many steps can be taken though to be confident in submitting the new form 990. The Panel on the Nonprofit Sector has published a list of guidelines for charities to look at. (visit www.independentsector.org for the full text) The 33 principles in this booklet are not all required for charities to follow. There are six...
posted @ Tuesday, July 08, 2008 9:20 AM |
When I mention that my work involves working with nonprofit organizations, many people often look confused and ask, "So how do they make money?" It's a rather common misconception that the term "nonprofit" equals "no profit". However, this is not the case at all. Nonprofits simply rely more on donors and their contributions rather than seeking their own profit. With these misconceptions, much less the IRS rules or dismal economic predictions, making a profit or being able to meet budget can be a challenge for many organizations. In recent years though, a change has come about that may be helpful to...
posted @ Thursday, June 26, 2008 12:00 AM |