How to Survive a Micro-Managing Board

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. Continue Reading

Starting a Nonprofit in Washington State

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. Continue Reading

Cause Related Marketing and Commercial Co-Venture Best Practices

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.”
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When is a Contribution Not a Contribution? By Billy Minch, CPA

For those of us who spend our lives working in, with, or around nonprofit organizations, this is generally thought of as a pretty easily answered question… but is it really? Recently, several of the clients we serve have received contributions from vendors and service providers that may challenge, or at least stretch, the definition of what gets recorded as a contribution. Continue Reading

Multistate Fundraising Registration and Filing Portal

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. Continue Reading

Nonprofit Jargon Buster – Directors vs. Trustees

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. Continue Reading

Name Changes – How to Do it Right

Exempt organizations that wish to change their name often secure a trade name or “do business” under a fictitious name. Presumably they opt to use a fictitious name rather than formally change their name because they believe a legal name change is too much trouble or they don’t know how to accomplish it. . . . A better approach is to change the organization’s legal name with both state and federal authorities to present a unified and cohesive brand to donors and supporters. Continue Reading

IRS Guidance Breathes New Life Into Mission-Related Investing

Foundations are required to expend approximately 5% of their assets for charitable purposes each year. The other 95% is invested to generate distributable income for future years. Historically, foundations have struggled with the idea of making riskier investments that further their charitable purposes, but do not qualify as a PRI because a significant purpose of the investment is the production of income or the appreciation of property. Continue Reading

Benefiting Individuals

Donors wishing to help the victims of a tragedy, a serious illness, or other major hardship are often surprised to learn that gifts earmarked for specific individuals are not tax deductible as charitable contributions. This rule catches many donors off guard as it is not intuitive that gifts made to individuals who are clearly in need would not be considered charitable. Continue Reading

Nonprofits and Affiliated Entities

Increasingly, nonprofits are creating affiliate organizations such as entities to hold real property, taxable subsidiaries that run unrelated businesses, lobbying organizations, foundations, chapters, and even management organizations. There are myriad reasons to create affiliates but there are a number of common scenarios that we will touch in this post. Continue Reading

Nonprofit Law Jargon Buster – What is a Group Exemption?

The group exemption permits a central or parent organization to certify that each subordinate qualifies for exemption and to include it under its umbrella for tax-exemption purposes. The process is designed to reduce paperwork for both taxpayers and the IRS where affiliated entities are similar in their purpose, structure and operations. Continue Reading