New IRS Memo on Shared Websites

Download: Nonprofit Law Podcast #52 (mp3, 10:20)

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Intro

Your guide to the laws impacting nonprofits
Shownotes at nplawcast.com
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501(c)(3)/501(c)(4) Shared websites

• On February 20th, the IRS released T.A.M. 200908050
• Arguably a stricter stance at affiliated 501(c)(3)-501(c)(4) entities sharing websites when the 501(c)(4) is engaged in political activity that is prohibited for 501(c)(3)s.
• What we’ve always thought
  • Caveat – the IRS rarely gives a lot of spot-on advice, so “what we’ve always thought” is based on educated conjecture based on existing precedent
  • 501(c)(3)s and affiliated 501(c)(4)s can share the same website so long as corporate formalities were followed.
  • The (c)(4) can be on the (c)(3)’s website, but there had to be some kind of way for the (c)(4) to reimburse the (c)(3) for using that space.
  • The (c)(4) also had to be the entity making the communications as well.
• The IRS in this T.A.M.
  • The entities involved here had the (c)(4) reimbursing the (c)(3) for the space, but the (c)(3)’s logo and copyright information were splashed all over the (c)(4) page content.
  • That was a compelling factor for the IRS… more compelling than which entity paid for the communications that endorsed candidates and included non-(c)(3) allowable candidate questionnaires.
• Where does this leave us?
  • It does not appear that the IRS is closing to door to shared sites, but it is clear that details matter beyond which group cuts the check for which content.
  • The safest thing would be separate websites altogether – and these days, it’s certainly less of a cost issue to maintain 2 domain names and 2 design schemes than in year’s past.
  • I suspect, although it’s not 100% clear from the T.A.M., that the (c)(3) and (c)(4) could share a domain hosting package so long as they split the costs, and maintain separate websites with separate communications.
  • Linking between the two should still be acceptable under earlier law, but it cannot rise to the level of campaign intervention, so the links are best left as, “we have an affiliated organization and you can read more about that work here.”

Resources

My post at the nonprofit law blog

Alliance for Justice (note, AFJ has a free conference call on the topic this Tuesday, March 10)

Caplin & Drysdale

IRS TAM 200908050 (Feb 20, 2009)(PDF, via Caplin & Drysdale)

Closing

Email me with questions and suggested topics
nplawcast.com

This podcast provides general information about legal topics but it is not a complete discussion of all legal issues that arise in relation to nonprofits nor is it a substitute for legal advice. This podcast does not create an attorney-client relationship. This is general legal information and the contributors make no warranties regarding the general legal information provided in this podcast , and disclaim liability for damages resulting from its use to the fullest extent permitted by the applicable law.

Shownotes

Intro

Tim Mooney… Welcome to the Nonprofit Law Podcast
Your guide to the laws impacting nonprofits.
Shownotes…. nplawcast.com
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When is a person acting on their own versus acting on behalf of their organization?

- Joining a nonprofit as a director or a staff member doesn’t take away your individual rights
- Individuals can do things that are otherwise forbidden… donate time/money to campaign, etc.
- General rule – so long as an organization’s financial resources, facilities, or staff are not used, the organization is not going to be beholden to the individual acts of its staff, officers or directors

When do the actions become attributed to an organization?

- Principles of agency are used… if the person acts as if they have power, and they actually do have the power, the IRS will usually consider the action that of the organization
- Actions of individuals that weren’t ok’d by the group, but were later “implicitly ratified.” (i.e. Organization found out about the actions and did not disavow them)

Tips & Best practices

- Have a policy in place on use of organizational resources
- Encourage use of disclaimers for individuals working on non-organizational endeavors (i.e. “organization shown for identification purposes only”)

Resources

Election Year Issues (pp. 363-365) – IRS CPE Text
Election Year Activities for Section 501(c)(3) Organizations: Frequently Asked Questions – McDermott Will & Emery
Closing

Email me with questions and suggested topics
Need more than a podcast? Tim-Mooney.com
nplawcast.com

This podcast provides general information about legal topics but it is not a complete discussion of all legal issues that arise in relation to nonprofits nor is it a substitute for legal advice. This podcast does not create an attorney-client relationship. This is general legal information and the contributors make no warranties regarding the general legal information provided in this podcast , and disclaim liability for damages resulting from its use to the fullest extent permitted by the applicable law.

Shownotes

Intro

Tim Mooney… Welcome to the Nonprofit Law Podcast
Your guide to the laws impacting nonprofits.
Shownotes…. nplawcast.com
Email the show
I’ll be at the Craigslist Foundation Nonprofit Bootcamp in NYC on August 16th – if you attend and see me, feel free to say hello!
Thanks to Texas Nonprofits for featuring the show on their homepage! It sparks my craving for Ironworks BBQ in Austin…

Can a staff member also serve on the board of directors?

• From a listener email: keep the suggestions coming!
• Some people are absolutists about this – it’s an unworkable conflict of interest. Early in my career I was confronted with an ED who was convinced it was actually illegal.
• In some circumstances, this may be true – check your state laws regarding conflicts of interest, but also your bylaws and conflict of interest policies
• Assuming none of these things block it, serving on the board as a staff member IS possible
• It’s more of an issue for small, but growing nonprofits
• Why? It’s a route to compensate a person for their work – paid as a staff member, but still present as an unpaid board member. (wearing two hats)
• Pitfall: Conflict of interest – breach of duty of loyalty (for more, go back to NLP #35)
• From BoardSource: “It is probably impossible to find a board member who will never have any conflicts of interest… if these associations develop into conflicts of interest and become a major obstacle to fulfilling the duty of loyalty — one of the main legal obligations of board members — it may be necessary to re-evaluate the board member’s suitability for current board service.”
• If it makes sense for your organization to have a person serve as a board member, have a very strict policy regarding breach of loyalty. Best practice would be an abstention policy where the board member recuses him or herself from any votes that impact staff. Another (perhaps better) policy would be to have the board member serve in an ex officio capacity (i.e. no voting power on the board, but has full authority to be present and debate all decisions).

Resources

BoardSource
How many nonprofits compensate their board members?
Is it acceptable for a board member to have a personal relationship with a staff member?
Can conflict of interest be an obstacle to board service?
How does a nonprofit safeguard against organizational conflict of interest?

Closing
Email me with questions and suggested topics
Sign up for the free NLP newsletter… every week get an early look at the shownotes and resources sent to you by email, plus get additional free content on the laws impacting nonprofits. Go to nplawcast.com/newsletter for more info and to sign up.
Need more than the podcast? Tim-Mooney.com and Beyond the Podcast at nplawcast.com
nplawcast.com

This podcast provides general information about legal topics but it is not a complete discussion of all legal issues that arise in relation to nonprofits nor is it a substitute for legal advice. This podcast does not create an attorney-client relationship. This is general legal information and the contributors make no warranties regarding the general legal information provided in this podcast , and disclaim liability for damages resulting from its use to the fullest extent permitted by the applicable law

Shownotes

Intro

Tim Mooney… Welcome to the Nonprofit Law Podcast
Your guide to the laws impacting nonprofits.
Shownotes…. nplawcast.com
Email the show
I’ll be at the Craigslist Foundation Nonprofit Bootcamp in NYC on August 16th – if you attend and see me, feel free to say hello!
Thanks to Texas Nonprofits for featuring the show on their homepage! It sparks my craving for Ironworks BBQ in Austin…

Can a staff member also serve on the board of directors?

• From a listener email: keep the suggestions coming!
• Some people are absolutists about this – it’s an unworkable conflict of interest. Early in my career I was confronted with an ED who was convinced it was actually illegal.
• In some circumstances, this may be true – check your state laws regarding conflicts of interest, but also your bylaws and conflict of interest policies
• Assuming none of these things block it, serving on the board as a staff member IS possible
• It’s more of an issue for small, but growing nonprofits
• Why? It’s a route to compensate a person for their work – paid as a staff member, but still present as an unpaid board member. (wearing two hats)
• Pitfall: Conflict of interest – breach of duty of loyalty (for more, go back to NLP #35)
• From BoardSource: “It is probably impossible to find a board member who will never have any conflicts of interest… if these associations develop into conflicts of interest and become a major obstacle to fulfilling the duty of loyalty — one of the main legal obligations of board members — it may be necessary to re-evaluate the board member’s suitability for current board service.”
• If it makes sense for your organization to have a person serve as a board member, have a very strict policy regarding breach of loyalty. Best practice would be an abstention policy where the board member recuses him or herself from any votes that impact staff. Another (perhaps better) policy would be to have the board member serve in an ex officio capacity (i.e. no voting power on the board, but has full authority to be present and debate all decisions).

Resources

BoardSource
How many nonprofits compensate their board members?
Is it acceptable for a board member to have a personal relationship with a staff member?
Can conflict of interest be an obstacle to board service?
How does a nonprofit safeguard against organizational conflict of interest?

Closing
Email me with questions and suggested topics
Sign up for the free NLP newsletter… every week get an early look at the shownotes and resources sent to you by email, plus get additional free content on the laws impacting nonprofits. Go to nplawcast.com/newsletter for more info and to sign up.
Need more than the podcast? Tim-Mooney.com and Beyond the Podcast at nplawcast.com
nplawcast.com

This podcast provides general information about legal topics but it is not a complete discussion of all legal issues that arise in relation to nonprofits nor is it a substitute for legal advice. This podcast does not create an attorney-client relationship. This is general legal information and the contributors make no warranties regarding the general legal information provided in this podcast , and disclaim liability for damages resulting from its use to the fullest extent permitted by the applicable law

Shownotes

Intro

Tim Mooney… Welcome to the Nonprofit Law Podcast
Your guide to the laws impacting nonprofits.
Shownotes…. nplawcast.com
Email the show

How you can pick up clues on the type of nonprofit you hear about in the news

This show is all about figuring out the type of nonprofit
A recent article on David Brock’s new organizational involvement spurred this:
“Brock wouldn’t detail Progressive Media USA’s strategy, and stressed that – as required by his group’s nonprofit status – the spending would be on a mix of direct electoral politics and issue ads with no direct connection to the race.” (Politico/CBSNews.com)
What type of nonprofit?
501(c)(3)? Check out their website… do they allow for charitable deductions for donations? Does the solicitation page specifically say contributions are NOT deductible?
Deductible? 501(c)(3)… likely a public charity
If not… keep looking for more clues!
Does the organization engage in ALL election activity supporting or opposing a candidate?
Probably a 527
Does it do mixed advocacy – some supporting or opposing a candidate and some not?
Probably a 501(c)(4)… Progressive Media USA might event have both a (c)(4) and an affiliated 527, so it’s not always as easy to pick out everything from one source!

Little clues here in there can lead you find out without relying on the cheat (Guidestar or a personal visit to the offices!)

Closing
Email me with questions and suggested topics
Sign up for the free NLP newsletter… every week get the shownotes and resources sent to you by email, plus get additional free content on the laws impacting nonprofits. Go to nplawcast.com/newsletter for more info and to sign up.
Need more than the podcast? Tim-Mooney.com and Beyond the Podcast at nplawcast.com
nplawcast.com

This podcast provides general information about legal topics but it is not a complete discussion of all legal issues that arise in relation to nonprofits nor is it a substitute for legal advice. This podcast does not create an attorney-client relationship. This is general legal information and the contributors make no warranties regarding the general legal information provided in this podcast , and disclaim liability for damages resulting from its use to the fullest extent permitted by the applicable law

Shownotes

Intro

Tim Mooney… Welcome to the Nonprofit Law Podcast
Your guide to the laws impacting nonprofits.
Shownotes…. nplawcast.com
Email the show

My Top 6 Resources
This week is all “resource time” here on the podcast – my top 6 resources – 3 sites in two categories

Operational information – excellent resources for how to get things done right
Guidestar
CraigsList Foundation
BoardSource

Infrastructure organizations – operational guidance plus representation of your interests
Alliance for Justice – Nonprofit Advocacy Project and Foundation Advocacy Initiative
National Council of Nonprofit Associations (NCNA) and your state nonprofit association
Independent Sector

Closing
Email me with questions and suggested topics
Sign up for the free NLP newsletter… every week get the shownotes and resources sent to you by email, plus get additional free content on the laws impacting nonprofits. Go to nplawcast.com/newsletter for more info and to sign up.
Need more than the podcast? Tim-Mooney.com and Beyond the Podcast at nplawcast.com
nplawcast.com

This podcast provides general information about legal topics but it is not a complete discussion of all legal issues that arise in relation to nonprofits nor is it a substitute for legal advice. This podcast does not create an attorney-client relationship. This is general legal information and the contributors make no warranties regarding the general legal information provided in this podcast , and disclaim liability for damages resulting from its use to the fullest extent permitted by the applicable law

Shownotes

Intro

Tim Mooney… Welcome to the Nonprofit Law Podcast
Your guide to the laws impacting nonprofits.
Shownotes…. nplawcast.com
Email the show

News & Notes
– Nonprofits and Elections: Balancing Personal Versus Organizational Activity on-demand video screencast is available now at nplawcast.com/beyondthepodcast.

Do all nonprofits have to file Form 990?

- No, but most do. The default is that your nonprofit will be filing a 990 about 5 months after the end of its tax year
- Who doesn’t file a Form 990?
- Small organizations
- Gross receipts of less than $100,000 and assets of less than $250,000 at the end of the year (Form 990-EZ)
- Gross receipts normally less than $25,000 (no filing necessary for FY 2007)
- For FY 2008 (next year’s filing) these organizations may be required to file an annual electronic notice – e-Postcard
- Churches and church-affiliated organizations (no filing necessary)
- Private foundations (Form 990-PF)
- Employee benefit trusts (Form 5500)
- Black lung benefit trusts (Form 990-BL)
- Special partnerships of religious and apostolic organizations (Form 1065).

Resources
IRS: EO Reporting Requirements – Annual Return Filing Exceptions

Closing
Email me with questions and suggested topics
Sign up for the free NLP newsletter… every week get the shownotes and resources sent to you by email, plus get additional free content on the laws impacting nonprofits. Go to nplawcast.com/newsletter for more info and to sign up.
Need more than the podcast? Tim-Mooney.com and Beyond the Podcast at nplawcast.com
nplawcast.com

This podcast provides general information about legal topics but it is not a complete discussion of all legal issues that arise in relation to nonprofits nor is it a substitute for legal advice. This podcast does not create an attorney-client relationship. This is general legal information and the contributors make no warranties regarding the general legal information provided in this podcast , and disclaim liability for damages resulting from its use to the fullest extent permitted by the applicable law

Download: Nonprofit Law Podcast #27 (mp3, 6:19)

Shownotes

Intro

Tim Mooney… Welcome to the Nonprofit Law Podcast
Your guide to the laws impacting nonprofits.
Shownotes…. nplawcast.com
Email the show

News & Notes
Sign up for the free NLP newsletter… every week get the shownotes and resources sent to you by email, plus get additional free content on the laws impacting nonprofits. Go to nplawcast.com/newsletter for more info and to sign up.
Nonprofits and New Media: Legal Rules for using the Internet, Podcasts and Social Networks is available. Early reviews are great, and I’m glad it’s been well-recieved. Check out the poll at the bottom of the Beyond the Podcast page at nplawcast.com and give your input on what topics you’d like covered in the some of the next BTP offerings.

New Year, New Changes?
A lot of nonprofits consider making changes to their organization – new offerings, new services, new board members… even new addresses
How do you handle letting the IRS know about these things?
Form 990 – your annual return generally contains places in the form to include any of the ordinary changes that happen with nonprofits
new address, new board members, new officers, etc.
What about bigger changes
In some instances, bigger changes require more information to supplement the 990 – for instance, if your nonprofit reincorporates, you would need to attach the new articles of incorporation to the Form 990
What about super-big changes?
If your nonprofit is changing its services or mission dramatically, it might require additional action
Private Letter Ruling – a lengthy process with the IRS asking for specific advice on a specific matter. Get a lawyer!
Another 1023 – sometimes the changes are so big that you might as well be a new organization (i.e. a totally different exempt purpose than the one you applied for recognition in the first place)
This would be due to big changes… going from private foundation to public charity, or nonrelgious organization to a religious one that is exempt from filing 990s, etc.

Resources
Exempt Organizations – Reporting Changes to IRS
Private Letter Rulings and Determination Letters

Closing

Email me with questions and suggested topics
Need more than the podcast? Tim-Mooney.com and Beyond the Podcast at nplawcast.com
nplawcast.com

This podcast provides general information about legal topics but it is not a complete discussion of all legal issues that arise in relation to nonprofits nor is it a substitute for legal advice. This podcast does not create an attorney-client relationship. This is general legal information and the contributors make no warranties regarding the general legal information provided in this podcast , and disclaim liability for damages resulting from its use to the fullest extent permitted by the applicable law.

Shownotes

Intro

Tim Mooney… Welcome to the Nonprofit Law Podcast
Your guide to the laws impacting nonprofits.
Shownotes…. nplawcast.com
Email the show

News & Notes
We’re going on holiday schedule through the end of the year… we’ll have new editions every other week through the end of the year. Happy holidays!
Sign up for the free NLP newsletter… every week get the shownotes and resources sent to you by email, plus get additional free content on the laws impacting nonprofits. Go to nplawcast.com/newsletter for more info and to sign up.

Charitable solicitation registration
Listener question…
The piece a lot of nonprofits forget
A function of state law (sometimes even municipal!)
43 states plus DC require it
Make sure you are registered in your “domiciled” state if it’s required
The big question… if we ask for donations on our website, do we have to file in every state?
Answer… technically, it depends on EACH state’s laws on contacts and solicitation, so you may technically have to depending on your activities
Huge expense and a huge hassle
Practical answer… few states are going after non-filers if their only “contact” is a potential one
Practical solution… file in states that you are targeting or have some kind of a real presence
Consider using the Multistate Filing form

Resources
Idealware.org
Multistate Filing form

Closing

Email me with questions and suggested topics
Screencast on using the Internet, podcasting and social networking for your nonprofit – go to nplawcast.com for details
Need more than a podcast? Tim-Mooney.com
nplawcast.com

This podcast provides general information about legal topics but it is not a complete discussion of all legal issues that arise in relation to nonprofits nor is it a substitute for legal advice. This podcast does not create an attorney-client relationship. This is general legal information and the contributors make no warranties regarding the general legal information provided in this podcast , and disclaim liability for damages resulting from its use to the fullest extent permitted by the applicable law.

Shownotes

Intro

Tim Mooney… Welcome to the Nonprofit Law Podcast
Your guide to the laws impacting nonprofits.
Shownotes…. nplawcast.com
Email the show

Threshold question… do we need a nonprofit?

Is this a long-term project?
Do you envision this living beyond your involvement?
How big is the endeavor?
Will you be accepting money or goods from others – how much?
Do you want to work with others to make this happen?
Are you replicating the work of another nonprofit?

Resources

“Can I” vs. “Should I”: Center for Nonprofit Corporations (pdf)

Closing

Email me with questions and suggested topics
AP audio & handbook on using the Internet, podcasting and social networking for your nonprofit coming later this summer
Need more than a podcast? Tim-Mooney.com
nplawcast.com

This podcast provides general information about legal topics but it is not a complete discussion of all legal issues that arise in relation to nonprofits nor is it a substitute for legal advice. This podcast does not create an attorney-client relationship. This is general legal information and the contributors make no warranties regarding the general legal information provided in this podcast , and disclaim liability for damages resulting from its use to the fullest extent permitted by the applicable law.

Shownotes

Intro

Tim Mooney… Welcome to the Nonprofit Law Podcast
Your guide to the laws impacting nonprofits.
Shownotes…. nplawcast.com
Email the show

Common characteristics

All are tax exempt
All have some kind of legal form in a state
These are federal tax law designations (numbers correspond to the tax code)

Public charities – 501(c)(3)

Support “charitable, religious, educational, scientific, literary, testing for public safety, fostering national or international amateur sports competition, and the preventing cruelty to children or animals.”
Have a certain level of public support (many small contributors… this is a future show!)
Donors get tax deductions
No support or opposition to candidates (future show)
Limited lobbying (future show)

i.e. Red Cross, American Cancer Society, etc.

Private foundations – 501(c)(3)

Same as a public charity, but they get their money from a limited source (can’t show public support)
i.e. Bill and Melinda Gates Foundation, Ford Foundation, etc.

Social Welfare – 501(c)(4)

Donors do not get tax deductions
Unlimited lobbying… tend to be advocacy groups
Limited election work (secondary activity)
i.e. Sierra Club, …

Unions and Labor Organizations – 501(c)(5) and Trade Associations – 501(c)(6)

Same rules as 501(c)(4)s

Political Organizations – 527s

PACs, political parties, formerly “Stealth PACs”
All activity goes towards the election or defeat of a candidate or ballot measure
VERY complicated because of the overlay with state or federal election laws
If you wade in this thicket, make sure you have a lawyer advising you!

Resources

AFJ – The Connection
IRS – Nonprofit index

Closing

Email me with questions and suggested topics
AP audio & written guides coming soon
Need more than a podcast? Tim-Mooney.com
nplawcast.com

This podcast provides general information about legal topics but it is not a complete discussion of all legal issues that arise in relation to nonprofits nor is it a substitute for legal advice. This podcast does not create an attorney-client relationship. This is general legal information and the contributors make no warranties regarding the general legal information provided in this podcast , and disclaim liability for damages resulting from its use to the fullest extent permitted by the applicable law.

Shownotes:

Intro

Tim Mooney… Welcome to the Nonprofit Law Podcast
Your guide to the laws impacting nonprofits.
Shownotes…. nplawcast.com
Contact

Is it time to dust off your bylaws?

Your bylaws are important

Things to look at:
Committees… meetings… notice requirements… board terms

Time to change? Maybe… Has your organization changed?

Change in your mission
Change in organization operation
– do you really still follow the annual meeting procedures? Need to update?
– How do your bylaws handle resignations or other situations where a board member leaves?
– How do you handle members or constituents you serve? Do they have a voice on the board, or should the board really be insulated from it?

See http://tx.essortment.com/nonprofitsbylaw_pzv.htm
Advisory boards as an option or add-on

Resources

Nolo Press… How to Form a Nonprofit Corporation
BoardSource… The Nonprofit Board’s Guide to Bylaws: Creating a Framework for Effective Governance
Sample bylaws – remember these bylaws were probably written for the specific needs of the organizations… look, compare, alter as needed, but they’re best as a reference. If you’ve got some complicated issues, consult a lawyer!

Foundation Center
Another sample

Closing

Email me with questions and suggested topics
AP audio & written guides coming soon
Need more than a podcast? Tim-Mooney.com
I look forward to bringing the information to the community
Thank you for joining me on the nonprofit law podcast… take care.
nplawcast.com

This podcast provides general information about legal topics but it is not a complete discussion of all legal issues that arise in relation to nonprofits nor is it a substitute for legal advice. This podcast does not create an attorney-client relationship. This is general legal information and the contributors make no warranties regarding the general legal information provided in this podcast , and disclaim liability for damages resulting from its use to the fullest extent permitted by the applicable law.

Shownotes:

Intro

Your guide to the laws impacting nonprofits.
Shownotes…. nplawcast.com
Email the show

Topic from a listener… tips on starting a nonprofit

Volunteers
Startups rely almost exclusively on heart and volunteer efforts.  
Make sure you have a dedicated base of volunteers and a *very* dedicated board.  
You’ll be relying on them a lot over the course of the first year.

IRS
Getting nonprofit corporate status in your state is a piece of cake… in some instances it can take as little as 24 hours.
Getting the IRS to recognize your tax-exempt status is a *much* longer process, and you need to factor that into your planning.
Right now it’s taking the IRS 9-12 months to process applications… some people won’t give charitable contributions until that process is done, so it definitely affects fundraising.

Lawyers?
A lawyer is not necessary, but as with all things in life, getting a pro to help you can be really useful.  
The problem is that there are a lot of lawyers out there, but very few that have much training or experience in nonprofit laws.
If you can find one that isn’t already maxed to capacity (raising my hand on that!) and he or she is interested in your work, by all means ask them to be on your board!

Resources
This podcast
Nolo Press… How to Form a Nonprofit Corporation (plus California-specific guide)
Alliance for Justice’s Nonprofit Advocacy Project (afj.org)
The Pro Bono Partnership (probonopartner.org)

Closing

Email me with questions and suggested topics
AP audio & written guides coming soon
Need more than a podcast? Tim-Mooney.com
nplawcast.com

This podcast provides general information about legal topics but it is not a complete discussion of all legal issues that arise in relation to nonprofits nor is it a substitute for legal advice. This podcast does not create an attorney-client relationship. This is general legal information and the contributors make no warranties regarding the general legal information provided in this podcast , and disclaim liability for damages resulting from its use to the fullest extent permitted by the applicable law.