One of those Days . . .

It was the Monday morning after a hugely successful weekend fundraiser. The executive director of the nonprofit drug-recovery facility arrived early at her office -- eager to start implementing new programs now possible because of the generosity of donors. Her mood changed abruptly, though, when a prominent local attorney called. A volunteer from the gala’s steering committee had taken it upon himself to post event Read More

5 Ways to Lose Your Tax Exemption

Congratulations!  You just received the long-awaited determination letter from the Internal Revenue Service. You are now a tax-exempt, charitable organization under section 501(c)(3) of the Internal Revenue Code. You can accept donations, get grants, and do great things for the world. But, if you’re not careful -- There are five foolproof ways to lose this coveted status.  You don’t need all of them. Just one -- Read More

Social Enterprises: A Revolution under the Radar

Until recently, entrepreneurs and businesses interested in being socially responsible had limited – and unsatisfactory – choices. If they set up as traditional for-profit corporations, there were serious restrictions on straying from the existing model of maximizing shareholder value. If they set up as nonprofit corporations, they endangered their tax exemptions if the primary purpose was to make money from Read More

Another Way to Sink the Ship: Too Much Lobbying

Along with prohibited political activity, another way a 501(c)(3) organization can risk its tax exemption is too much lobbying. Why? Because a tax exemption is a taxpayer subsidy to your organization -- without it, you’d have to pay tax on your revenue.  So Congress has wanted to make sure that a 501(c)(3)’s activities don’t veer too far into the partisan arena. But the lawmakers have also realized that many Read More

What about Private Foundations: Are They Allowed to Lobby?

The rules about permitted lobbying activities for 501(c)(3)s don’t apply across the board to all 501(c)(3)s.  They are meant for public charities: organizations that generally receive much of their money from donations from the general public or from grants. Private foundations are 501(c)(3)s, but their lobbying activities are much more restricted. Subject to just a few exceptions, private foundations are generally Read More

To Elect or Not Elect: That is the (Lobbying) Question

It’s a common misconception that 501(c)(3) organizations are not allowed to lobby. This may stem from people wrongly conflating the absolute ban on political activities with activities meant to influence legislation. It’s true that 501(c)(3)s are flatly prohibited from intervening in political campaigns.  But the reference to legislative activities is not absolute: . . . (N)o substantial part of the activities of Read More

It’s That Time of Year Again

It’s that time again. No, not summer vacation. It’s election season in the United States. Actually, election season seems to begins the day after the last election. With each passing week, the airwaves become more and more saturated with annoying political ads, culminating in the non-stop coverage in early November. It seems that everyone has an opinion. But what’s important to remember is that 501(c)(3) Read More

Next Time, Let’s Text in our Votes!

As the foundation board members wrapped up their meeting, one of them wondered out loud why they had to meet in person every month.  “We text all day for business. Why don’t we just put a few issues on an agenda, email it out, circulate online comments and questions, and then vote by text message?” Sounds reasonable, right? If nonprofits routinely conduct business by email and text -- like all other sectors of the Read More

A Rose by any Other Name . . .

“What's in a name? that which we call a rose By any other name would smell as sweet;” – William Shakespeare, Romeo and Juliet, Act II, Scene II Well, no. Not always.  Sometimes a nonprofit’s name leads to the unpleasant odor of protracted litigation. Just ask the folks over at WWP, Inc., doing business as Wounded Warrior Project about their long battle with an entirely distinct charity that had a confusingly Read More

Bylaws are Sometimes Like a Decades-Old Hairstyle

Big hair, long bangs, and enough hairspray to withstand a Category 4 hurricane: The style was new and fresh in the ‘80s.  Everyone was doing it. It worked. It seemed like a good idea at the time. But walk around today with a hairdo like that, and people will snigger and stare. If only it were that easy to realize that your organization’s bylaws are outdated. Bylaws aren’t Forever The bylaws – a corporation’s Read More