"Inurement and Private Benefit Have Often Been Confused"

That's what the Exempt Organizations Division tells its people who are tasked with approving (or denying) section 501(c)(3) tax exemption applications. It's also why our last blog post was titled "How to Torpedo Your Tax Exemption: The Fifth Way" instead of "How to Torpedo Your Tax Exemption: The Fifth (Private Benefit) and Sixth (No Inurement) Ways." Although they are distinct rules - and each can stand alone as a Read More

How To Torpedo Your Tax Exemption: The Fifth Way

If you're looking for a way to lose your hard-earned section 501(c)(3) tax exemption, we've already written about four roads that will almost certainly get you there: (1) failing to file the required Form 990 three times, (2) dipping your (organizational) toes into the political waters, (3) spending way too much time bending the ears of legislators, or (4) launching a successful business that has nothing at all to do Read More

Happy Thanksgiving from For Purpose Law!

Read More

Just One More Thing About Meetings and Minutes

You probably thought we’ve told you all you need to know about charity board meeting minutes in “Breach of Duty by Ogling the Doughnuts,”  “Fun Facts About Corporate Minutes,” and “Nonprofit Corporate Minutes: What Not To Do.” There’s just a bit more. It’s about motions and resolutions. They aren’t the same.  All resolutions start out as motions, but not all motions end up as resolutions. The distinction is Read More

What if a Donor Threatens to Renege on a Pledge?

At the end of our post on charitable pledges (“What, Exactly, Is a Pledge?”), we posed the question: “What if an organization’s mission or activities change before an entire pledge is paid. Can the donor revoke a pledge based on changed circumstances? This is Not A Hypothetical Problem When a donor makes a pledge, and then threatens to back out, the underlying dynamic is a often a tug-of-war for control over the Read More

"Uh Oh. It’s the End of the Year and We Have Money Left Over!"

You’re a nonprofit. You’re panicking. That November fundraiser was a huge success.  You have money to burn. But will your tax exemption go up in smoke on December 31st? No -- so relax. Clarification: When you and we and almost everyone else in the nonprofit community use the word “nonprofit,” it usually means the type of organization that has successfully jumped through the proper state and federal hoops to Read More

The Deep End of the Charity Board Conference Table

Congratulations! You've just been asked to serve on the board of directors of a local charity. But they've thrown you in at the deep end. You're at your first meeting - and they must have thought you'd done this before, because they didn't provide any training or orientation. You know a bit about the organization, but mainly what you've read in newspaper puff pieces. It's a great cause, though, so you're pleased and Read More

So What, Exactly, is a Pledge?

Pledge Week on PBS is exciting: There’s the new season of Downton Abbey (season premiere in January - we can't wait!!), lots of your old favorite programs, and those great gifts if you make a monthly pledge. But are those offers of books, CDs, concert tickets, and other goodies just a way to entice you to pick up the phone? Certainly, that’s part of it, but there’s also another reason - a legal reason, of Read More

Nonprofit Corporate Minutes: What Not to Do

Let's say there's a contest to find great examples of  nonprofit corporate meeting minutes. Well, there are some sure-fire ways to make sure you don't make the cut. The commentators we cited in “Breach of Duty by Ogling the Doughnuts,” and “Fun Facts About Corporate Minutes”  offer useful tips for avoiding common mistakes and trouble spots. Failing to Document That a Quorum Was Present Simply put, if there is no Read More

Fun Facts about Corporate Minutes

Seriously? You were expecting fun facts about minutes? We’re more interested than the average law firm in drafting effective corporate documents, but even we don’t think minutes are fun. But they are important. Corporate minutes are much more than meaningless formalities or mere note-taking; they are legal requirements of substance that have important consequences. That’s what we wrote in “Breach of Fiduciary Read More