Get Ready for Machine-Readable Form 990s

There is a significant technological advance coming down the pike in connection with the IRS Form 990, the  all-important information return required for many tax-exempt organizations. Machine-readable Form 990’s (Modernized E-file, “MeF”) will reportedly be launched in the next month or so. The significance of this innovation is that this method makes it possible to electronically search for data, making it much Read More

Lessons in Charity Governance, Courtesy of Sweet Briar and San Diego Opera

In the spring of 2015, we followed with keen interest two developing stories about major community institutions that were suddenly threatened with immediate closure: Virginia’s Sweet Briar College and the San Diego Opera.  We watched as these institutions’ supporters rallied to oust the leadership that had proposed these unexpected and undesirable courses of action, and and how those dissenters saved the Read More

Private Museums Targeted by Senate Finance Committee

The tax-exempt status of certain high-profile private museums have become the target of an inquiry by the Senate Finance Committee. The issue is whether they are providing enough public benefit to justify the benefits of exemption under Section 501(c)(3) of the Internal Revenue Code and the related charitable deductions. In November 2015, Finance Committee Chairman Senator Orrin G. Hatch (R-UT) sent letters to a Read More

Alzheimer's Association Tries to Consolidate, But Splits Apart

Recently, the Chicago-based Alzheimer’s Association embarked on a strategic change of course to fully integrate its independent chapters nationwide into a single charitable organization. There were some unexpected consequences, though, that may have lessons for other affiliated groups. Instead of uniting - as the national board planned - chapters are starting to peel off and go it alone. Merger Plan Read More

Charitable Gifts in Perpetuity: Not a Great Idea

Two news stories from 2015 highlight the problem of the “dead hand” reaching out from eternal slumber, squeezing the life out of needed flexibility for a charitable institution established long ago by a bequest. “The Law” disfavors anything in perpetuity; hence, the dreaded Rule Against Perpetuities that is the bane of the existence of every first-year law student: The common rule against perpetuities forbids some Read More

New Laws, New Rules in 2016 for California Nonprofits

On New Year’s Eve, there are champagne toasts and doomed-to-failure resolutions to lose weight. At the stroke of midnight, there are also new laws on the books that affect California nonprofits Some of them apply only to nonprofits; others, for instance, cover all employers in the state, including nonprofits. New Laws and Rules Just for Nonprofits Attorney General Regulations After a lengthy period of review and Read More

2015 Year-End Congressional Measures Affecting Nonprofits in 2016

In a perfect world, federal tax policy would be comprehensively analyzed, thoughtfully debated, and then enacted without partisan rancor or dispute. We don’t live in that perfect world. For several years, budgets and tax proposals have been held hostage to entirely unrelated political disputes. The result is that even when there are temporary extensions for relatively uncontroversial tax laws, sometimes these Read More

The "Trade or Business" Test: Does It Quack Like a Duck?

The hallmark of a 501(c)(3) public charity is that it receives enough support from donations or grants to make it accountable to the public good. But many 501(c)(3)s also generate income from business-type activities - like selling products or services. Generally, this is fine -  and won’t jeopardize the tax exemption. But if the scope of the business-type activities is too big compared with the nonprofit’s exempt, Read More

2016 Priorities for Exempt Organizations Division

It’s no secret that it’s been a tough year for the Tax-Exempt and Government Entities Division of the IRS. Actually, it’s been a difficult few years for these embattled federal regulators and the philanthropy community they serve. There was the huge brouhaha surrounding former Division Chief Lois Lerner and allegations of political favoritism in Section 501(c)(4) approvals or denials. There has been the years-long, Read More

The Better Choice?: A Foundation or a Donor-Advised Fund

Although the donor-advised fund (DAF) has been around for many decades, this charitable-giving format has  surged in popularity in recent years. Our recent post, “Donor-Advised Funds: An Alternative for High-Net-Worth Philanthropists,” provides an introduction to this timely topic. The DAF is a choice midway between an outright donation to an independent 501(c)(3) organization and establishing a private Read More