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

Preferred Postal Rates: Another Perk for Nonprofits

Section 501(c)(3) organizations enjoy lots of perks; most notably, relief from the federal income tax obligation. They are also eligible for government and foundation grants. Their donors benefit as well from valuable charitable tax deductions. There are others, including exemptions from sales and property taxes. Those are matters of state - rather than federal - law. Each jurisdiction has its own state tax rules Read More

Outside Fundraising Help: Part III – "Fundraising Counsel"

  It’s that time of year again. You’re busy with holiday preparations and celebrations and, if you’re a key member of a nonprofit’s team, you’re keeping an eye on the December 31st deadline for prospective donors to support your group and be eligible for a tax deduction. In addition to the nuts and bolts of planning and coordinating a fundraising campaign, you also have to pay close attention to your state’s Read More