Fiduciary Duties of Nonprofit Board Members
CharityLawyer Blog
by Kyler Mejia
3d ago
Board governance is the cornerstone of effective nonprofit management. Comprised of individuals with diverse expertise and a shared commitment to the organization’s mission, the board of directors plays a vital role in guiding and overseeing the activities of a nonprofit. The board of directors serves as the governing body of the organization, is responsible for setting strategic direction, ensures financial accountability, and safeguards the nonprofit’s mission and assets. Due to each board member’s ability to influence and control the organization, board members are legally bound to certain ..read more
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Harnessing the Power of AI in the Workplace
CharityLawyer Blog
by Kyler Mejia
1w ago
Artificial Intelligence tools such as ChatGPT, Bing AI, and Google Gemini have exploded in popularity in recent years. More individuals are relying on AI to perform basic tasks and monotonous job duties, such as drafting correspondence, creating presentations, and conducting research. AI is a wonderful tool that can increase productivity and foster innovation in the workplace. However, it can also expose an organization to a breadth of business risks. In this blog, we will discuss the power of AI and how to promote ethical and safe use in the workplace. What are the Benefits and Risks of Using ..read more
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FTC’s New Rule Banning Non-Competes
CharityLawyer Blog
by Kyler Mejia
2w ago
In April 2024, the Federal Trade Commission (FTC) issued a final rule banning non-competes nationwide. The FTC has determined that non-competes are an unfair method of competition and thus a violation of the FTC Act. What is the Ban? The ban prohibits organizations from entering into new non-compete agreements or inserting non-compete clauses in new contracts. The rule applies to all persons working for an organization, whether paid or unpaid, and without regard to how the worker is classified under any other state or federal law. With the exception of non-competes for senior executives, exist ..read more
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FAQ: Tax Compliance Before Receiving Your Determination Letter
CharityLawyer Blog
by Kyler Mejia
1M ago
Most organizations seeking official recognition of tax-exempt status must apply to the IRS within 27 months of formation. Generally, if the organization applies within the 27-month window, recognition will be retroactive to the date of the organization’s formation. This means an exempt organization can begin operating as a § 501(c) organization prior to receiving its determination letter from the IRS. It also means that prior to receiving its determination letter, the organization is subject to the regulatory and compliance rules applicable for its exempt status. Clients often ask about what i ..read more
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What is a Volunteer?
CharityLawyer Blog
by Kyler Mejia
1M ago
Volunteer work is critical to the nonprofit sector. Without volunteers, many organizations would not be able to run their programs effectively. This being the case, it is crucial for nonprofits to understand how federal and state laws define the term “volunteer,” so volunteers are not inadvertently classified as employees under the law. The Fair Labor Standards Act On the federal level, workers are generally classified under the Fair Labor and Standards Act (FLSA).  The U.S. Department of Labor (DOL) has published a fact sheet to delineate how the FLSA applies to nonprofit organizations ..read more
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New Elective Pay Rules for Exempt Organizations
CharityLawyer Blog
by Kyler Mejia
1M ago
Last month, the Treasury Department and IRS released final regulations on the elective pay rules under the Inflation Reduction Act of 2022 (IRA). The IRA introduced new rules allowing tax-exempt organizations to take advantage of federal tax credits for certain clean energy projects. Historically, tax-exempt organizations have not been able to tax advantage of tax credits because they are exempt from paying federal income taxes and thus have no tax liability to credit. Now, eligible organizations can make the elective pay election and receive a tax refund for the value of the credit(s) in the ..read more
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The Many Paths to Making a Difference
CharityLawyer Blog
by Ellis Carter
1M ago
Understanding Nonprofits In our world, there’s no shortage of ways to contribute positively. This can take many forms, from a group of neighbors coming together for community disaster planning to existing organizations working on voter registration or even a community coffee shop training youth for employment. Among these avenues for social good, forming a nonprofit is a popular choice for those looking to have a structured impact on a cause they care deeply about. So, what exactly is a nonprofit? Simply put, a nonprofit is an organization established to serve the public or a specific communit ..read more
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Form 990 Red Flags to Avoid
CharityLawyer Blog
by Ellis Carter
1M ago
Navigating Form 990 and avoiding red flags is crucial for nonprofit organizations to ensure compliance, transparency, and the integrity of their operations. Form 990 serves as an important regulatory compliance and public disclosure tool. Form 990 outlines an organization’s financial activities and key governance practices and is instrumental in maintaining public trust and tax-exempt status. This post highlights critical Form 990 red flags that stakeholders should be aware of to safeguard their nonprofit’s reputation and operational effectiveness. 1. Incomplete or Unclear Transactions wi ..read more
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Form 990 Red Flags to Avoid
CharityLawyer Blog
by Ellis Carter
2M ago
Navigating Form 990 and avoiding red flags is crucial for nonprofit organizations to ensure compliance, transparency, and the integrity of their operations. Form 990 serves as an important regulatory compliance and public disclosure tool. Form 990 outlines an organization’s financial activities and key governance practices and is instrumental in maintaining public trust and tax-exempt status. This post highlights critical Form 990 red flags that stakeholders should be aware of to safeguard their nonprofit’s reputation and operational effectiveness. 1. Incomplete or Unclear Transactions wi ..read more
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Public Charities: The 501(h) Election
CharityLawyer Blog
by Kyler Mejia
2M ago
501(c)(3)s are limited in their ability to lobby. Federal tax law restricts a 501(c)(3)’s lobbying activities under either the substantial part test or expenditure test. Plainly, the substantial part test states that no substantial part of the 501(c)(3)’s activities may be lobbying activities. The expenditure test states that the 501(c)(3)’s lobbying expenditures cannot exceed a certain amount. By default, each 501(c)(3) is subject to the substantial part test. However, most 501(c)(3)s can choose to operate under the expenditure test, often referred to as making the 501(h) election. Why Make t ..read more
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