Exempt Org. Resource Blog

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ExemptOrgResource.com is an online resource for information and insight on the unique legal issues impacting nonprofit organizations. The blog is designed to keep the nonprofit, tax-exempt organization community up-to-date on legal developments, changing regulations and good practices.

A Minute Guide to Minutes

Among the many elements of corporate housekeeping and compliance that demand the time and attention of directors and officers (and staff), minutes often seem like a burden.  No one doubts that minutes matter.  A well-documented board meeting creates an important historical record that can guide future deliberations and may prove useful during Board disagreements, litigation, Attorney General investigations, other governmental enforcement actions, or an audit by the IRS.  However, clients often nervously ask whether there is a legal standard regarding how much detail minutes should contain. 

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President Trump’s New Johnson Amendment Executive Order: Is the Bark Worse than the Bite?

Earlier this week we reported on proposed bills regarding the repeal or modification of the “Johnson Amendment” which established the absolute prohibition on political campaign activity by 501(c)(3) charitable organizations.  On May 4, President Trump issued an executive order, “Promoting Free Speech and Religious Liberty,” which, among other things, addresses enforcement of the prohibition by the Internal Revenue Service (IRS).

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Update on Johnson Amendment Repeal Bills

During his presidential campaign, President Trump promised to repeal the “Johnson Amendment” which established the absolute prohibition on political campaign activity by 501(c)(3) charitable organizations.  After his inauguration, President Trump promised to “destroy” the amendment (specifically with respect to churches), and three bills have been introduced in the 115th Congress to modify the prohibition or eliminate it completely for all 501(c)(3) charitable organizations.

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EOs and EOs: Exempt Organizations and Presidential Executive Orders

In the twelve days since his inauguration, President Donald Trump has issued a flurry of executive orders relating to, among other things, the proposed repeal of the Affordable Care Act, the construction of oil pipelines, the building of a wall on the Mexican border, and immigration restrictions.  These executive orders have begun the process of fulfilling many of the promises President Trump made during the campaign, and it seems likely that additional executive orders will continue to be issued.

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Proposed Legislation Would Allow Limited Political Campaign Activity for Charitable Organizations

Recently, we wrote about the absolute prohibition on political campaign activity by 501(c)(3) charitable organizations, and the importance of managing the use of social media to avoid violating these rules.  This prohibition has gained national attention during the 2016 election cycle, with Donald Trump vowing to repeal the “Johnson Amendment,” so named because then-senator Lyndon B....
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IRS to Update 1967 Revenue Ruling Relating to Change of Domicile

The Internal Revenue Service (the “IRS”) has announced plans to update Revenue Ruling 67-390 that requires an organization to “re-apply” for  tax-exemption if it changes its corporate structure, including in situations where an exempt organization reincorporates under the laws of another state (even where there is no change in corporate/charitable purposes). 

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Trending Now: Political Activities and Social Media

The 2016 U.S. presidential campaign has reached a fevered pitch, with a little over a month remaining before Election Day.  After Monday’s debate between Hillary Clinton and Donald Trump, the stakes are high and the American public is turning to social media to express powerful emotions ranging from excitement to exhaustion, and to support their chosen candidate (or oppose the other).  

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Court Dismisses Challenge to New York Donor Disclosure Requirement

On August 29, 2016, the United States District Court for the Southern District of New York dismissed in its entirety a complaint against the New York Attorney General filed by Citizens United and Citizens United Foundation, challenging the Attorney General’s policy of requiring charities to disclose the names, addresses, and total contributions of their donors in connection with registration to solicit funds in New York.  

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BREAKING NEWS: PRI Examples Are Finalized, with Improvements

Yesterday, Treasury and the Internal Revenue Service (IRS) finalized the regulations describing nine new program-related investment (PRI) examples that were first proposed on April 19, 2012.  The final regulations incorporate several helpful amendments that were requested by comments received in response to the proposed regulations.

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Form 990-N Filing Changes

The IRS recently announced that, beginning February 29, 2016, Form 990-N (also known as the “e-Postcard”) will be filed through the IRS website rather than through the Urban Institute website.

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Thanks But No Thanks: Proposed Charitable Gift Substantiation Regulations Receive a Critical Response

On September 18, the Department of the Treasury and Internal Revenue Service (the “IRS”) proposed regulations relating to the substantiation of charitable contributions made to Section 501(c)(3) organizations.  If approved, the proposed regulations would expand the ways in which charities can acknowledge donations.  Under the current regulations, charities must provide a contemporaneous written acknowledgement to donors who contribute $250 or more stating (i) the amount of cash and a description of any property other than cash contributed; (ii) whether any goods or services were provided by the organization in consideration of the contribution; and (iii) a description and good faith estimate of the value of any goods or services provided.  This acknowledgement is routinely provided as part of the “thank you’s” sent out by charities for contributions they receive, including those that fall below the $250 threshold.

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Possible End to Required Disclosure of Contributors

The IRS is, according to Tax Analysts, considering eliminating Schedule B of the Form 990, which asks for the names and addresses of an exempt organization’s contributors and for certain information about contributions received.   Tax Analysts reported that, at a program sponsored by the Urban Institute, Tammy Ripperda (Director of Exempt Organizations at the IRS) questioned whether the IRS should ask for the names and addresses of contributors, given that this information is not made public, and whether there is a need for the information from a federal tax law enforcement standpoint. 

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Cybersecurity & Nonprofits: A Matter of Time?

The ever increasing cyber-attacks and data breaches targeting the private sector and government agencies, and the increased focus on cybersecurity plans and preparedness, may seem like remote risks for nonprofit organizations.  Because nonprofits have not been as vigorously targeted for attacks as their for-profit and government counterparts, the sector has been slower to adapt to the threat environment and allocate their often scarce resources to cyber preparedness and protection.  Perhaps this can be explained, in part, by a nonprofit’s organizational focus on mission and programming, limited resources (underscored by pressure to reduce administrative, overhead, and compliance costs in favor of programmatic expenditures), and a sense of their charity status, or “halo,” providing protection from any risk.

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New York Not-For-Profit Board Chair Requirement Delayed Again

One of the more contentious requirements imposed by the New York Non-Profit Revitalization Act is the new Section 713(f) of the Not-for-Profit Corporation Law, which states that no employee of a not-for-profit organization can serve as Board chair or hold any title with similar responsibilities.  Implementation of Section 713(f) previously was delayed until January 1, 2016, and on October 26, Governor Andrew Cuomo signed into law a bill which delays the effective date, for another year, until January 1, 2017.  According to the memorandum accompanying the bill, the delay is necessary because “the Legislature requires more time to study the impact of this prohibition on not-for-profit organizations.”

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Federal Court Upholds New York Donor Disclosure Requirement

A federal district court in New York has upheld the New York Attorney General’s policy requiring registered charities to disclose the names, addresses and total contributions of their major donors.  This is the second federal court to rule on this issue, after the United States Court of Appeals for the Ninth Circuit upheld a similar requirement by California’s Attorney General in May in a suit brought by the Center for Competitive Politics, a 501(c)(3) public charity.

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Nonprofits and Cybersecurity: Understanding and Managing the Risks of Cyber Threats

With cybercrime striking everywhere from government agencies to Major League Baseball, each new hack is making headlines, launching inquiries, and triggering lawsuits.  Although most of the focus has been on private sector companies and governmental agencies, nonprofit organizations are not exempt (no pun intended) from cyber threats or their consequences.

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White House Announces MRI/PRI Guidance with a Focus on Climate Change and the Environment

On June 16, 2015, the White House issued a press release highlighting private sector commitments and a series of executive actions related to investment in clean energy innovation.  The release coincided with yesterday’s clean energy investment summit, at which Vice President Joe Biden described more than $4 billion of independent commitments by major foundations, institutional investors, and other long-term investors to fund climate change solutions, including innovative technologies with the potential to reduce carbon pollution.

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Attorney General Issues Audit Committee Guidance

The New York Attorney General has issued guidance about the audit oversight requirements under the Non-Profit Revitalization Act.  The AG’s Guidance—issued without fanfare by the Charities Bureau on February 24—will be of interest to most charities that are required to register to conduct charitable solicitations in New York.

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IRS Restructuring Update

As we reach Day 500 of the IRS Section 501(c)(4) controversy (with a shout out to the Tax Prof Blog for keeping count), the IRS is continuing to implement restructuring of the Tax Exempt and Governmental Entities Division (“TE/GE”).  In a statement made on September 9, 2014, the IRS announced that the current Office of Division Counsel/Associate Chief Counsel (TE/GE) will be split into two offices:  the Office of Associate Chief Counsel (TE/GE), which will report to the deputy chief counsel (technical), and the Office of Division Counsel (TE/GE), which will report to the deputy chief counsel (operations).  With this restructuring, IRS field attorneys will be part of the Office of Division Counsel and IRS national office attorneys will be part of the Office of Associate Chief Counsel.

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New (But Mostly Old) IRS and Treasury Department Priorities for the Tax-Exempt Sector

The Treasury Department and IRS released the 2014-2015 Priority Guidance Plan on August 26, 2014.  The Guidance Plan lists a total of 317 projects that are priorities for allocation of Treasury Department and IRS resources for July 2014 through June 2015.  Of these, only sixteen relate directly to exempt organizations.  Eleven of the sixteen are carryovers from the 2013-2014 Priority Guidance Plan; the remaining five projects are new, but two of these (dealing with Form 1023-EZ and related streamlined application procedures) were completed before issuance of the 2014-2015 Plan. 

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