Uncategorized

Nonprofit Tweets of the Week – February 21, 2014

The Nonprofit Law Blog will be getting a new look next week. Have a listen to Gavin DeGraw’s Everything Will Change (the official song of Team USA 2014) while perusing this week’s tweets on nonprofits, philanthropy, governance and social enterprises:

  • Stanford Social Innovation Review: Three reasons why nonprofit mergers continue to lag; a feature article in our new Spring 2014 issue http://ow.ly/tQ7cT 
  • AFJ Bolder Advocacy: Contrary to NY Times editorial, IRS rules would not solve scourge of secret money in politics. We explain: Link
  • Ellis Carter: Five Internal Controls for the Very Small Nonprofit | Blue Avocado 
  • Jan Masaoka: Ten Things Boards Do Right: who knew? Blue Avocado
  • Cynthia Remec: This infographic’s a great board read: NFP Strategic Restructuring, collaboration best practices http://ow.ly/tAYeu
  • LearnNPFinance: Check out the Nonprofit Assistance Fund’s 10-step budgeting checklist for nonprofits: http://bit.ly/1osbAjI
  • Philantopic: Millennials and the New Efforts to Reduce Poverty in America – American Progress
  • Robert Reich: 3 reasons why Americans aren’t raising a ruckus over widening inequality. YouTube
  • Erin Bradrick: Clinton Foundation and Gates Foundation announce partnership to measure progress by women & girls: Philanthropy News Digest
Uncategorized

IRS Deadline: March 1, 2014 – Who is Your Responsible Party?

 

Me 

Do you know who your organization has reported to the IRS as its responsible party? Your organization should make sure the IRS has the current information by the February 28, 2014 deadline.

According to the Instructions to IRS Form 8822-B:

Beginning January 1, 2014, any entity with an EIN [Employer Identification Number] must file Form 8822-B to report the latest change to its responsible party. Form 8822-B must be filed within 60 days of the change. If the change in the identity of your responsible party occurred before 2014, and you have not previously notified the IRS of the change, file Form 8822-B before March 1, 2014, reporting only the most recent change.

For a nonprofit organization, "the “responsible party” is the person who has a level of control over … the funds or assets in the entity that, as a practical matter, enables the individual, directly or indirectly, to control, manage, or direct the entity and the disposition of its funds and assets." Typically, this will be the organization's executive or president.

The person who has accepted the role of being the responsible party may have greater responsibility and therefore greater exposure to personal liability for failure to pay withholding (payroll) taxes. Internal Revenue Code Section 6672(a) provides in pertinent part:

Any person required to collect, truthfully account for, and pay over any tax imposed by this title who willfully fails to collect such tax, or truthfully account for and pay over such tax, or willfully attempts in any manner to evade or defeat any such tax or the payment thereof, shall, in addition to other penalties provided by law, be liable to a penalty equal to the total amount of the tax evaded, or not collected, or not accounted for and paid over.

While there is no direct reference to "responsible party" in Section 6672, it might be difficult for a person identifying herself or himself as the responsible party to claim she or he was not the party responsible for collecting, accounting for, and paying over withholding taxes. The term "person" in Section 6672 explicitly includes officers and employees, and Section 6672 does not from penalties volunteer board members unless they solely serve in an honorary capacity, do no participate in day-to-day or financial operations of the organization, and do not have actual knowledge of the failure to collect, truthfully account for, and/or pay withholding taxes, and so long as someone else can be held liable for the penalty.

It's important to note that nonprofit organizations may have identified a responsible party when it first applied for an EIN (see the organization's Form SS-4 or online filing records). If the individual listed as the responsible party has since changed, a nonprofit organization must file Form 8822-B by no later than February 28, 2014 to report such change.

Here are additional resources on withholding taxes and possible personal liability:

Not Paying Your Taxes? Your Board Could Be Personally Liable (Nonprofit Quarterly)

Yes Virginia, Nonprofit Directors Really Can be Held Liable for An Insolvent Nonprofit’s Debts (Charity Lawyer Blog)

 

TWEETS OF THE WEEK

Nonprofit Tweets of the Week – February 14, 2014

 

Heart

Happy Valentine's Day. Have a listen to Chet Baker's My Funny Valentine while perusing this week's tweets on nonprofits, philanthropy, governance and social enterprises:

  • Foundation Center: Can My Business Be a Nonprofit? Free webinar 2/26, 2-3pm ET w/ attorney Erin Bradrick. Register now: http://bit.ly/1b5awPz 
  • Council of Nonprofits: File IRS Form 8822-B before March 1st to tell the IRS who the "responsible party" at your nonprofit is. Deadline soon!
  • Law News Trends: Safeguarding Your Nonprofit against Fraud and Embezzlement: Best Practices, Common Pitfalls, and Practical… http://bit.ly/1iZoNfY 
  • Council of Nonprofits: #TransparencyTuesday More tips for nonprofit transparency http://bit.ly/1jtYG46 
  • Nonprofit Law News: Updated Procedures For Reinstating Tax-Exempt Status: IRS Issues Revenue | by Polsinelli
  • Ellis Carter: Boards Can't Just Abandon an Insolvent Nonprofit http://bit.ly/eal7QT
  • Debra Beck: Core nonprofit board competency 2: Think strategically http://bit.ly/1eTNPwS 
  • Gene: WA Supreme Court invalidates exemption for religious employers when employee does not perform religious functions – MarketWatch
  • Nonprofit Quarterly: Conflicts of interest are a normal part of organizational life, but dealing with them is anything but simple… http://ow.ly/ttvHm 
  • Community Initiatives: Does it help or hinder? Great article on crowdfunding and established nonprofits, via NY Times 
  • Gene: How Companies Can Achieve Effective Board Governance, Stakeholder Engagement, and NGO Partnerships http://huff.to/1eUbxcjAlice Korngold
FORMS Starting a Nonprofit

NEO Law Group’s Video on Tips for Starting a Nonprofit – Form 1023

NEO Law group recently posted a new YouTube video on 2 minute tips for starting a nonprofit. This video focuses on the Form 1023, the Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code. We hope that you enjoy it and please stay tuned for additional videos from NEO Law Group on tips related to nonprofits.

Uncategorized

Nonprofit Tweets of the Week – February 7, 2014

 

Sochi

 

Today marks the first day of the Winter Olympics in Sochi. Have a listen to kd lang's incredible version of Hallelujah (from the Opening Ceremony of the 2010 Winter Olympics) while perusing this week's tweets on nonprofits, philanthropy, governance and social enterprises:

Boards / Governance

NonprofitRadio: Board Committees and Other Committees

 

Nonprofit Radio 2014
I'll be discussing board committees and other committees with Tony Martignetti on NonprofitRadio tomorrow at 10:30 am PST / 1:30 pm EST. Please join us and Tony's 9,000 other listeners live on Talking Alternative. Or catch the recorded podcast on iTunes.

While I'm not certain where the conversation may go, we may be discussing issues like:

  • Why do nonprofits have committees?
  • Can a nonprofit have someone who is not a board member on a board committee?
  • What's the difference between a committee and an advisory board? How about a task force?
  • What's the difference between a standing committee and an ad hoc committee?
  • How much authority can a board delegate to a committee?
  • How do committees take action?
  • How do committees document their actions?
  • How do boards exercise oversight over committee actions?
  • Should every nonprofit have an executive committee?
  • Should every nonprofit have an advisory board or advisory committees?
  • What other committees should a nonprofit have?

 Check out some of our other posts on committees:

Everything You Wanted to Know About Nonprofits & Committees
Advisory Board v. Board of Directors – A Distinction with a Difference
The Finance Committee: What is it and What Does it Do?
Human Resources Committee

Background: Fiduciary Duties

Under the Model Nonprofit Corporation Act (Third Edition), the board of directors is the group of individuals responsible for the management of the activities and affairs of the nonprofit corporation, regardless of the name used to refer to the group.  Generally, all corporate powers must be exercised by or under the authority of the board of directors of the nonprofit corporation, and the activities and affairs of the corporation must be managed by or under the direction, and subject to the oversight, of its board of directors.

Each director, when discharging the duties of a director, must act: (1) in good faith, and (2) in a manner the director reasonably believes to be in the best interests of the nonprofit corporation.  In addition, the directors, when becoming informed in connection with their decision-making function or devoting attention to their oversight function, must discharge their duties with the care that a person in a like position would reasonably believe appropriate under similar circumstances.

In discharging board or committee duties, a director who does not have knowledge that makes such reliance unwarranted may rely on the performance by certain individuals to whom the board may have delegated, formally or informally by course of conduct, the authority or duty to perform one or more of the board’s functions that are delegable under applicable law.

A director may be liable to the nonprofit corporation or its members for a decision to take or not to take action, or a failure to take any action, as a director, if the party asserting liability in a proceeding establishes, inter alia, that the challenged conduct consisted or was the result of:

  • A decision as to which the director was not informed to an extent the director reasonably believed appropriate in the circumstances; or
  • A sustained failure of the director to devote attention to ongoing oversight of the activities and affairs of the corporation, or a failure to devote timely attention, by making (or causing to be made) appropriate inquiry, when particular facts and circumstances of significant concern materialize that would alert a reasonably attentive director to the need therefor.

For smaller nonprofit corporations in particular, directors who take on additional roles and responsibilities not related to their service as directors or members of board committees must exercise additional care and caution. Such roles may include serving as officers, employees, or program volunteers. Consideration of potential exposures, obtaining insurance coverage, and other risk management strategies should be reviewed with respect to such service. The standard of care and inquiry required to be reasonably informed may differ widely among the different roles assumed by an individual who serves as a director.

FUNDRAISING Starting a Nonprofit

NEO Law Group’s Video on Tips for Starting a Nonprofit – Fundraising Before Exemption

Yesterday, NEO Law Group posted its third YouTube video on 2 minute tips for starting a nonprofit.  This video focuses on the issue of fundraising before receiving an exemption determination letter from the IRS. We hope that you enjoy it and please stay tuned for additional 2 minute videos with tips for starting a nonprofit.

TWEETS OF THE WEEK

Nonprofit Tweets of the Week – January 31, 2014

  

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Happy Lunar New Year! The past week's highlight: the State of the Union address. The upcoming weekend's highlight: the Super Bowl. Have a listen to the Red Hot Chili Peppers' Can't Stop while perusing this week's tweets on nonprofits, philanthropy, governance and social enterprises:

  • Walt Frick: HBR’s Guide to Obama’s 2014 State of the Union, by me. Harvard Business Review … Tons of links to put the proposals in business context
  • Rick Cohen: Rick Cohen on nonprofit messages re income inequality in Pres. Obama 's 2014 State of the Union – Nonprofit Quarterly
  • Emily Chan: Update: Expedited Handling for IRS Determination Letters Still Available via Nonprofit Law Matters  
  • AFJ Bolder Advocacy: The Basics of Effective Nonprofit Advocacy
  • Law For Change: New California Employment Laws for 2014 http://law4.ch/1a3U4OF 
  • Perlman & Perlman: Share, Use, Remix: An Overview of Creative Commons | NTEN
  • BDO: This week on our blog, Sandra Feinsmith discusses challenges and opportunities facing nonprofits in 2014 http://bit.ly/1fkGaaA 
  • Ellis Carter: Considerations When Conducting Activities in a New State http://bit.ly/1bpQr1Y 
  • Council of Nonprofits: Envision your ideal board member  - BoardSource
  • Vantage Point: Generative Thinking: The Board’s Highest Purpose via CompassPoint
  • Nonprofit Times: Massachusetts Launches Non-Guaranteed Social Impact Bonds http://bit.ly/1ffo0Xh
  • AAPIP: Video: Watch this AAPIP giving circle video. 10 Years of Dreamers & Doers. Building Democratic Philanthropy http://youtu.be/h5cnT9wsG50 
  • UN Foundation: What is the State of the World's Children? UNICEF is looking at the data. http://uni.cf/data
Starting a Nonprofit

NEO Law Group’s Video on Tips for Starting a Nonprofit – Drafting a Purpose Statement

NEO Law Group recently posted its second YouTube video on 2 minute tips for starting a nonprofit.  This video focuses on the process of drafting a purpose statement for a new nonprofit organization  We hope that you enjoy it and please stay tuned for additional 2 minute videos from NEO Law Group on tips related to nonprofits.    

TWEETS OF THE WEEK

Nonprofit Tweets of the Week – January 24, 2014

 

Camelback Mountain Camelback Mountain, Phoenix, Arizona

On Tuesday, Erin and I gave a presentation on committees to the Finance Professionals Network and Human Resources Network at CompassPoint.  Today, I'm on a panel with nonprofit lawyers Eve Borenstein and Ellis Carter discussing small nonprofit organization issues at the American Bar Association meeting in Phoenix. Have a listen to Glen Campbell's By the Time I Get to Phoenix while perusing this week's tweets on nonprofits, philanthropy, governance and social enterprises:

  • Rick Cohen: MLK Day: What Is the Legacy? my 2012 commentary on MLK "Day of Service" progs & where they fall short of MLK message NPQ
  • Gene: Honored to let Institute for War and Peace Reporting use Nonprofit Law Blog content for positive civil society & social change efforts in Iran. #MLKDay
  • Guidestar: What does net neutrality mean for nonprofits? Lucy Bernholz, @p2173, shares her thoughts: http://owl.li/sNyfH 
  • Philanthropy: Charitable Deduction Probably Safe for 2014, Say Experts http://ow.ly/sGCZ6 
  • Nonprofit Quarterly: LinkedIn stresses that volunteering matters by launching a new volunteer marketplace http://ow.ly/sEOnk 
  • Philanthropy: Op-ed on donor-advised funds: "The only policy that makes sense is to impose payout requirements…"  
  • Nonprofit Law News: IRS Issues New Guidance for Exempt Hospitals: Proposed Procedures for Correcting…  | by DWT
  • Law for Change: LawForChange Blog: IRS Announces Streamlined Procedures to Reinstate Tax-exempt Status http://law4.ch/LMVx0H  [Ed. The article is written by Ellis Carter.]
  • Gene: The World Changing Ideas Of 2014 FastCo | "A public company will become a benefit corporation"
  • Bill Gates: Melinda Gates and I released our Annual Letter. Read how life is improving around the world 
  • UNICEF: Wealth of half world’s population the same as that of 85 richest people. Via Oxfam  #inequality
  • Michele Berger: Proud to launch NEO Law Group's new video series- Tips on Starting a Nonprofit! 1st video, Selecting the Board: YouTube [Ed. Michele is our ace legal assistant, 3rd year law student, and video producer! Our Senior Counsel Erin Bradrick stars.]