Find updates on our major cases, as well as updates on nonprofit compliance and educational issues below.
Flanner House of Indianapolis v. Flanner House Elementary School
Flanner House is suing Flanner School and its board of directors for recklessly overseeing the school resulting in its sudden closure and damages to Flanner House, and fraud in negotiating its lease, as well as Flanner School’s insurer for bad faith in handling the claim against the directors and officers insurance.
In re Todd Academy
Parents of students, teachers and other creditors sued the Todd Academy for alleged nonpayment of wages. After continually missing paychecks and repeatedly breaking promises to pay, teachers finally had enough of the excuses and decided to bring legal action against Sharon Todd, the Todd Academy and its affiliate organization Todd Academy Fundamentals. The case settled with the Defendants admitting liability and promising to pay back wages, plus liquidated damages, attorney fees and costs.
Good Healthcare Option for Small Employers
April 19, 2017
A little-noticed bill passed in December of 2016 gives qualified small employers the option to offer a health reimbursement arrangement as a benefit to their employees – without running afoul of Affordable Care Act restrictions.
Are EZ Charities Really Easy? Yes… and No
January 31, 2017
The brevity and lack of detail on Form 1023-EZ raises concerns for funders who rely on the organization’s determination letter to identify eligible grant recipients.
Pitfall Season for Cause Marketing
November 1, 2016
Cause marketing, where a for-profit business sells goods or services on the promise that it will share proceeds with a charity, is a popular and potentially valuable tool for nonprofits. It’s a fast-growing type of marketing. However, it presents pitfalls for the unwary nonprofit leader.
‘Blocker’ Corporation: Avoiding UBIT for Nonprofit ‘Business’ Activities
August 2, 2016
As charitable organizations seek to increase streams of revenue, many dabble in sources of business revenue to supplement the financial bottom line. Business activities are fairly common among charitable organizations. The activities themselves are not inherently wrong or impermissible for charities. They only become an issue if they are unrelated to the charitable purposes of the organization and represent a substantial percentage of the total revenue and activities of the organization. Unrelated business income tax (UBIT) can apply to income from those types of unrelated business activities. A blocker corporation, however, can help avoid UBIT.
Beware: New Overtime Rules Apply to Most Nonprofits
June 14, 2016
New regulations for paying employees overtime go into effect December 1. Contrary to popular belief, nonprofits are not automatically exempt and many will have to pay employees overtime. Avoid potential lawsuits and learn how to play by the new rules.
Why Outcomes Matter
January 26, 2016
Outputs measure what we do. Outcomes measure effectiveness and behaviors changed. Outcomes can be notoriously difficult to measure.
Busting the “Best Practices” Myth
October 13, 2015
Many leading nonprofit organizations and experts laud “best practices.” But “best practices” are essentially impossible to put into practice and perhaps even a waste of time for an organization to pursue. Right? . . .
Fixing the Charitable Property Catch-22
August 1, 2015
If a charity acquires property after May 15th in a given year, it may be required to pay property taxes for that year even though the charity’s use is actually tax exempt. This is due to the May 15th deadline to file for property tax exemption. There is an easy fix.
Top 5 Mistakes of Boards
July 14, 2015
Our list of the Top 5 Mistakes of Boards: 1. Failing to Monitor Programming Effectiveness or Make Course Corrections; 2. Not Wrestling With Tough Questions; 3. Board-Level Confidences are Not Kept; 4. One Person (or a Small Group) Runs the Show; and 5. Not Holding Executives and Inactive Board Members Accountable. Read more to find out why.
Inattentive Board Personally Liable for $2.25M
May 5, 2015
Individual board members were each found personally liable for $2.25M in damages for providing inadequate oversight, relying on incompetent officers and in failing to take adequate action once they knew there were problems. No director personally or individually engaged in bad behavior other than being inattentive but they were each still held liable. The lesson? Read to find out.
Are tax deductions allowed for restricted donations?
February 10, 2015
Three different donors want to restrict their gifts to your charity in three different ways. What should you do to ensur ethe restrictions are proper?
Can my donor take a tax deduction for in kind donations?
December 16, 2014
Your organization just found out that it will receive a donation of new laptops for the office. Do you know what type of information to include in an acknowledgement? Well, a donor may generally deduct an in-kind (or, non-cash) donation as a charitable contribution. And a donor must obtain a particular type of written acknowledgement from the charity to substantiate the gift.
So you want a lawyer on your board . . .
October 14, 2014
Nonprofits are tapping lawyers not only for their legal expertise, but also for their personal networks and reputation. Having a lawyer on board can be good for both sides, yet comes with risks. But when the risks are properly managed, the lawyer’s service can be positive and fruitful.
New “EZ” Charities are Second Class?
August 11, 2014
The new “EZ” Application for tax exemption is laudatory and does some good. But it also creates a second class of charities, those who went the “EZ” route and who cannot undo it. Most often, if it seems too good to be true, it probably is.
Charities Should Use Caution when Pursuing “Business” Activities
March 13, 2014
The modern nonprofit sector is vibrant and adaptable, especially after coming off the heels of the largest and longest recession in modern history. Many charities are pursuing opportunities to ensure stability by providing services for a fee and by selling goods. Consultants even hold seminars on developing earned income streams. Most charities, however, do this at some risk, and should be cautious in how they expand and manage business-related activities.
New Year Brings Internal Assessments for Nonprofits
January 6, 2014
January is an excellent time to review what annual compliance-related requirements imposed on nonprofits by various regulatory agencies that some inadvertently overlook. Charitable Allies provides an easy to follow checklist to be sure an organization is off to a good start.