This is part of our series on legal documents for nonprofit organizations. You can read our previous installment about documents for churches here. We work with several nonprofits that deal with what we’d call vulnerable populations—groups of people that are at greater risk for physical, psychological, or social harm orRead More…
501(c)(3) status covers most types of nonprofits, from veteran’s organizations to animal shelters. Most federally tax-exempt nonprofits fall into this category—however, you may find that the activities you’re looking to engage in are better suited for another type. While there are over 20 types of 501cs, today we’ll dig intoRead More…
Transcription: Together: “My name is Brooke Howe and I’m Kyle Howe and we’re with The Cooper House” Brooke: “The Cooper House is an organization that fosters hope to families in crisis in our community. We focus on children, parents, and families who are involved with the Department Of Child Services.”Read More…
As your church continues to grow, it’s helpful to make sure your legal documents are in order. Maybe you’re planting a new church and need a checklist of the documents you might need. Maybe you’re a leader at a church that’s been operating for some time and want to seeRead More…
What are Nonprofit Bylaws? Nonprofit organizations are governed by an official set of rules called bylaws. Nonprofit bylaws outline any state requirements for the nonprofit, as well as how the organization (and by extension, the people who run it) will operate on a high level. Bylaws are adopted when theRead More…
If your company is looking to start a charitable arm whether it’s a corporate foundation or other charitable endeavor – there are a few things to take into consideration before beginning the process. We’ll go over a few key considerations in this article, including the type of organization to start,theRead More…
One of the more nuanced types of conflict a nonprofit can run into is disputes between the nonprofit’s members and its Board of Directors. Attorneys and consultants who are not well-versed in nonprofit law can often give poor advice in these situations, as it’s a situation completely unique to nonprofitRead More…
If your nonprofit is involved in a lawsuit, knowing what to expect can help you best prepare for what’s to come. Though there are different ways the conflict can be solved, sometimes litigation is necessary to bring about justice or meaningful change. Whether your nonprofit filed a suit, or someoneRead More…
If your nonprofit is in the midst of conflict, it can be difficult to know how to solve it when emotions run high and the nonprofit’s mission is at stake. In this article, we’ll outline a few options you might be able to use to solve conflict, whether it’s aRead More…
Depending on your role within a nonprofit, it is possible to remove a board member, but it’s crucial to handle the situation carefully to protect the nonprofit from liability. Let’s dive into why a board member (also referred to as a director) might step down voluntarily or be removed, andRead More…
Searching for people to serve on your nonprofit’s board can be an overwhelming task. Whether your nonprofit is recruiting its first board, or if you’re looking to strengthen your existing board, we’ve got some tips to help you find the right people. Before you start recruiting, it’s important to knowRead More…
When starting a nonprofit, selecting members for your board of directors is one of the most essential steps you can take to make it a reality. But before choosing board members, it’s important to understand the basics so that you can avoid common mistakes in the long run and remainRead More…
The word “members” in the nonprofit context is often misunderstood, so today, we’re going to break down the legal and practical meanings. Knowing more about nonprofits with a membership structure can help you determine if your new nonprofit needs members. So what are “members” of a nonprofit? A member, inRead More…
Tax-Exempt Organizations 101 Did you know that the term “nonprofit” is not always interchangeable with the term “501c3?” A nonprofit is not always a 501c3, but a 501c3 is always a nonprofit. The term 501c3 is shorthand for an IRS term that describes public charities, which are most nonprofits. ButRead More…
For many charities, there comes a time where significant change is necessary. Maybe your nonprofit is ready to expand program lines or link arms with another organization doing similar work. Maybe your nonprofit has fulfilled what it set out to do, and you’d like to tie up loose ends beforeRead More…
If you get a notice from the IRS that your nonprofit status has been revoked, your 501(c)(3) status is no longer active. This can prevent you from applying for grant funding, obtaining gifts from companies, and securing funding from donors. Nonprofits lose tax exempt status automatically after 3 consecutive yearsRead More…
As a nonprofit grows and changes, so should the role of your board. While the basic legal responsibilities of a nonprofit’s board should always be kept in mind to avoid liability, throughout the lifecycle of a successful nonprofit, the role of the board does shift as the organization grows. Let’sRead More…
Whether you’ve been fundraising for 2 months or 20 years, it’s important to make sure your nonprofit is handling all the legal requirements surrounding donations. New to Fundraising? 43 states in the US currently require some sort of registration for your nonprofit to start raising money legally. So before youRead More…
If your nonprofit has gone through a merger, or is currently merging with another nonprofit, one question comes up all the time: Can we undo this if we change our minds? What happens if this merger isn’t as beneficial as we thought it would be? The short answer is yes,Read More…
When Sophia Shock first started her nonprofit, she knew she’d need some guidance to make it the best it could be. Her journey began when her uncle Andy suffered a severe hemorrhagic stroke in May of 2020. In an effort to help fundraise for his care, Sophia sold handmade, reversibleRead More…
There’s an overwhelming amount of advice for business leaders, but this advice is often not tailored to the unique needs of nonprofit leaders and executives. As a nonprofit ourselves, we understand the frustration, so we continually update this page with resources for nonprofit leaders: from advice from other nonprofit execsRead More…
Do you want to ask for donations through social media, email campaigns, telethons, or snail mail? Are you planning a 5k to raise money for your cause? Want to encourage giving to your nonprofit through a Bingo night or raffle contest? Before your nonprofit does any type of fundraising (inRead More…
Eventually, every board has some sort of conflict—whether it’s a small disagreement or a large difference in the direction they want the nonprofit to take. The key to managing board conflict is to be proactive when the first signs of conflict develop, rather than waiting for it to snowball intoRead More…
We’ve heard stories from nonprofits who’ve gotten not-so-great advice from a well-meaning attorney on their board. But why shouldn’t the attorney on my board give legal advice for your nonprofit? Typically, board attorneys have an area of focus that is not nonprofit-related: whether it’s family law, business law, etc. AndRead More…
Starting a nonprofit can be a fulfilling experience that allows you to pursue a cause you’re passionate about. However, many new nonprofit founders don’t anticipate the challenges that arise from starting a nonprofit. There are three common mistakes new nonprofit leaders make that can cost your charity time, money, orRead More…
We speak with hundreds of people looking to start a nonprofit each year, and one topic comes up over and over again: Should my nonprofit be a public charity or a private foundation? And what’s the difference between the two? Many people think that if the word “foundation” is inRead More…
The Basic Steps of a Nonprofit Merger Once you’ve determined that merging two nonprofits would be beneficial or needed, you can begin the process of merging. Each situation is different, so we recommend reaching out to a qualified nonprofit attorney to help throughout the process. There is also no setRead More…
Debunking the “hostile takeover” myth In the for-profit world, the term “merger” has a negative connotation, conjuring up thoughts of hostile corporate takeovers and big layoffs, but in the nonprofit world, it’s a different story. In the last year, we’ve seen nonprofits come together in ways that actually helped themRead More…
Save your nonprofit money so you can spend more on your mission It’s no secret that most nonprofits are registered as tax exempt with the IRS. But could your nonprofit be missing out on more money-saving opportunities? There are tons of businesses that offer discounted rates for registered nonprofits. DifferentRead More…
Nonprofit Status for Religious Organizations Churches, synagogues, mosques, and other places of worship are automatically considered tax exempt by the IRS (as long as they meet certain requirements), without filing for recognition of 501(c)(3) status officially. So why would a church file for 501(c)(3) status? Let’s delve into the legalRead More…
What counts as an in-kind donation? How do you write an acknowledgement for an in-kind donation? What counts as an in-kind donation? Generally speaking, an in-kind donation is when a donor donates a non-monetary donation. It’s important to note that donated time (volunteering) is not tax-deductible, but if the volunteerRead More…
After the whirlwind of 2020, more nonprofits are turning to collaboration with other nonprofits to pool resources, gain efficiency, and better serve their mission. Nonprofits can merge their back offices to enjoy lower overhead cost, enter into a joint venture to expand their offerings or service area, or even mergeRead More…
Compliance is a bit of a buzzword, but it really covers the answer to any question that starts with the phrase “Is it legal for a nonprofit to do that?” or “Can my nonprofit do or say this?”. Today, I want to cover the three of the common compliance questions weRead More…
What is a donation acknowledgement? A donation acknowledgement (often called a donation thank you letter) is a written communication from a nonprofit to a donor that includes the information a donor needs to take any tax-deductions applicable. The IRS requires nonprofits to send donation acknowledgments, so most nonprofits have madeRead More…
Heather Harrell started with a vision to create a school in her community that would not only educate students from 1st grade through 8th grade, but make a lasting positive impact on their community for years to come. Heather gathered an amazing team to create The Village School of LouisvilleRead More…
By Zac Kester, Executive Director and Mark Pizur, Program Officer If a creditor or Attorney General has involved your nonprofit in a receivership case, there are a few points you should take into consideration. But first, read up on what receivership is, and its basic benefits and downsides. The BoardRead More…
By Zac Kester, Executive Director and Mark Pizur, Program Officer Few industries have been immune from economic troubles brought on by COVID-19, and nonprofit organizations were no exception. But unlike business corporations, nonprofits cannot be forced into bankruptcy by creditors. So what are your options if your nonprofit organization isRead More…
Soma Church was built around the idea that the gospel changes everything. Change became a big part of the church, as the church grew from one location to three. “As time went on and those churches became more established, they were ready to branch out on their own,” said GrantRead More…
Like many nonprofits, ESEA Network had to change their plans for their annual conference when COVID-19 hit. ESEA Network works to provide equitable educational opportunities to economically disadvantaged children through a variety of methods, including an in-person conference for leaders in education. COO of ESEA Network, Jason Vallina, was inRead More…
The Villages of Indiana has impacted the lives of thousands of children and families since the organization was formed over 40 years ago. “The Villages champions families for children through foster care, adoption, and family services,” said CEO Sharon Pierce. But Sharon wanted to do more to ensure that theRead More…
Throughout the year, we’ll be sharing success stories from our clients about the wonderful things they’ve been able to accomplish with the support of Charitable Allies because we believe that when nonprofits thrive, our communities thrive. Rock Steady Boxing was founded to empower people with Parkinson’s Disease in a unique way: byRead More…
By Zachary S. Kester, Executive Director and Andrew Emhardt, Program Officer When a nonprofit organization is insolvent, the Board of Directors have a duty to organization’s creditors (individuals/entities to whom they owe money). The board must take steps to ensure that they “preserve the assets” or otherwise maximize the amountsRead More…
By Zachary S. Kester, Executive Director and Andrew Emhardt, Program Officer Sometimes a nonprofit organization must face a stark reality: insolvency. An insolvent organization is one that is not able to pay its debts as they come due, and it does not have enough assets or property to cover allRead More…
Throughout the year, we’ll be sharing success stories from our clients about the wonderful things they’ve been able to accomplish with the support of Charitable Allies because we believe that when nonprofits thrive, our communities thrive. When Megan McGuire became the Chief Executive Officer of Ascent 121, a nonprofit organizationRead More…
Three Ways to Reorganize or Restructure Your Nonprofit If your nonprofit is trying to find ways to accomplish new goals or is struggling, it might be time to restructure. Restructuring and reorganization can take on different forms, but they usually involve an intentional desire to change direction. Choosing which methodRead More…
The Five Methods to Dissolve a Nonprofit Once you’ve made the difficult decision to close your nonprofit organization, a thousand questions arise. How do we close the organization? What’s the best way to close with dignity and leave a lasting positive legacy? To close your nonprofit properly there are severalRead More…
Has COVID 19 dramatically impacted your ability to achieve your mission? Has your revenue dried up during the pandemic? Unfortunately, many nonprofits are feeling the impact of these unprecedented times, and are unsure of what to do next. Closing a nonprofit is a difficult decision, but in some cases, it’sRead More…
Are you getting burned out on all the COVID-19 related content these days? In the early stages of the pandemic you needed access to as much information as possible related to the novel coronavirus. For many states, businesses and organizations there is more knowledge of what the near term holds.Read More…
The COVID-19 pandemic has caused many nonprofits (and businesses) to see a reduction in donations/revenue or to temporarily shut down entirely. If that’s you, make your insurance claim. Make (and Preserve) the Insurance Claim I can’t stress this enough. Really. You absolutely should make (and preserve) your insurance claims, evenRead More…
Recognition of your organization’s tax-exempt status is one of the most important steps in the formation of an exempt organization. But, it is not the last step. Many organizations obtain their tax-exempt status and then lose it for one reason or another. The most common reason that exempt organizations loseRead More…
You’ve worked hard to gain federal recognition of your organization’s tax-exempt status, and now your organization is exempt from all federal income taxes. This newly awarded status, however, does not automatically grant exemption from state taxes, such as sales and use taxes, property taxes and income and franchise taxes. Similarly,Read More…
Over the years, the Internal Revenue Service (IRS) has paid close attention to enforcing the private benefit, private inurement, and excess benefit transaction doctrines against tax-exempt organizations. A doctrine is a specific set of guidelines regarding a specific issue. Each set of guidelines has its own specific features, but inRead More…
A major part of starting a nonprofit and becoming a tax-exempt, public charity is ensuring that you can provide for the feeding and care of an organization by complying with the filing and reporting obligations for the organization. This includes a number of filings that need to be done onceRead More…
As charitable organizations seek to increase streams of revenue — to provide more services, support more staff or help ensure long-term sustainability — many dabble in sources of business revenue to supplement the financial bottom line. For example, an organization with a pool may wish to rent the pool andRead More…
By Zachary S. Kester, Executive Director and Robert Miller, Program Officer, Charitable Allies Misconceptions abound in the public charity sector. Even those familiar with public charities often fail to understand or are unaware of certain aspects of the law related to public charities. One of the most common misconceptions amongRead More…
Legal jargon can be difficult to read and understand for attorneys and even more so for everyone else. This problem is no less an issue in the nonprofit sector, especially given that many people wanting to start nonprofits are just looking to do good in society and might not haveRead More…
While lexicographers correlate a rabble-rouser with a “demagogue,” this fundamental mischaracterization undermines the nature of the “loyal opposition.” How resourceful is a rabble-rouser? Do his or her contributions come highly recommended or strongly denounced?Read More…
By Zachary S. Kester, JD, LLM, CFRM, at Charitable Allies I recently sent out an email where I spoke about how my manager muscles were sore! I haven’tRead More…
By: Zachary S. Kester, J.D., LL.M, CFRM Charitable Allies Still unclear and fretting over whether your charityRead More…
We have dealt with a number of issues for our clients that were the result of “do-it yourself,” “robo-forms,” or “lawyer-in-a-box” type of documents. Here is some information on why these forms are inadequate, specifically in the nonprofit sector.Read More…
The following is an article by TheIndianaLaywer.com about Charitable Allies Executive Director Zachary S. Kester The Indiana Lawyer presented its 2018 Leadership in Law Distinguished Barrister & Up and Coming Lawyer Award Honorees to 30 men and women who represent the strength and future of Indiana’s Legal profession. Among theRead More…
By Zachary S. Kester, Executive Director and Robert Miller, Program Officer, Charitable Allies Many people know that charities can be tax-exempt from many forms of taxation and that their donors commonly receive tax benefits for their donations to the organization. Charities also receive the benefit of a formal structure thatRead More…
By Zachary S. Kester, Executive Director and Robert Miller, Program Officer, Charitable Allies Savvy businesspeople know that the best way to protect personal interests from liability is through incorporating their for-profit business. Incorporating offers many of the same protections for nonprofit organizations. However, errors and omissions of the Board ofRead More…
Starting a new nonprofit can be fun and exciting. You are beginning a journey to help your community in the best way you know how. You see an issue and you are stepping in to fill the void.Read More…
By Zachary Kester, JD, LLM CFRM, Charitable Allies Spending too much on overhead is bad. But how much is too much? While scholars agree that the 15 percent line implicitly reflected in Part IX of Form 990 is too low, what’s the sweet spot? And, maybe more importantly, what do fundersRead More…
By Zachary Kester, JD, LLM CFRM, at Charitable Allies Last night the National Art Museum of Sport and The Children’s Museum of Indianapolis announced a new permanent home for the NAMOS collection–the new Riley Children’s Health Sports Legends Experience. NAMOS Board President and NCAA VP and CFO Kathleen McNeely graciouslyRead More…
By Zachary S. Kester, JD, LLM, CFRM With all the coverage of the 2016 Presidential election and then proposed repeal of the Affordable Care Act (popularly known as “Obamacare”), many nonprofits and small employers may be unaware that last-minute legislation gave them the option to offer health reimbursement arrangements toRead More…
By: Zachary S. Kester, J.D., LL.M, CFRM and Laura Fucio, Charitable Allies IRS recognition of a nonprofit’s tax-exempt status is crucial for any nonprofit hoping to receive grants. Most grantors or donors need advanced assurance of the IRS determination of tax-exemption or deductibility to satisfy tax obligations upon them. InRead More…
By: Zachary S. Kester, J.D., LL.M, CFRM Charitable Allies After a hot, muggy summer, fall has come to Indiana. In addition to bringing cooler temperatures, changing leaves and pumpkin spice flavored absolutely everything, the fall season is a popular one for charitable fundraising. You have probably encountered an advertisement offeringRead More…
June 14, 2016 By Zachary S. Kester, JD, LLM, CFRM and Kylie Schreiber, at Charitable Allies To their detriment, many nonprofits believe the new overtime rules going into effect on December 1, do not apply to them since they are not business “enterprises.” But this overlooks the reality that “individual”Read More…
By Zachary S. Kester, JD, LLM, CFRM, at Charitable Allies Many nonprofit organizations are pretty good at tracking activity data, such as how many children they served, how many meals they served, or how many people completed a class or training offered. Increasingly, these numbers alone are becoming insufficient toRead More…
By Zachary Kester, JD, LLM, CFRM Many leading nonprofit organizations and experts laud “best practices” to set the bar high in terms of transparent, prudent and ethical operations across many areas. These go beyond the minimum legal and accounting requirements and purport to set a strong foundation of compliance withRead More…
The Todd Academy, Inc. (founded and operated by Sharon Todd, also the owner of Todd Academy Fundamentals, Inc.) was a private school dedicated to serving the unique educational needs of the gifted and talented. Unfortunately, its laudable mission was lost in a haze of mismanagement and deceit. Examples include: Not payingRead More…
Flanner House of Indianapolis, Inc. today took a difficult step and brought an action against Flanner House Elementary School, Inc. and its board of directors alleging nearly $1M in damages for the Flanner School Board’s reckless conduct in improperly overseeing the school. Flanner House and Flanner School are two differentRead More…
By Zachary Kester, JD, LLM, CFRM Recently a charity purchased property to use as a part of its charitable programming. Unfortunately, it was not permitted to apply for a property tax exemption that year because the property sale closed after the May 15th deadline to apply for the tax exemption.Read More…
Nonprofit boards are often made up of a group of people trying to help out their community as best as they can. Unfortunately, however, they are not immune from mistakes. These mistakes can have serious consequences that range from creating financial liabilities for the organization to leading to its ultimateRead More…
By Zac Kester, JD, LLM, CFRM, at Charitable Allies Nonprofits do such great things. They provide end of life care, fight homelessness, provide free legal services to indigent individuals, honor fallen soldiers, conserve land and water, combat disease, rescue animals, and much, much more. It takes a team to getRead More…
By Zachary S. Kester, JD, LLM, CFRM, at Charitable Allies Sally Sponsor wants to restrict her donation to sponsor a specific child in your child sponsorship program. Andy Abode wants to be sure Don Displaced directly benefits from his donation to the homeless shelter; Displaced is a homeless man withRead More…
Your organization just found out it will receive a donation of new laptops for the office. Do you know what type of information to include in an acknowledgment?Read More…
By Zac Kester, JD, LLM, CFRM Good nonprofit organizations seek out community leaders from diverse backgrounds to serve on their boards of directors. As they recruit directors, they know that having the right people with the right skills helps the organization achieve its strategic goals. Nonprofits are tapping lawyers notRead More…
By Zachary S. Kester, JD, LLM, CFRM, at Charitable Allies By now you’ve likely heard of the new IRS Form 1023-EZ, a streamlined Application for Recognition of Tax Exemption that greatly reduces entry barriers for new, small charities. There are some wonderful potential benefits. There are some rather grave potentialRead More…
By Zachary S. Kester, JD, LLM, CFRM 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 evenRead More…
By Zachary S. Kester, JD, LLM, CFRM, at Charitable Allies At the start of every year, many nonprofit organizations wisely take time to regroup and assess what worked and what didn’t in the previous year. Now is also an excellent time to review compliance requirements that some nonprofits inadvertently overlook.Read More…