Starting and Managing a Nonprofit Organization

Nonprofits must comply with stringent federal and state laws due to their special tax-exempt status; the government's ultimate threat is revocation of a nonprofit's tax-exempt status, which usually means the nonprofit's demise. Written in plain English, not "legalese," Starting and Managing a Nonprofit Organization: A Legal Guide, Sixth Edition, provides essential guidance for those interested in starting nonprofits, as well as valuable advice for leaders of established organizations.

• Revised and expanded to include updated information on changes in laws, rules, and regulations governing the nonprofit sector
• Covers federal tax law, nonprofit, governance, the annual information return (Form 990), charitable giving rules, and current IRS ruling policy
• Presents essential, practical legal information in easy-to-understand English
• Explains the applications and implications of corporate, tax, and fundraising laws for nonprofits

This easy-to-read resource contains essential information on virtually every legal aspect of starting and operating a nonprofit organization from receiving and maintaining tax-exempt status to tips for successful management practices.

Preface ix

Acknowledgments xiii

PART ONE STARTING A NONPROFIT ORGANIZATION 1

Chapter One: What Is a Nonprofit Organization? 3

Chapter Two: Starting a Nonprofit Organization 13

Chapter Three: Debunking Some Myths and Misperceptions 23

PART TWO BEING NONPROFIT, LEGALLY 31

Chapter Four: Nonprofit Organizations: Much More than Charity 33

Chapter Five: Nonprofits and Private Benefit 49

Chapter Six: From Nonprofit to Tax-Exempt 65

Chapter Seven: Charities: Public or Private? 79

Chapter Eight: Governance: Board Duties and Liabilities 93

Chapter Nine: Braving Annual Reporting 109

Chapter Ten: Tax Exemption: Not a Paperwork Exemption 119

Chapter Eleven: Charitable Giving Rules 129

Chapter Twelve: Government Regulation of Fundraising 147

PART THREE TAX-EXEMPT ORGANIZATIONS CAN BE TAXABLE, AND SO CAN THEIR MANAGERS 167

Chapter Thirteen: Related or Unrelated? 169

Chapter Fourteen: Lobbying Constraints—And Taxes 185

Chapter Fifteen: Political Campaign Activities—And More Taxes 197

Chapter Sixteen: Donor-Advised Funds, Tax Shelters, Insurance Schemes—And Still More Taxes 205

PART FOUR HELPFUL HINTS AND SUCCESSFUL TECHNIQUES 211

Chapter Seventeen: Subsidiaries: For-Profit and Nonprofit 213

Chapter Eighteen: Joint Venturing and Other Partnering 223

Chapter Nineteen: Wonderful World of Planned Giving 233

Chapter Twenty: Putting Ideas into Action 241

PART FIVE SIDESTEPPING TRAPS 251

Chapter Twenty-One: Watchdogs on the Prowl 253

Chapter Twenty-Two: Potpourri of Policies and Procedures 267

Chapter Twenty-Three: Commerciality, Competition, Commensurateness 283

Chapter Twenty-Four: IRS Audits of Nonprofit Organizations 293

Chapter Twenty-Five: Avoiding Personal Liability 313

PART SIX CONSTITUTIONAL LAW PERSPECTIVE 319

Chapter Twenty-Six: Nonprofit Organizations and the Constitution 321

Glossary 341

Index 353

BRUCE R. HOPKINS is the country’s leading authority on tax-exempt organizations and a senior partner with the law firm Polsinelli Shughart. He is the author of more than twenty-eight books, all published by Wiley, including The Law of Tax-Exempt Organizations, Tenth Edition, and the newsletter Bruce R. Hopkins’ Nonprofit Counsel.

Nonprofit Organizations & Charities

Everything you need to start and manage a nonprofit—from leading nonprofit legal expert Bruce R. Hopkins

Written by nonprofit legal expert Bruce R. Hopkins, Starting and Managing a Nonprofit Organization: A Legal Guide, Sixth Edition is essential reading for those new to the nonprofit world, as well as veteran directors, officers, and executives of well-recognized organizations. Now fully updated and revised, this guide equips you with all the critical information and know-how you need to protect your nonprofit’s tax-exempt status and avoid the many legal traps that are out there.

This Sixth Edition of Starting and Managing a Nonprofit Organization: A Legal Guide presents in-depth discussions of the legal aspects involved in the formation and operation of a nonprofit organization, with updated information on changes in laws, rules, and regulations governing the nonprofit sector, such as:

• Federal tax law
• Nonprofit governance
• Reporting rules for tax-exempt organizations
• Public charity status
• Form 990—the annual information return
• Charitable giving rules
• Current IRS ruling policy
• Constitutional law principles

Packed with checklists, step-by-step guidance as to procedures, and a glossary of legal terms for fail-safe compliance, Starting and Managing a Nonprofit Organization, Sixth Edition demystifies intricate legal issues with plain-language explanations of nonprofit laws and regulations for non-legal professionals.