Non-Profit Law Updates: Tax, Employment, Privacy, Technology, and Other Key Issues

For your reference, here’s a roundup of what you need to know about recent legal developments affecting non-profits, courtesy of lawyers and law firms publishing their work on JD Supra:

The Top 10 Legal Risks Facing Nonprofit Boards (Venable LLP):

“With ultimate authority for guiding and advancing the mission of the organizations they serve, effective boards need to pay close attention to the risks the organization embraces, manages and avoids. The array of risks your nonprofit faces include some with legal implications. This article offers a glimpse of the top legal risks facing nonprofit boards as well as practical tips for addressing risk at the board table.” Read more»

A Nonprofit’s Guide to Properly Characterizing Workers as Employees, Interns and Volunteers (Venable LLP):

“But for the nonprofits that inappropriately classify workers as interns or volunteers, those misclassifications can lead to serious – oftentimes financially crippling – penalties. Among other things, penalties typically include back wages, interest on those wages, liquidated damages (meant to punish employers for non-compliance), attorneys’ fees, and unpaid taxes and unemployment insurance contributions, not to mention criminal charges for nonprofit executives and those making personnel decisions.” Read more»

New Private Letter Ruling Disregards Separate Existence of a Charity and Related Noncharity (Dinsmore & Shohl LLP):

“A non-profit organization (the “Applicant”) decided to operate a charitable endeavor it called ‘Facts’ and ‘Acts’. The idea was that the Applicant’s website would host a news aggregation site, together with links to donate to recognized charities. … No fees would be charged to website users as the Applicant intended to rely on fundraising to cover costs. Because these activities appear charitable, the Applicant sought exemption under IRC § 501(c)(3).” Read more»

Thank the IRS for Small Mercies: Filing Small Nonprofit Tax Notices are Quick and Easy (Law Office of Alena Herranen):

“The Internal Revenue Service isn’t known for compassion and forgiveness. On the contrary, those three simple dry words, “Internal Revenue Service,” have come to epitomize dread and oppression, especially for those individuals who have fallen behind in filing returns or paying taxes. The IRS is after all a law enforcement agency as well as a revenue collection service. … It’s not the kind of organization that exudes a warm and fuzzy feeling.” Read more»

Non-profits May Face A Privacy Bill Like No Other (Erin McClarty):

“Amidst the recent privacy wave everyone’s been riding, there’s been new legislation proposed that nonprofit-organizations will want to take a look at. Titled The Commercial Privacy Bill of Rights Act of 2011, Congressmen (and women) are seeking to put in place information practice protections that provide consumers greater control over their personal information.” Read more»

Johnston v. Carnegie Corporation of New York: How Strong Are Your Nonprofit’s Severance Agreements? (Venable LLP):

“Nonprofits often feel like Davids in a world of Goliaths. Struggling with tight budgets and lean staffs, the last thing they want to add to their basket of worries is a complex regime of human resource policies. Often, overworked senior staffers rely on outdated, internally generated employment documents that haven’t been reviewed by a lawyer in years. … In these moments, the would-be Davids become vulnerable themselves to legal challenges from disgruntled employees.” Read more»

An Advertising Perspective on the Kerry-McCain and Stearns-Matheson Privacy Bills (Davis Wright Tremaine LLP):

“The Kerry-McCain Senate bill and the Stearns-Matheson House bill each seeks to apply a common set of fair information practices on virtually all businesses, online and offline, that collect information about consumers or consumer behavior. For the moment, both bills are directed to commercial and non-profit organizations (such as many online businesses) that are currently not under privacy regulation.” Read more»

What Is One Thing Always At Risk? Your Tax-Exempt Status (Erin McClarty):

“I was absolutely astonished by a few of the things discussed in the National Taxpayer Advocate’s Annual Report. Most surprising was the fact that there is no statute of limitations for the revocation of a non-profit’s exempt status.” Read more»

IRS Trims Tax Exempt Rolls by 275,000 (Gammon & Grange P.C.):

“As reported in previous G&G Law Alerts (see Alerts from April and August 2010), tax exempt organizations that fail to file a required IRS Form 990 annual report (including the Form 990-N applicable to small organizations) for three consecutive years face automatic revocation of their exempt status. … The IRS recently released a list of 275,000 organizations that have been trimmed from the tax exempt rolls, with revocation retroactive to the 2010 due date of the third consecutive unfiled 990.” Read more»

The Top Five Technology Legal Traps for the Unwary Nonprofit Organization (Venable LLP):

PowerPoint presentation that provides a useful overview of the top five technology legal traps for nonprofits: Electronic Contracts, Social Media, Trademark, New Technology, and Employee Use. Read more»

Could Your Nonprofit’s Chapters Be Considered “Franchises” (Venable LLP):

“A recent U.S. Court of Appeals for the Seventh Circuit decision held that the national Girl Scouts organization violated a Wisconsin franchise law when it attempted to take away territory from a local chapter as a part of the national organization’s broader plan to reorganize local council boundaries.” Read more»


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