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The Nonprofit FAQ
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Regulation
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What state rules and regulations apply to nonprofits?
The IRS has a webpage with links to explanations of each state's requirements for nonprofit organizations. There are many differences.
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Nonprofit Legal Self-Assessment Checklist
An inventory of many topics that should be considered by nonprofits in order to keep their legal house in order.
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Where can I find federal and state laws?
Search engines and libraries for finding federal and state laws
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Are US Nonprofits Required to Report to the Government?
The short answer is yes. Nearly every nonprofit will need to report annually to the federal government and, usually, to state and maybe local governments as well.
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How are nonprofit organizations classified?
Many systems of classification (taxonomies) are in use for various purposes. These notes mention several of them.
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What actual steps do I take? Which filings come first?
The practical details (in the USA) of incorporating a nonprofit and filing for tax-exempt status and a nonprofit mailing permit.
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What Must Be in an Annual Report?
There is no standard format for the Annual Report but many states and some watchdog organizations have requirements for annual reporting.
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Where Can I Find Background on Policy Issues?
The Public Agenda (http://www.publicagenda.org/) and Handsnet (http://www.handsnet.com/) track issues of interest to many nonprofits.
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Does Fundraising on the Internet Require Registration in Every State?
There is no final answer...yet. Several writers' have discussed the question online.
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Can we re-incorporate in another state?
Although the organization may feel it is just a formality when the state of incorporation is changed, in fact one organization has gone out of existence and a new one has been formed. New standing with the IRS is necessary.
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We want to change the mission and work we do. How difficult is it to make such a change?
You may need to notify your state corporations office, the IRS, and officials in states where you do fundraising. More details in this item.
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Is a Board Necessary?
Many factors affect the answer to the question. Being incorporated is probably a good idea; corporations usually have boards.
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Board Basics
Some first principles about the board of directors and pointers to other information on the subject.
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Can nonprofits use proxies when voting?
It's a complicated question. Some guidance may be found in state nonprofit corporation law.
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Can a Board Meet by Conference Call or Online?
Laws vary from state to state. Some references to discussions of the several related issues.
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Do board meetings or documents have to be public?
If there are any external rules about this, they will be found in state law or funding requirements.
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How to Choose a Service to Process Donations Online
IdealWare has a thorough discussion on the web.
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Don't Board lists have to be made public?
Board lists are often included in reports to state and federal agencies. It is unlikely the organization must provide the list separately to an individual.
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What is an Executive Committee?
This term usually refers to a smaller group of board members that has been delegated specific powers to act in certain circumstances on behalf of the full board.
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Is there a difference between 'directors' and 'trustees'?
The terms have specific meanings, but in fact are often used more or less interchangeably.
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What happens when nonprofits go out of business?
A plan of dissolution is supposed to be filed. Often that doesn't happen. Assets must be passed on to another organization with a similar purpose.
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Resources for Understanding Nonprofit Mergers
Here's a link to a page with references on this topic.
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Can a nonprofit declare bankruptcy?
Yes. This item includes references to several discussions of the question from a variety of sources.
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What to do if you suspect damaging activities at a nonprofit
How to proceed if there are rumors or other signs of mismanagement, improper payments, insider self-dealing, conflict of interest, etc., involving a nonprofit organization.
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Who can benefit from a nonprofit's activities?
Nonprofits are restricted to public purposes and may not be used as a source of private gain.
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How to Help the Attorney General Handle a Complaint?
An Assistant Attorney General offers advice on how to seek help when there appear to be abuses of nonprofit status.
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How can we streamline our charitable solicitations registration?
The Unified Registration Statement (URS) is accepted by many states.
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What employee taxes do nonprofits pay
Income taxes withheld from employees' pay and the employer's share of social security and medicare are due from any employer. Classifying someone as a contractor who isn't can be expensive (in penalties, etc). Unemployment taxes are more complicated. The IRS has explanations that can help.
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I want to start a campaign to raise money for a cause. What do I need to worry about?
Besides finding the money, you mean? Well, there are actually several issues that you should consider before running your own fundraising campaign.
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What is the legal definition of 'volunteer'?
There is no single and universal definition. Much depends on the context and the organizational setting.
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Where can I learn the basics of contract law?
Basic resources about U.S. contract law and the legal system
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What is a patent? trademark? copyright?
Patents, trademarks and copyrights are used to protect your creations (intellectual property), whether they are tangible creations such as books or intangible processes such as programs
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Are there rules about naming a nonprofit?
The answer will vary from state to state.
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How do I incorporate an organization as a nonprofit?
The procedures vary from state to state. This item provides the names of three books that can help.
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Can a non-profit invest in for profit ventures?
The simple answer is "yes." But, as is often the case, the practical answer is that it's complicated.
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Must all nonprofits be purely about helping others?
No. That requirement applies to foundations and public charities (501(c)(3)s), but there are many types with other requirements
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What are employee laws? Any related major issues and topics?
There are a variety of federal laws, executive orders, etc., regarding the selection and treatment of individuals in the workplace.
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Why screen volunteers at all?
The approach to recruiting volunteers should be as careful as the process used for adding any new staff.
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Must we do criminal background checks on our volunteers?
It is required by law for some types of assignments. A program for doing background checks for long-term volunteers may also be a good idea.
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Is it common practice for board members to be compensated?
In a word, no.
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What membership benefits should we offer?
It depends. On the purposes of your organization and the environment in which you operate. This item discusses some of the considerations.
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Should we conduct a raffle?
There are a lot of hoops to jump through.
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Is the cost of a raffle ticket deductible?
Purchasing a 'chance' to win something does not count as a charitable deduction.
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Can the organization operate while completing the 501(c)(3) process?
Extra caution is needed, but many organizations have started work before the formal process was completed
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Can Fundraisers be Paid a Percent of the Amount Raised?
This is a highly controversial issue on which the professional associations are unanimously agreed that such arrangements are unethical. Many views are expressed in this item.
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