Nonprofit Lawyers News

A 501 c3 organization, unless it is a church, must prepare an application and request exemption directly from the IRS. Once exemption status is approved by the IRS, an organization's related income is exempt from federal corporate income tax. Also, contributions to the organization are tax-deductible to the donor, to the extent permitted by law.
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Gregory Nielsen, CEO, Center for Nonprofit Excellence (cnpe.org) give us his Top 10 Risks Facing Nonprofit Boards. Members of nonprofit organizations regardless of state, face risk factors and the Center for Nonprofit Excellence wants you to be aware of them.
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There are general fiduciary duties that all board members must comply with and other specific duties attorneys serving on nonprofit boards must comply with as well. According to the Model Nonprofit Corporation Act, each board member, when fulfilling their duties must act in good faith and in a manner the director reasonably believes to be in the best interests of the nonprofit organization. The members of the board of directors, when discharging the duties of a director shall act in good faith and in a manner the director reasonably believes to be in the best interest of the nonprofit corporation.
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In most cases attorneys will advise a client to incorporate, though it's not necessary and other forms may be eligible for tax exemption under Section 501(c)(3), including LLC's, trusts, and unincorporated associations assuming they meet certain requirements. Generally, incorporating can provide additional protections that other forms may, or may not, provide depending on state law.
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In most cases a nonprofit that's been formed under state law will not be automatically exempt from federal income taxes, and will need to go through the process of applying for tax exemption. In order to be eligible for tax exemption under Section 501c3, an entity needs to be organized and operated exclusively for one or more of these purposes:
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After an organization meets the operational and organizational test, the next step in filing for tax exemption under Section 501 c3, for organizations that are not able to self declare such as churches, is to file a form 1023, or 1023ez with the IRS. Form 1023 is a 12 page application with schedules, and there are 38 pages of instructions. The assistance of an attorney is not required, yet it is an area where an attorney can be particularly helpful in terms of guiding the applicant through the process.
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