Nonprofit Law & Finance Essentials e-book set E-Book

Bruce R. Hopkins

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Sprache: Englisch

Veröffentlichungsjahr: 2012

Beschreibung

The ultimate insider guide to managing your nonprofit effectively and protecting its mission—all in one affordable collection

This e-book bundle demystifies nonprofit laws and financial responsibilities, providing you with the expert advice to financially manage your nonprofit effectively and understand its complex legal issues. Written by renowned nonprofit leaders Bruce Hopkins, Thomas McLaughlin, and Laurence Scot, the Nonprofit Law and Finance Essentials e-book collection equips you to meet and manage your nonprofit's legal and financial obligations with step-by-step guidance, practical tools, and concrete strategies.

• Fundraising Law Made Easy/Bruce R. Hopkins—features the ins and outs of fundraising law from nonprofit law authority Bruce Hopkins
• Streetsmart Financial Basics for Nonprofit Managers, Third Edition/Thomas A. McLaughlin—presents plain-English direction for reading, interpreting, and implementing financial data
• The Simplified Guide to Not-for-Profit Accounting, Formation & Reporting/Laurence Scot—offers a wealth of solid information for understanding nonprofit financial transactions, financial statements, and internal and external reports

Learn how constitutional law, governance, and IRS audit practices pertain to charitable fundraising. Make management decisions that ensure your organization's long-term financial viability. Navigate unique nonprofit accounting rules. It's all at your fingertips with Wiley's Nonprofit Law & Finance Essentials e-book set, equipping you with the tools to manage money and mission.

Leseprobe

Contents

Introduction

Fundraising Law Made Easy

Streetsmart Financial Basics for Nonprofit Managers

The Simplified Guide to Not-for-Profit Accounting, Formation & Reporting

INTRODUCTION

It would be nice if nonprofits didn’t have to worry about raising more money than they spend, or about keeping up with the laws and regulations that apply to them. But the truth is, your nonprofit’s financial and legal management is essential for organizational success and intricately connected with its every purpose.

Wiley equips you to meet and manage your nonprofit’s legal and financial obligations with the step-by-step guidance, practical tools, and concrete strategies in Nonprofit Law & Finance Essentials e-Book Set: Tools to Manage Money and Mission.

This e-Book bundle demystifies nonprofit laws and financial responsibilities, providing you with the expert advice to financially manage your nonprofit effectively and understand its complex legal issues.

With essential guidance for those starting new nonprofits—as well as for directors of established organizations—this bundle offers hands-on information from renowned nonprofit leaders and includes the following titles:

Fundraising Law Made Easy

/

Bruce R. Hopkins

—Features the ins and outs of fundraising law from nonprofit law authority Bruce Hopkins

Streetsmart Financial Basics for Nonprofit Managers, Third Edition

/

Thomas A. McLaughlin

—Presents plain-English direction for reading, interpreting, and implementing financial data

The Simplified Guide to Not-for-Profit Accounting, Formation & Reporting

/

Laurence Scot

—Offers a wealth of solid information for understanding nonprofit financial transactions, financial statements, and internal and external reports

Learn how constitutional law, governance, and IRS audit practices pertain to charitable fundraising. Make management decisions that ensure your organization’s long-term financial viability. Navigate unique nonprofit accounting rules. It’s all at your fingertips with Wiley’s Nonprofit Law & Finance Essentials e-Book Set, equipping you with the tools to manage money and mission.

Table of Contents

Title Page

Copyright Page

Preface

About the Author

Chapter 1 - INTRODUCTION TO THE LAW OF FUNDRAISING FOR CHARITY

DEFINITION OF CHARITABLE FUNDRAISING

CONCEPT OF CHARITABLE SALES

DEFINITION OF CHARITABLE CONTRIBUTION

METHODS OF FUNDRAISING

FUNDRAISING EXPENSES

COMMENSURATE TEST

FUNDRAISING COMPENSATION ISSUES

STEP TRANSACTION DOCTRINE

CHARITABLE PLEDGES

PUBLIC POLICY CONSIDERATIONS

SUMMARY

Chapter 2 - FUNDRAISERS’ LAW PRIMER

FORM OF ORGANIZATION

ORGANIZATIONAL TESTS

OPERATIONAL TEST

PRIMARY PURPOSE RULE

PRINCIPLES OF FIDUCIARY RESPONSIBILITY

CHARITABLE PURPOSES AND ACTIVITIES

RECOGNITION OF TAX EXEMPTION

PRIVATE INUREMENT DOCTRINE

PRIVATE BENEFIT DOCTRINE

INTERMEDIATE SANCTIONS

LEGISLATIVE ACTIVITIES

POLITICAL CAMPAIGN ACTIVITIES

PROHIBITED TAX SHELTER TRANSACTIONS

PERSONAL BENEFIT CONTRACTS

GOVERNANCE POLICIES

SUMMARY

Chapter 3 - STATE REGULATION OF CHARITABLE FUNDRAISING

FUNDRAISING REGULATION AT STATE LEVEL

CHARITABLE SOLICITATION ACTS

EXEMPTIONS FROM SOLICITATION ACTS

POWERS OF ATTORNEYS GENERAL

SANCTIONS

UNIFIED REGISTRATION

FUNDRAISING BY MEANS OF INTERNET

IMPACT ON FEDERAL REGULATION

SUMMARY

Chapter 4 - PUBLIC CHARITIES AND PRIVATE FOUNDATIONS

PRIVATE FOUNDATION DEFINED

PRIVATE OPERATING FOUNDATIONS

EXEMPT OPERATING FOUNDATIONS

CONDUIT FOUNDATIONS

NONEXEMPT CHARITABLE TRUSTS

PRIVATE FOUNDATION RULES

CONCEPT OF PUBLIC CHARITY

INSTITUTIONS

DONATIVE PUBLICLY SUPPORTED ORGANIZATIONS

SERVICE PROVIDER PUBLICLY SUPPORTED ORGANIZATIONS

COMPARATIVE ANALYSIS OF PUBLICLY SUPPORTED CHARITIES

SUPPORTING ORGANIZATIONS

PUBLIC SAFETY TESTING ORGANIZATIONS

IMPORT OF PUBLIC-PRIVATE DICHOTOMY

SOME STATISTICS

SUMMARY

Chapter 5 - FEDERAL ANNUAL REPORTING REQUIREMENTS

FEDERAL TAX LAW REPORTING BASICS

IMPORT OF REDESIGNED FORM 990

SUMMARY OF PARTS OF REDESIGNED FORM 990

ANNUAL RETURN SCHEDULES

FEDERAL AND STATE REGULATION OF GAMING

PREPARATION OF FORM 990 SCHEDULE M

PREPARATION OF SCHEDULE B

PREPARATION OF OTHER PARTS OF FORM 990

SUMMARY

Chapter 6 - CHARITABLE GIVING RULES

BASIC CONCEPTS

DEFINING CHARITABLE GIFT

QUALIFIED DONEES

GIFTS FOR THE USE OF CHARITY

CONDITIONAL GIFTS

GIFTS OF PROPERTY IN GENERAL

VALUATION OF PROPERTY

LIMITATIONS ON DEDUCTIBILITY

DEDUCTION REDUCTION RULES

QUALIFIED APPRECIATED STOCK

TWICE-BASIS DEDUCTIONS

GIFTS OF VEHICLES

GIFTS OF INTELLECTUAL PROPERTY

GIFTS OF CLOTHING AND HOUSEHOLD ITEMS

GIFTS OF TAXIDERMY

PARTIAL INTEREST GIFTS

GIFTS OF OR USING INSURANCE

PLANNED GIVING

ADMINISTRATIVE MATTERS

SUMMARY

Chapter 7 - UNRELATED BUSINESS RULES

UNRELATED BUSINESS LAW STATUTORY FRAMEWORK

AFFECTED TAX-EXEMPT ORGANIZATIONS

CONDUCT OF BUSINESS

REGULARLY CARRIED-ON BUSINESSES

RELATED OR UNRELATED?

UNRELATED BUSINESS TAXABLE INCOME

EXCEPTED ACTIVITIES

EXCEPTED INCOME

EXCEPTIONS TO EXCEPTIONS

EXCEPTIONS TO EXCEPTIONS TO EXCEPTIONS

FUNDRAISING AND UNRELATED BUSINESS RULES

DONOR RECOGNITION PROGRAMS

COMMERCIALITY DOCTRINE

PROVISION OF SERVICES

SUMMARY

Chapter 8 - OTHER FEDERAL TAX LAW REGULATION OF FUNDRAISING

GIFT SUBSTANTIATION REQUIREMENTS

QUID PRO QUO CONTRIBUTIONS RULES

DISCLOSURE REQUIREMENTS

APPLICATION FOR RECOGNITION OF EXEMPTION

PUBLIC CHARITY CLASSIFICATIONS

APPRAISAL RULES

RECORDKEEPING RULES

FORM 8283

UNIQUE REPORTING RULES

NONCHARITABLE FUNDRAISING RULES

SUMMARY

Chapter 9 - FUNDRAISING AND CONSTITUTIONAL LAW

FREE SPEECH BASICS

TYPES OF SPEECH

POLICE POWER

FUNDRAISING FREE SPEECH PRINCIPLES

SUPREME COURT OPINIONS

SUBSEQUENT COURT OPINIONS

AIRPORT TERMINAL SOLICITATIONS

DOOR-TO-DOOR ADVOCACY

REGISTRATION FEES

OUTER BOUNDARIES OF SPEECH RIGHTS

FUNDRAISING AND FRAUD

DUE PROCESS RIGHTS

EQUAL PROTECTION RIGHTS

DELEGATION OF LEGISLATIVE AUTHORITY

TREATMENT OF RELIGIOUS ORGANIZATIONS

OTHER CONSTITUTIONAL LAW ISSUES

SUMMARY

Chapter 10 - FUNDRAISING AND GOVERNANCE

GOVERNANCE PHILOSOPHY IN GENERAL

BOARD FUNDRAISING RESPONSIBILITIES

WATCHDOG AGENCIES AND FUNDRAISING

ORGANIZATION EFFECTIVENESS

BOARD EFFECTIVENESS

LAW COMPLIANCE

CATEGORIES OF EXPENDITURES

DISCLOSURES TO PUBLIC

MISSION STATEMENTS

FUNDRAISING PRACTICES

IRS AND GOVERNANCE

OFFICER AND EMPLOYEE TAX LIABILITY

PERSPECTIVES ON NONPROFIT GOVERNANCE

SUMMARY

Chapter 11 - FUNDRAISING AND IRS AUDITS

ORGANIZATION OF IRS

REASONS FOR IRS AUDITS

IRS AUDIT ISSUES

TYPES OF IRS AUDITS

COMPLIANCE CHECKS

COLLEGE AND UNIVERSITY COMPLIANCE CHECK PROJECT

HARDENING THE TARGET

WINNING AUDIT LOTTERY

COPING WITH EXAMINERS

TOURS

IRS AUDIT PROCESS

CLOSING AGREEMENTS

APPEALS PROCESS

FAST-TRACK SETTLEMENT PROGRAM

RETROACTIVE REVOCATIONS

CHURCH AUDIT RULES

LITIGATION

SUMMARY

Chapter 12 - PERSPECTIVES AND COMMENTARIES

CHARITABLE FUNDRAISING AND THE LAW

FUNDRAISERS AND SOLICITORS: THE DIFFERENCES

SCOPE OF STATE LAW

THE FUNDRAISER’S CONTRACT

CHARITY AUCTIONS AND FUNDRAISING LAW

FUNDRAISING REGULATION BENEFITS

FUNDRAISING AND PRIVATE INUREMENT

FUNDRAISING AND FRAUD

FUNDRAISING AND SUBSTANTIATION RULES

SOME PROPOSALS FOR RELIEF

SUMMARY

Index

This book is printed on acid-free paper.

Copyright © 2009 by John Wiley & Sons, Inc. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey.

Published simultaneously in Canada.

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Library of Congress Cataloging-in-Publication Data:

Hopkins, Bruce R.

Fundraising law made easy / Bruce R. Hopkins.

p. cm.

Includes index.

eISBN : 978-0-470-53024-5

1. Fund raising-Law and legislation-United States. 2. Charitable uses, trusts, and foundations-United States. I. Title.

KF1389.5.H655 2009

344.7303’170681-dc22

2009013314

Preface

This book exists principally because of your author’s belief that the federal and state law concerning the regulation of fundraising for charitable purposes is one of the most fascinating aspects of the panoply of nonprofit law, and I wanted to capture it in a nontechnical form. As to the latter motive, I wanted the subject to be in the format of its companions, the books Nonprofit Law Made Easy, Charitable Giving Law Made Easy, and Private Foundation Law Made Easy. In format, style, and length, it parallels its siblings. The hope is that these four books, in tandem, will be of assistance in guiding non-lawyers through the maze of law concerning charitable fundraising, private foundations, other types of nonprofit tax exempt organizations, and charitable giving.

This book also, however, blatantly mimics still another Wiley book (the one that started it all): Not-for-Profit Accounting Made Easy. Lawyers and accountants in the nonprofit realm populate overlapping universes, so these four companion volumes about nonprofit law are a natural fit with the book on nonprofit accounting rules.

As was noted in the preface to Nonprofit Law Made Easy, I have never had the opportunity to discuss this accounting book with its author, Warren Ruppel. I cannot imagine, nonetheless, that he extracted as much enjoyment from this writing process as I have. After years of writing technical (and long) books about various aspects of nonprofit law, writing the charitable fundraising, private foundation, nonprofit organizations, and charitable giving books with this approach was pure pleasure. The biggest challenges, not surprisingly, were the decisions as to what to include and what to leave out. This book thus reflects my take on what constitutes the fundamentals of the law concerning the charitable solicitation process.

In any event, I had a far easier time of it than Mr. Ruppel did. He had to create his book; I had merely to imitate it. The substance obviously is different but the format is unabashedly copied. Consequently, the four law books are about the same length as his, there are likewise a dozen chapters in each, every chapter of these books opens with an inventory of what is coming and ends with a chapter summary and there are no footnotes. (The lack of footnotes came the closest, to derogating from the pleasure of writing these books.) The four books also share a similar dust jacket. So Mr. Ruppel and Wiley designed the original vessel; I poured my descriptions of the law into it.

Now, back to this matter of what to include and what to exclude. I included in this book the absolute basics, namely:

• A discussion of the law’s definition of charitable fundraising (such as it is)

• Fundraising methods and costs

• Relevant nonprofit law in general (as a primer)

• The states’ charitable solicitation acts

• The differences between private foundations and public charities

• Federal annual reporting requirements

• Charitable giving rules

• Unrelated business rules

• Other aspects of federal regulation of fundraising

• Constitutional law principles

But, wanting to do more, I worked in two hot nonprofit law topics, specifically, governance and IRS (Internal Revenue Service) audits, and made them as relevant as I could to the law of charitable fundraising.

Nonprofit law continues to be as dynamic as law can get; consequently, trying to capture what appears to be the basics of elements of this law at any point in time can be tricky business. Congress, the Treasury Department, the IRS, the courts, and others in federal and state government are certain to contribute their share of new law. For the sake of the charitable community, I hope coming law changes are not too tough on fundraisers and those charitable organizations, they, which are a meaningful component of the nonprofit sector and our society in general; fundraising professionals are an important part of American philanthropy.

As a nonaccountant in the nonprofit field, I am glad to have Not-for-Profit Accounting Made Easy as a guide to the basics of the accounting rules and principles applicable to nonprofit organizations. I have once again tried to emulate Mr. Ruppel’s work, to provide an equally valuable volume for the nonlawyer who needs a grounding in the law of charitable fundraising.

I extend my thanks to Natasha Andrews-Noel, senior production editor, and to Susan McDermott, senior editor, for their support and assistance in creating this book.

Bruce R. Hopkins September 2009

About the Author

Bruce R. Hopkins is a senior partner in the law firm of Polsinelli Shughart PC, practicing in the firm’s Kansas City, Missouri, and Washington, D.C., offices. He specializes in the representation of charitable and other nonprofit organizations. His practice ranges over the entirety of law matters involving tax-exempt organizations, with emphasis on fundraising law issues, charitable giving (including planned giving), the formation of nonprofit organizations, acquisition of recognition of tax-exempt status for them, the private inurement and private benefit doctrines, the intermediate sanctions rules, legislative and political campaign activities issues, public charity and private foundation rules, unrelated business planning, use of exempt and for-profit subsidiaries, joint venture planning, tax shelter involvement, review of annual information returns, and Internet communications developments.

Mr. Hopkins served as chair of the Committee on Exempt Organizations, Tax Section, American Bar Association; chair, Section of Taxation, National Association of College and University Attorneys; and president, Planned Giving Study Group of Greater Washington, D.C.

Mr. Hopkins is the series editor of Wiley’s Nonprofit Law, Finance, and Management Series. In addition to Fundraising Law Made Easy, he is the author of The Law of Fundraising, Fourth Edition; The Tax Law of Charitable Giving, Third Edition; The Law of Tax-Exempt Organizations, Ninth Edition; Planning Guide for the Law of Tax-Exempt Organizations: Strategies and Commentaries; IRS Audits of Tax-Exempt Organizations: Policies, Practices, and Procedures; The Tax Law of Associations; The Tax Law of Unrelated Business for Nonprofit Organizations; The Nonprofits’ Guide to Internet Communications Law; The Law of Intermediate Sanctions: A Guide for Nonprofits; Starting and Managing a Nonprofit Organization: A Legal Guide, Fifth Edition; Nonprofit Law Made Easy; Charitable Giving Law Made Easy; Private Foundation Law Made Easy; 650 Essential Nonprofit Law Questions Answered; The First Legal Answer Book for Fund-Raisers; The Second Legal Answer Book for Fund-Raisers; The Legal Answer Book for Nonprofit Organizations; The Second Legal Answer Book for Nonprofit Organizations; and The Nonprofit Law Dictionary; and is the coauthor, with Jody Blazek, of Private Foundations: Tax Law and Compliance, Third Edition; also with Ms. Blazek, The Legal Answer Book for Private Foundations; with Thomas K. Hyatt, of The Law of Tax-Exempt Healthcare Organizations, Third Edition ; with David O. Middlebrook, of Nonprofit Law for Religious Organizations: Essential Questions and Answers; with Douglas K. Anning, Virginia C. Gross, and Thomas J. Schenkelberg, of The New Form 990: Law, Policy and Preparation; and also with Ms. Gross, Nonprofit Governance: Law, Practice, and Trends. He also writes Bruce R. Hopkins’ Nonprofit Counsel, a monthly newsletter, published by John Wiley & Sons.

Mr. Hopkins earned his JD and LLM degrees at George Washington University National Law Center, and his BA at the University of Michigan. He is a member of the bars of the District of Columbia and the state of Missouri.

Mr. Hopkins received the 2007 Outstanding Nonprofit Lawyer Award (Vanguard Lifetime Achievement Award) from the American Bar Association, Section of Business Law, Committee on Nonprofit Corporations. He is listed in The Best Lawyers in America, Nonprofit Organizations/Charities Law, 2007-2009.

1

INTRODUCTION TO THE LAW OF FUNDRAISING FOR CHARITY

The purpose of this chapter is to provide a framework consisting of the fundamental elements in federal and state law that shape the rules concerning fundraising for charitable organizations. Thus, this chapter will:

• Provide a definition of the phrase charitable fundraising.

• Address the concept of charitable sales.

• Explore the definition of the phrase charitable contribution.

• Describe the various methods of fundraising.

• Discuss the controversial matter of fundraising costs.

• Summarize the commensurate test.

• Enumerate the several issues pertaining to fundraising compensation.

• Explain the trap that lurks in the step transaction doctrine.

• Summarize the law concerning the enforceability of charitable pledges.

• Correlate the applicability of the public policy doctrine to the charitable giving setting.

DEFINITION OFCHARITABLE FUNDRAISING

A common perception is that there is a single type of activity termed fundraising , just as there is a prevailing view that all charitable gifts are made in cash. Most state and local, as well as some federal, regulatory approaches seem founded on this perception. An assumption is made that the law amply defines fundraising, when in fact it does not. Yet, to raise funds in this setting is to solicit gifts.

State Law

State charitable solicitation acts (see Chapter 3) usually define the word solicitation . These definitions generally are encompassing. This fact is evidenced not only by the express language of the definition but also by an expansive definition of the term charitable and application of these acts to charitable solicitations conducted, in common parlance, “by any means whatsoever.” A solicitation can be oral or written. It can take place by means of a variety of methods of communication (discussed ahead). Debate over the legal consequences of charitable solicitation over the Internet (discussed ahead) highlights the importance and scope of the word solicitation.

A most expansive, yet typical, definition of the term solicit states that it means any request, directly or indirectly, for money, credit, property, financial assistance, or other thing of any kind or value on the plea or representation that the subject of the gift is to be used to benefit a charitable organization or otherwise be used for a charitable purpose. Usually, the word solicitation is used in tandem with the word contribution (or gift) (discussed ahead). The term may, however, encompass the pursuit of a grant from a private foundation, other nonprofit organization, or a government department or agency. (About a dozen states exclude the process of applying for a government grant from the term solicitation; a few similarly exclude the seeking of private foundation grants.) There is no requirement that a solicitation be successful; a solicitation is a solicitation irrespective of whether the request actually results in the making of a gift.

A court created its own definition of the term solicit in this setting, writing that the “theme running through all the cases is that to solicit means to ‘appeal for something,’ ‘to ask earnestly,’ ‘to make petition to,’ ‘to plead for,’ ‘to endeavor to obtain by asking,’ and other similar expressions.” (The court ruled that a state’s charitable solicitation act did not apply to gambling activities held to generate funds destined for charitable purposes.)

Federal Lobbying Rules

At the federal level, the definition of fundraising that is most relevant (and accurate) in the charitable setting is found in an odd place: the tax laws restricting legislative activities by public charities. One of the law requirements is that these activities may not be substantial; an elective test provides allowable lobbying expenditures in terms of declining percentages of aggregate program (charitable purpose) expenditures. Exempt purpose expenditures, however, do not include amounts paid to or incurred for (1) a separate fundraising unit of the organization or (2) one or more other organizations, if the amounts are paid or incurred primarily for fundraising. Nonetheless, program expenditures include all other types of fundraising outlays.

An organization’s first task in this context is to determine its direct fundraising costs. These costs include such items as payments to fundraising consultants, salaries to employees principally involved in fundraising, and fundraising expenses concerning travel, telephone, postage, and supplies. With respect to these direct items, there may have to be allocations, such as between the educational (program) aspects and the fundraising aspects, of the expenses of creating and delivering printed material. Then, an organization must ascertain its indirect costs, to be apportioned to fundraising, lobbying, and other factors. These costs include items such as salaries of supportive personnel, rent, and utilities.