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Starting a nonprofit

volunteers
Starting a nonprofit

Nonprofit Volunteers – Minimizing the Risks

Minimizing legal exposure is important because volunteers’ acts are generally imputed to the nonprofit organization. Specific, written volunteer policies and procedures are critical. Important components of a good volunteer program include clear and forward-thinking volunteer policies, thorough volunteer applications, screening, and management.

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Starting a nonprofit

Choosing a Fiscal Sponsor

A fiscal sponsorship is often a great idea for small charities that do not have the resources to apply for their own tax-exempt status. It allows them to receive tax deductible donations from donors to accomplish their mission without having to expend their resources on administrative duties. However, as the recent International Humanities Center scandal has shown, it can be dangerous to get into bed with a fiscal sponsor without first performing some basic due diligence.

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Forming a 501(c)(3) Booster Club

Section 501(c)(3) of the Internal Revenue Code allows for tax exemption for organizations organized and operated to foster national or international amateur sports competition so long as no part of the net earnings inure to the benefit of any private shareholder or individual. A parent run booster club must be organized so that it benefits the entire class of athletes or participants and does not benefit certain individuals over others.

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IRS

PTIN: Ensuring your Tax Preparer is Registered with the IRS

Charities should be aware that it is now illegal for anyone to receive compensation for preparing a return for someone else if they have not obtained a PTIN from the IRS first; a paid preparer who is not registered with the IRS is perpetrating fraud. If a charity chooses to work with an unregistered paid preparer, it opens itself up to IRS scrutiny and, possibly, denial of tax exemption plus additional attorneys’ fees to resolve any issues arising from the initial filing. Charities also need to keep in mind that the organization, regardless of whether or not a paid preparer was used, is ultimately responsible for the information in it’s exemption application.

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Campaign Finance Laws
Starting a nonprofit

Ballots and Propositions – Don’t Forget About Campaign Finance Laws!

Initiatives and propositions can create a sneaky trap for the unwary charitable organization because while there are no candidates involved, campaign finance laws typically apply to express advocacy for or against a ballot initiative or proposition. Whether such communications are made for the purpose of influencing an election depends on whether the communications constitute express advocacy.

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Nonprofit Lobbying – Don’t forget to Register

Tax-exempt organizations (other than private foundations) have the ability to influence legislation either as an insubstantial part of their activities or by making the 501(h) election and measuring their lobbying expenditures. However, state and federal laws often require principals and their lobbyists to register prior to engaging in lobbying and file expenditure reports.

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