Lead Stories

An appellate court in Texas has ruled that notice of a meeting of a nonprofit’s nominating committee was ineffective when sent to committee members only by electronic mail and not by one of the methods for providing notice set forth in the bylaws of the corporation.  The ruling came in a lengthy opinion denying summary judgment to both sides in a dispute over elections in a homeowners’ association.  (Swonke v.

The Tax Court has agreed with the IRS that a nonprofit sperm bank distributing the sperm of a single man does not advance the public health and is therefore not qualified for 501(c)(3) charitable exemption.

William C. Naylor, Jr., a software engineer who holds more than 10 patents on various inventions, created a nonprofit public benefit corporation in California in 2003.  Its purpose was to provide free sperm from Naylor to women seeking to become pregnant through artificial insemination or in vitro fertilization.  He advertised the availability on the Internet.

A Court of Appeals in Texas has ruled that a trial court must strike pleadings filed on behalf of a nonprofit corporation when the attorneys who filed the case were selected by one faction within the organization and cannot show authority to act on behalf of the corporation.  (In Re: Salazar, Ct. of App., TX, Second Dist., No. 2-09-405, CV, 6/25/10.)

The nonprofit National Association of Investors Corporation (“NAIC”) had obtained the same directors and officers insurance policy from its insurance agent each year from the 1990s through 2004.  The policy contained the standard “insured vs. insured” provision excluding coverage for a claim brought by one individual insured under the policy against another insured by the policy.

The separate assets of 31 Catholic churches, schools, cemeteries and other charities held in a pooled investment account of the Catholic Diocese of Wilmington (DE) are available to pay the debts of the Diocese in bankruptcy, according to the bankruptcy court in Delaware.  The Diocese held the funds in trust for the benefit of the organizations, but could not meet the burden of specifically tracing the funds, the Court said.  The entire fund (with one exception for a group with a different arrangement) was therefore available for the general creditors of the Diocese.  (In

We regularly feature answers to questions from readers in our “To the Point” column. The full list can be viewed here. Here are a few questions recently received from readers.

Can only rich form 501(c)(3)?

I am interested in starting up a 501(c)(3) but have read that none of the principals of the organization are allowed to obtain monetary or material benefit.  If that is the case, how does anyone on the board get paid? Can only rich people form a (c)(3)?  --From the Website.