Lead Stories

When membership in the nonprofit Wapsi Hunting Club in Iowa declined to only five members in 2008, they hired an attorney to review their articles of incorporation and bylaws and make recommendations for moving forward.  In response, four of the members, over the objection of the fifth, Paul Jochimsen, amended the mutual-benefit corporation’s bylaws to make it possible to admit members without a unanimous vote, to provide that each member would be a director, and to provide that net assets would be distributed pro rata among the members upon dissolution.  They rejected several proposals from Jochimsen, including a suggestion that memberships be redeemable at a proportionate value of the assets and that assets be distributed to charity upon dissolution. In addition, they admitted a new member without introducing him to Jochimsen or having him participate in club events before admission.

The Fifth Circuit Court of Appeals has partially reversed a trial court and has held that Texas may require professional solicitors of clothing and other household goods to tell donors that they will be involved in selling the goods and giving proceeds to charity.

With less than $5000 in receipts, are we exempt?

We are a nonprofit 501(c)(3) corporation with gross receipts of less than $5000 a year.  We are not tax-exempt but do have a tax ID.  If a sponsor wants to purchase uniforms for the team, does he receive a tax deduction? There is some confusion. Some state that with less than $5000 in revenue you are exempt.  —From the Website.

An employee who signed a stipulation dismissing a claim of sexual assault brought against him and his nonprofit employer cannot require indemnification of his attorneys fees and costs when the stipulation covered all claims, “including all direct and indirect claims, made or to be made” in connection with the litigation, the Court of Appeals of Minnesota has ruled. (Mortimore v. R.S. Eden, No. A10-1877, 8/1/11.)

Members of the Alpha Kappa Alpha Sorority, a District of Columbia nonprofit corporation with its principal place of business in Illinois, may sue individual members of the sorority’s “directorate” for breach of fiduciary duty in a District of Columbia court, the D.C. Court of Appeals has ruled.  But the court has no jurisdiction over the Sorority’s separate foundation, an Illinois nonprofit that had not done business in the District.  (Daley v. Alpha Kappa Alpha Sorority, No. 10-CV-220, 8/18/11.)

The Third Circuit Court of Appeals has reversed a trial court and allowed a committee of unsecured creditors to sue the directors of a nonprofit nursing home personally for breach of fiduciary duty in administering the home during insolvency prior to bankruptcy.  The federal District Court in Pittsburgh had ruled that the directors were protected by the business judgment rule and granted summary judgment against the creditors.  (See Nonprofit Issues®, 12/1/10.) The Court of Appeals has held that