Lead Stories

The Intermediate Court of Appeals of Hawai‘i has reversed a probate court and ordered it to approve a complicated settlement of a charitable contribution under the doctrine of cy pres.  As a result, the state will have a new watershed and forest reserve, the Hawaiian Humane Society will have a $1 million educational fund, and the heirs of the donor will have unrestricted interests in residential properties.  (In Re: Elizabeth J.K.L. Lucas Charitable Trust, No. 30306, 6/30/11.)

We get large numbers of questions involving youth sports leagues, booster clubs and other primarily volunteer community organizations.  Here is a sample of the recurring themes.

The Court of Appeals of Texas has ruled that a member of a nonprofit association has the right to inspect the association’s records, but must submit to a confidentiality agreement with respect to some non-financial records, prohibiting disclosure even to other members who have their own right to inspect.  (Gaughan v. National Cutting Horse Association, Ct. of App. TX, Ft. Worth, No. 02-09-00450-DV, 7/28/11.)

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.