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Nonprofits Must Deal With Religiously Diverse Workplace

Title VII requires reasonable accommodation that does not impose undue hardship on business

In his inaugural address, President Barack Obama stated that “…[w]e know that our patchwork heritage is a strength, not a weakness.  We are a nation of Christians and Muslims, Jews and Hindus – and nonbelievers.” 

It is this patchwork of different faiths, beliefs and non-beliefs that the Equal Employment Opportunity Commission (“EEOC”) calls America’s “rich tapestry of religious beliefs and practices.”  It is, however, this very tapestry of differences that has seeded conflict and increased litigation about religious discrimination in the workplace.

IRS Expands Availability of Flip Unitrusts

Final regulations permit switch to fixed percentage payout in certain situations outside the control of the trustee, and give one-time option for reformation

Unitrusts are among of the most flexible tools available to the planned giving officer. The final regulations permitting a "flip" from an income only payout to a fixed percentage payout in the case of sale of unmarketable assets are a significant advantage for both donors and charities. They should be studied carefully to see if they can be used with preexisting trusts.

Using a CRUT for Stock Options Can Be a Strategy That Sells Itself

Planning testamentary disposition of non-qualified deferred compensation can provide a virtually no risk technique for younger donors

Donors who hold non-qualified stock options or other forms of non-qualified deferred compensation should consider an absolutely no risk planned giving technique that could result in both a substantial gift to charity and more income for a surviving spouse.

Be Careful Handling Gifts with Strings Attached

Miscalculations can create both legal and public relations problems if development officers fail to find the right balance for gifts with restrictions

It is not necessarily easy to strike the right balance in accepting gifts with strings attached. If there are restrictions on any gift, be sure that both the donor and the charity fully understand what they are and that both can live with the limitations. You will be more likely to avoid both legal and public relations problems.

IRS Proposes Regulations for Travel Tours

Key to taxability of income is the amount of time participants spend on actual instruction and education

Travel tours have been one of the primary points of contention between small business and charities in the battle over unrelated business income. The IRS and Congress have regularly looked for abuses. Unless a tour program can contribute very significantly to your mission, it may not be worth the hassle to set one up and claim that it is not subject to unrelated business income tax.

Corporations Have Special Rules on Contributions

Many in-kind contributions may be deducted as ordinary business expenses; certain gifts of inventory qualify for enhanced deduction above cost basis.

Charitable fundraisers who understand the legal issues affecting potential donors are often better able to suggest gifts that work well for both the donor and the charity. Since corporations operate under different rules than individuals, it is important to understand the differences.

 

Articles of Incorporation Establish Basic Form of Nonprofit Corporations

State laws and IRS require certain provisions; including additional terms is primarily a matter of style

Articles of Incorporation, sometimes called a Certificate of Incorporation or Articles of Organization, are the fundamental governing document of a nonprofit corporation. They are filed with the appropriate state office to create the corporation.

The Articles normally include only the most basic provisions to meet the requirements of state law and the requirements established by the Internal Revenue Service to qualify for tax-exempt status, particularly the charitable exemption under Section 501(c)(3). The bylaws of the corporation usually contain significantly more provisions for ordinary governance of the corporation.

The Articles of Incorporation have primacy in the hierarchy of governing documents. Provisions of the Articles control over contrary provisions in the bylaws, while the bylaws control over corporate resolutions.

Articles do not have precise contours and the choice to include more than the minimally required provisions is largely a matter of the drafter’s style. In general, we avoid adding provisions to the Articles that are not absolutely required when they can be covered just as well in the bylaws.

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Spitzer Challenges Grasso’ Salary as “Objectively Unreasonable”And Obtained by Incomplete, Inaccurate, and Misleading Process

Head of NYSE compensation committee is also charged with breach of fiduciary duty for failing to advise Board on entire package

As the IRS begins to inquire gingerly about nonprofit salaries in excess of $1 million a year, it is informative to look at the complaint New York Attorney General Eliot Spitzer has filed to challenge the $187.5 million pay package awarded to former New York Stock Exchange Chairman and CEO Richard Grasso. (People v. Grasso, Supreme Court of New York in New York County, filed 5/24/04.)

Barnes Audit Shows Board Failure to Act

Report shows personal acrimony, failure to follow approved policies, And failure to exercise basic oversight responsibilities in many years

The “forensic audit” of the operation of the Board of Trustees of the Barnes Foundation during the mid 1990’s, which was recently made public in the current Foundation litigation, contains a host of vivid examples of how not to run a nonprofit Board.

It shows contracts between the president and persons with whom he had close business relationships which were not reviewed or approved by the Board, failure to develop a serious fund raising plan while suffering consistent annual deficits, failure to change investment policies when authorized by the court, and a number of odd real estate and other transactions not considered by the Board.

LLCs Becoming Entity of Choice for Subsidiaries

Single member limited liability companies, as "disregarded entities," have instant exemption; joint venture LLCs may qualify if all members are charities

The use of LLCs by charities is developing rapidly in special situations and is another tool for consideration in your planning for expansion. Since they are relatively new in most states, there is still a lot of law to be written on how they actually function is some situations, but they provide a flexibility that may not exist with other structures.

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