The due diligence process in considering a merger or affiliation is serious, but don’t let the lawyers use it to tell you why it shouldn’t be done. Lawyers are trained to tell you the risks. They will seldom provide the vision.
A charity that does not spend at least a portion of its time in advocacy work is probably not doing its job as well as it should.
Therefore, charities must understand the tax law definitions of "lobbying" and "legislation." There is a vast amount of advocacy that can be carried on without approaching tax limitations. Private foundations can support most of it, and preparing an application with foundation rules in mind can make it easier to get funded.
Tax law is not the only issue, however. Beware of federal and state lobbying registration requirements, with different definitions, and different reporting.
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Despite the political grandstanding that erupted after the disclosure that IRS determinations staff and attorneys had asked some improper questions of Tea Party and other potentially political organizations applying for 501(c)(4) social welfare exempt status, there has been no evidence that the IRS or the Obama Administration was targeting political foes.
When one reads the Treasury Inspector General’s Report, press reports of staff statements to the House Committee on Oversight and Government Reform, and comments of former IRS officials, one comes away with a vision of front line staff struggling to try to determine who can qualify as a (c)(4) organization when there is no clear definition to work with.
It isn’t as easy as it once was to claim a charitable contribution deduction for a gift to charity.
Because of perceived abuses by taxpayers claiming inflated deductions without adequate justification, Congress and the Internal Revenue Service have tightened the rules over the last several decades.
The rules apply to the taxpayers seeking the deduction. In most cases, they do not directly apply to the charities receiving the gifts and do not impose penalties on charities, but charities that want to assist their donors and receive additional gifts will want to be sure that the donors are in position to claim their deductions properly.
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The Consolidated Sportsmen of Lycoming County was incorporated in 1936 to promote conservation of forests, fields and streams of Pennsylvania, to promote fishing and hunting, and to promote the enjoyment of outdoor life by its members and the community in general. It owns and maintains approximately 230 acres of forest and meadow acreage atop Pennsylvania’s Marcellus Shale formation rich in natural gas. In 1981, it filed for and received recognition of exemption from the Internal Revenue Service as a 501(c)(7) social club.
When one of the founders of a nonprofit seeking to support democracy among Iranian citizens had a falling out with the others, he formed a new organization for the same purpose and used a name and logo that were similar to those the original group had trademarked. The original group has sued for trademark infringement in violation of the Lanham Act, and a federal District Court in the District of Columbia has denied the defendant’s motion to dismiss.
Liability for injuries at fraternity events is a frequent issue in litigation. (See Nonprofit Issues®, Vol. XXXVI, No. 5).
