By NEO Law Group
An engaged board can be one of the most important organizational assets of a nonprofit. But nonprofit boards are often underutilized and are not always effective in significantly advancing an organization’s mission. Educating boards and executives about their legal duties, practical steps to take to effectively meet those duties, and best practices in mitigating exposure to organizational and personal liability/harm is key to establishing board engagement and effectiveness.
The final private benefit rule discussed in this series is the excess benefit transaction rules, codified in section 4958 of the Internal Revenue Code (“IRC”), which are a similar but distinct set of rules from the private inurement doctrine discussed in Part II. Similar to the private inurement doctrine,...
The private inurement doctrine is another private benefit rule applicable to public charities. The doctrine comes directly from the language of section 501 of the Internal Revenue Code that only organizations “no part of the net earnings of which inures to the benefit of any private shareholder or individual”...
The conferment of private benefits by 501(c)(3) organizations is governed by a set of federal tax laws that are commonly not well understood.Most nonprofit leaders know to be wary of any organizational transaction, arrangement, practice, or policy that may potentially or actually serve private rather than public interests. However,...
Be fashionably late to meetings. Don’t show up too often so the board recognizes it’s special when you do. Start preparing for a meeting just before you go in so the materials are all fresh on your mind. Dominate the discussion; to sound smart, use buzz phrases like “we’ve...
Executive sessions are generally closed discussions of a board of directors that may include invited attendees such as an executive director or certain staff members. These sessions can occur at the end of a board meeting or separate from a board meeting if no formal actions are to be...
Despite the title of this post, change is neither necessarily good nor bad. It's just inevitable. But as board members, we have the ability (and the duty) to influence whether changes to our organizations will be to their advantage. Still, there are common barriers preventing boards from dealing with...
One of my favorite things about our work is the opportunity to speak to boards about their roles and duties. A nonprofit’s board members are one of its most underutilized and important assets. We believe most board members genuinely want to contribute in a manner that will best help...
It is fairly common for a parent corporation to set up a subsidiary in part because it intends to enter into some business transactions with that subsidiary. For example, a 501(c)(3) nonprofit (referred to generally as a nonprofit in the rest of this post) and for-profit in a parent-subsidiary...
There are a variety of reasons that a parent-subsidiary structure between a nonprofit and for-profit entity can be an attractive corporate structure whether initiated by a nonprofit or for-profit. A nonprofit may desire to move a program that would otherwise be characterized as a substantial unrelated business activity into...
One June 15, I attended Champions for Change: How to Orchestrate Strategic Level Transformations presented by Susan Meier of BoardSource for the Center for Excellence in Nonprofits. Susan began by providing us with three examples of for-profit corporations that either successfully transformed or failed to transform, setting the stage...