Tax Exempt Status
Nonprofit MOUs and
Non-Profit General Counsel
Every nonprofit organization must keep an eye on its governance and compliance obligations in order to maintain its tax exempt status and its goodwill with both funders and the community. As an experienced nonprofit attorney, my team can help both newer and more established nonprofit organizations meet their compliance obligations. And along the way, we’ll make sure that your organization is up to date on nonprofit governance best practices.
Nonprofit Governance Checklist
If you’re looking for the “short version,” here’s a quick and handy list of what your organization’s governance committee or board of directors should be keeping an eye on:
What Can Jeopardize a Nonprofit Organization’s Tax Exempt Status?
The IRS can revoke a nonprofit’s tax exempt status if:
In order to maintain your nonprofit’s tax exempt status, the organization’s primary activities must accomplish its exempt purpose(s). This is why it’s so important that the organization maintain consistency among: (a) the purpose clause in the Articles of Incorporation, (b) the organization’s bylaws, (c) what the organization told the IRS it would do when it applied for tax exempt status, (d) how the organization describes it current activities in its annual 990 information ``return, and (e) what the organization actually spends its time and money doing. According to the IRS, nonprofit organizations cannot spend more than “insubstantial” time or money on activities that don’t further the nonprofit’s exempt purposes.
In short, while there are many good things your organization probably could do, you have to stay focused on the primary mission.
In addition, there are a few red flags that will, in many cases, jeopardize your nonprofit’s tax exempt status because they strongly suggest the organization is not being operated “exclusively” for a tax exempt purpose:
Not only can these activities jeopardize the organization’s tax exempt status, but they can also result in the IRS charging excise taxes on improper transactions. Often, the directors or officers responsible for the improper activities are held personally liable for such excise taxes.
Amend or Restate Articles of Incorporation: $475 + $50 Ohio Secretary of State Fee
Includes accompanying board resolution authorizing the amendment or restatement.
Nonprofit Bylaws: $1,475 Nonprofit Organizations
Have your organization’s bylaws prepared or reviewed and updated by our nonprofit attorneys.
Ohio Attorney General’s Charitable Registration: $425
The Attorney General’s fee varies depending on the organization’s annual revenues (excluding government grants and funds from other charitable organizations.)
Cooperative Membership Agreements: $500
Statement of Continued Existence: $275 + $25 Secretary of State Fee
Nonprofit Dissolutions: $1,700 + $50 Secretary of State Fee
Includes Certificate of Dissolution and accompanying board resolution and Final Annual Report and Asset Disposition with the Ohio Attorney General’s Charitable Division, plus advice and guidance for winding up operations.
Agreements Between Nonprofits (Memoranda of Understanding): $1,050
Whether your nonprofit is serving as a fiscal sponsor, partnering with another nonprofit for a project, or sharing resources with a related organization, you still need a well drafted (and usually legally binding) agreement or MOU.
Read more about Nonprofit MOUs vs. Legal Contracts
Conflict of Interest Policy: $400
Governance Policies: $900
Depending on the size of your nonprofit and its particular operational risks, we can assist the board of directors with preparing or updating a variety of nonprofit governance policies, including: Document Retention and Destruction, Whistleblower, Fiscal, Gift Acceptance, Youth Safety, Information Security, etc.
Read more about Best Practices for Nonprofit Board Governance