Posts Tagged ‘lobbying’

The Dirty (Half) Dozen Nonprofit No-Nos

Occasionally, you have to protect people from themselves.  Even those with the best of intentions can mess things up so badly that it can jeopardize what they are trying to accomplish.  In the nonprofit world, there are best practices, good practices and acceptable practices…and, really, really bad practices that will cause your organization, its board, donors and beneficiaries headaches galore.  This week, we are going to explore the Dirty (Half) Dozen Nonprofit No-Nos, in no particular order.  We will limit our discussion to 501(c)(3) nonprofits.

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1.  Dictatorships. If you want to be your own boss and run the show as a benevolent dictator, then by all means, go start a business.  Just don’t start a nonprofit organization.  What many people fail to understand before they establish a 501(c)(3) organization is that nonprofits do not have shareholders, i.e., owners…only stakeholders.  Stakeholders can be defined as an organization’s board of directors, its members and its beneficiaries.  No one can legally assume ultimate control.  In fact, the IRS requires tax-exempt organizations to be structured such that control rests within a group of individuals.  This protects everyone involved.  Many times we’ve seen placeholder boards who basically rubber-stamp every decision made by a dictatorially-inclined president or executive director.  That does everyone a disservice.  Even worse, the IRS will hold all the leaders accountable for the governance and management of the organization, not just the dictator.

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Political Campaign Activity by Charities

As the upcoming US Presidential election gets closer, information on the IRS’s views on 501(c)(3) organizations and political activity seemed appropriate for this newsletter.

The Internal Revenue Service announced its Political Activities Compliance Initiative (PACI) once again will be in effect for the 2008 election season. The PACI program seeks to educate section 501(c)(3) organizations such as charities and churches about the federal law concerning political campaign activity and to enforce the law in this area.

By law, organizations exempt from tax under Internal Revenue Code section 501(c)(3) may not “participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office.”

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We want to thank Dee Hollinger and everyone at Foundation Group for all the work that you did for our 501(c)(3) letter of determination from the IRS. We were ecstatic over the fact that we received it so quickly. Thanks to all that worked so hard to put this together for us. We will recommend FG to everyone that wishes to start a nonprofit organization and will use your services again in the near future ourselves. — Donald McElfresh, AmerinRio, Inc., Florida City, Florida

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