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Law of Tax Exempt Organizations
http://charitychannel.com/groups/nonprofit-law
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Discuss U.S. tax-exempt organization law
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January 14-
 | Gayle Gifford Stephen, I'm having a really terrible time with this group. I posted two posts in the discussion forum on January 7th, one called Naming Staff Officers in bylaws (with shared management wrinkle) the other Powers of the Executiv
about 4 months ago | | |
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 | Mark Weinberg Kudos to Helen for her insightful issue spotting. The Unrelated Business Income Tax issues can be mitigated by splitting the return for use of the organization's membership lists off from any marketing it is called upon to perform; this is handled through a licensing arrangement for use of the nonprofit's name and logo as well as its membership lists and another for marketing help (ads in the organization's periodicals, lettes of endorsement, managing inquirieis, etc.). Proceeds from the former a not taxable (passive royalty income) while income from the latter is UBIT.
Greater concerns must be expressed about commercial joint-venturing in general which, especially when health is a mission of the nonprofit and the commercial entity claims to have a silver bullet, can lead to embarrassment if represented benefits are not delivered. Think Sunbeam and teh American Medical Association.
about 11 months ago | | |
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 | James Moore A client is presented with an opportunity. They and I could use your advice.
On the surface the opportunity resembles "For every pizza purchased, $1 will be donated to the charity." Such deals put the charity into the pizza business as a fundraiser.
The real co-marketing opportunity is more complex. A patient advocacy organization is being offered the opportunity to distribute a "revolutionary new diagnostic test" through its members to medical professionals already serving the members. Failure to diagnose is a crucial factor in their mission. 75% of those with conditions they serve are never diagnosed. For each test medical professionals use and new (previously undiagnosed) patients pay for, the testing company will make a donation to the charity. Not quite the same as the pizza deal, but similar.
Board members of the organization are understandably cautious. They are obviously concerned about appearances and reputation, but they also know that there's a line somewhere in the murky world of co-marketing that would take them from clever and innovative into the realm of illegal or at least unethical.
Obviously they need EO counsel. But before they engage counsel, they need to get the lay of the land on this issue--so they can shape their expectations and so they can temper the exploitations of the commercial entity that wants to get their test into the hands of medical professionals who will then use it. They want to have a pretty good idea of what the rules are before they get tangled up in negotiations that might lead to disappointment on either side.
I'd really appreciate the thoughts of this group--which I would share unfiltered with the client.
Thanks in advance for any brilliance you can shine on this situation.
about 11 months ago | |  James MooreSpell check inserted a "Freudian Slip" into my question: the org needs to "temper the 'expectations' of the commercial entity..." NOT "temper the 'exploitations'..."
 Helen ArnoldThis does indeed appear to be a commercial co-venturing situation. It will require an agreement for services, as well as state registration (in 39 states and DC) of the nonprofit and the co-venturer. Clarity of the roles of each can be informed to some extent by the registration regulations in the applicable states. The nonprofit would need to be careful of being pulled into the role of advertising for the for profit business. The processes and the return, in amount and methodology, should be very precise, affirmed for legality, and agreed to by the full Board. Be careful of taxable unrelated income considerations.
James MooreGreat input Helen and Mark.
A bit more detail if you have the time to process.
The "campaign" would be conducted by the charity.
Commercial entity, hereafter TESTCO, will supply charity with unlimited number of truly revolutionary diagnostic test kits for free. Charity will enlist constituents to bring TESTCO's kits to their doctors' offices and say, "75% of those with my kid's condition are undiagnosed. This kit revolutionizes the process, cuts costs and is painless. Use it under these circumstances - provided by charity." If docs comply, the test is used, sent to TESTCO for analysis and the patient is billed according to their billing practice. Charity gets a sizable donation for every test kit returned to TESTCO for processing.
TESTCO's test is vital to the charity's mission. For 50 years, diagnosis has languished for a number of reasons, but this new test (like many genetic tests) is a huge improvement on testing, non-invasive and painless. Perfect for kids vs. a blood draw and expense roughly 4 to 5 times as high for the "old" test. I think this is truly mission related.
TESTCO might also "sponsor" advertising by charity in medical journals.
Anyway, if this tweaks your opinions, I'd be interested to know.
MANY THANKS!!!
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| Mark Weinberg I don't see a problem with this. If the employee is also disabled, there is no problem. If they are not but have a child who is, it also is not a problem. If the employee is not disabled, in order to take into account the value of their services, this must be treated as compensation, but might be excludable from their income if it is deemed to be work related. Just document the elements on which you are relying and there should be no trouble. Peace, Markelangelo
a year ago | |  Ron WormserQuestions I've run into in the past with this:
-Will it take up limited spaces available to primary users?
-Will donors think their contributions are supporting employees v primary users?
-Will employees who do not take advantage of such opportunities seek to 'equalize' their employer-paid benefits?
-If more employees seek such opportunities than are spaces (and money) available, on what basis will selections be made?
None of these are insurmountable of course, but issues to anticipate and resolve before the actual issue surfaces. Good luck. Ron
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 | Genie Peterson Do any of my colleagues out there see a problem with a nonprofit offering its services to employees at a discount? I know that some colleges do this (e.g., employees can take a class at a discount) and I bet many art organizations would allow their office staff free admission. In this particular case, this is an organization that provides lessons and workshops to a special needs population. About 50% of the budget is donor-supported, the rest is covered by tuition, etc. The organization is considering offering staff a discount of 30%, which could add up to be a few thousand dollars/year, but that would not put anyone's salary range in the "excessive" category in this case. Any insight or guidance would be greatly appreciated.
a year ago | |  Stephen NillHi Genie,
I recommend posting this to the Discussion Forum for the group, rather than to the Journal page. You'll reach a lot more members of the Tax-Exempt Organization Group that way.
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December 20-
| Mark Weinberg Limbo Lower Now - How Low Can You Go . . .
REV. RUL. 2012-2 TABLE 5
Rate Under Section 7520 for January 2012
Applicable federal rate for determining the present value of an
annuity, an interest for life or a term of years, or a remainder or
reversionary interest 1.4%
a year ago | | |
December 11-
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Editorial Team updated the group
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October 01-
 | Stephen Nill
A3498d01.pdf (3.00 MB)
Standardized Registration for Nonprofit Organizations
about 2 years ago | | Stephen NillThis relates to the discussion we're having RE: "Donate Now" website buttons in the Discussion Forum.
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April 19-
 | Owen Doonan Hi all,
I am an old time member returning after a few years of being too busy to keep up. I am a long time disability advocacy and assistive technology specialist in MA. Nice to be back.
about 3 years ago | | |
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