Back to School: Gym Class (How Nonprofits Should Not be Like Tennis)

tennis court net

Serena-ity Now!

On the blog we’ve been going “back to school,” and our lessons wouldn’t be complete without a mandatory gym class. Which brings us to the question: is there gender bias in sports? Duh, yes. Mos def. It’s been especially newsworthy in tennis too.

There was nothing wrong with Serena Williams’ catsuit. Please, if a guy wore that, it would be noticed for sure, but certainly not banned.

Even worse: France’s Alizé Cornet received a code violation at the U.S. Open on Tuesday for removing her shirt on the court sidelines (she had a sports bra underneath). This is something men do all the time, and even while on the court.

The conversation continues in the aftermath of the US Open Finals last night between Serena Williams and Naomi Osaka. Were the umpire’s penalties in U.S. Open Final match the result of sexism? I certainly think so. I mean, I’ve seen male players such as, say, Rafael Nadal or John McEnroe, go absolutely bananas on the court and not receive a penalty to the tune of $17k.

Three Truth Bombs

Here are three truths that aren’t changed by any contretemps at Arthur Ashe Stadium:

First, Serena Williams is the greatest tennis player in history.

Second, at least on this day, Naomi Osaka outplayed Williams thoroughly for an amazing upset win.

Third, America, I love you like crazy, the crazy way that only an immigrants’ kid could love America. But, you have serious problems with sexism and misogyny.

Pink tennis ball stuck in fence

From the Tennis Court to Law Court

Here’s yet another truth bomb: nonprofits, already under terrific scrutiny by board members, donors, stakeholders, and government agencies, can’t afford even a whiff of a controversy like the tennis examples above. Even allegations of scandal can destroy previously successful nonprofits. And, just like the game of tennis, both need to consistently be working toward implementing rules and standards that ensure equity.

Such situations can split Boards, cause stakeholders to resign or pull back, snap shut donors’ wallets, and even result in expensive litigation. Fortunately, there are policies and procedures that can prevent your hardworking organization from ever having to deal with controversy (particularly those relating to discrimination, gender bias, and the like), by deterring such actions from every occurring. Let’s first discuss the IRS Form 990 and then the policies that relate to this annual information return.

IRS Form 990

IRS Form 990. This is the form that (most) nonprofits have to annually file some version of. Say what you will about the IRS – but in Form 990, the IRS provides nonprofits a path to prosperity. On Form 990, the IRS asks about several major policies and procedures that actually help nonprofits govern smarter. Any and every nonprofit should have all of these policies and procedures in place, with regular updates as appropriate. But, in our context, three policies are particularly relevant here.

At this point in the blog post, I feel as though I can actually hear you: “I don’t think we could ever afford that in our budget…we don’t know where to start!”

Before I delve into specific policies that will help your fave nonprofit combat discrimination and bias, let me repeat a special offer. I offer all nonprofits 10 major policies and procedures on IRS Form 990, drafted specifically and individually to each organization. for a flat fee of $990. No jokes, tricks, or hidden fees. Interested in learning more? Give this post a read, and don’t hesitate to contact me to take advantage of this solid, straight-up deal.

When do Nonprofits Need to File Form 990?

Compensation Policy

Data related to compensation is reported in three different sections on Form 990: “Officers, Directors, Trustees, Key Employees, and Highest Compensated Employees;” “Statement of Functional Expenses,” lines 5, 7, 8, and 9; and Schedule J;” and “Compensation Information for Certain Officers, Directors, Trustees, Key Employees, and Highest Compensated Employees.”

Having a set policy in place that objectively establishes salary ranges for positions, updated job descriptions, relevant salary administration, and performance management, is used to establish equality and equity in compensation practices. A statement of compensation philosophy and strategy, which explains to current and potential employees and board members how compensation supports the organization’s mission, can be included in the compensation policy.

Generally, this policy provides the benefits of:

  • Enhanced confidence of donors and supporters
  • Consistent framework for decision making on compensation
  • Increased compliance with federal and state employment laws
  • Reduced risk to the organization and its management and governing board

This policy can state clearly an organization’s intention to abide by federal and state law under which it is illegal to have pay differentiate based on gender.

25 Days of Giving: Nonprofit Policies Your Organization Needs to Consider

Document Retention and Destruction Policy

This policy should clarify what types of documents should be retained, how they should be filed, and for what duration. It should also outline proper deletion and or destruction techniques.

The document retention and destruction (DRD) policy is useful for a number of reasons. The principle rational as to why any organization would want to adopt such a policy is that it ensures important documents—financial information, employment records, contracts, information relating to asset ownership, etc.—are stored for a period of time for tax, business, and other regulatory purposes. No doubt document retention could be important for proof in litigation or a governmental investigation.

When I was a litigator, I represented employers who could not find a key document–a personnel file; written warning; performance review, and the like. Needless to say, in all these situations, the missing documents were a huge disadvantage to the employer in defending itself. Make sure that doesn’t happen to you by setting down rules as to what documents to keep and how long to keep them.

You know, there’s even a question of federal code. You may have heard of the federal law, the Sarbanes-Oxley Act of 2002. It reaffirms the importance of a DRD policy. Sarbanes-Oxley reads:

“Whoever knowingly alters, destroys, mutilates, conceals, covers up, falsifies, or makes a false entry in any record, document, or tangible object with the intent to impede, obstruct, or influence the investigation or proper administration of any matter within the jurisdiction of any department or agency of the United States or any case filed under title 11, or in relation to or contemplation of any such matter or case, shall be fined under this title, imprisoned not more than 20 years, or both.”

While the Sarbanes-Oxley legislation generally does not pertain to tax-exempt organizations, it does impose criminal liability on tax-exempt organizations for the destruction of records with the intent to obstruct a federal investigation.

Nonprofits & Sarbanes-Oxley Compliance

Yet another reason a DRD policy is an excellent idea, is it forces an organization to save space and money associated with both hard copy and digital file storage, by determining what is no longer needed and when…it’s like sanctioned spring cleaning!

Whistleblower Policy

Nonprofits, along with all corporations, are prohibited from retaliating against employees who call out, draw attention to, or “blow the whistle” against employer practices. A whistleblower policy should set a process for complaints, including gender bias or harassment, to be addressed and include protection for whistleblowers.

Ultimately this policy can help insulate your organization from the risk of state and federal law violation and encourage sound, swift responses of investigation and solutions to complaints.

A whistleblower policy encourages staff and volunteers to come forward with credible information on illegal practices or violations of adopted policies of the organization, specifies that the organization will protect the individual from retaliation, and identifies those staff or board members or outside parties to whom such information can be reported. (Instructions to Form 990)

The Sarbanes-Oxley Act (referenced under the document retention and destruction policy above) also applies here. If found in violation of Sarbanes-Oxley, both an organization and any individuals responsible for the retaliatory action could face civil and criminal sanctions and repercussions including prison time.

Stanley Cup Inspired: How Policies & Procedures Help Nonprofits Win the Game

Employee Handbook

On top of the super important policies he first line of defense for nonprofits is a well drafted, individualized employee handbook. Really, how can you NOT have an employee handbook? An employee handbook even if you have but a single employee makes clear the rights and responsibilities of both the employer and employee. So many disputes can be avoided by a clear, easy-to-read, and direct employee handbook.

In terms of gender discrimination, there are several provisions that should help insulate your favorite nonprofit. Your employee handbook would have an equal opportunity statement; anti-harassment policy; complaint procedure; and rules about compensation, document retention, and whistleblowing.

I offer a free “starter” employee handbook that can get you thinking about the types of provisions you should/could include in your employee handbook.

5 Necessary Policies for your Employee Handbook

Update As Needed

If you already have some (or all) of the above policies or employee handbook in place, seriously consider the last time they were updated. How has the organization changed since they were written? Have changes to state and federal laws impacted these policies at all? It may be high time for a new set of policies that fits your organization.

Playing tennis Without a Net?

tennis shoes on red court

Robert Frost famously opined that writing free verse is like playing tennis without a net. Well, I don’t know about that, but any nonprofit without the 10 major polices asked about on IRS Form 990, or without an employee handbook, is definitely like playing tennis without a net, ball, lines, umpires, or rules! And, the best way to play the “game” while assuring equity and fairness for all the players involves preventing bias and discrimination from ever holding a place on the court.

Schedule your free one-hour consultation and let’s talk about your organization’s needs!

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Nonprofit Events and Opportunities in August & September

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calendar on desk

Beyond my own information and resources I love offering Iowa nonprofits for free (like this board responsibilities handout or this nonprofit formation guide), I like to call attention to all the awesome events, awards, and grants available. There are so many great opportunities for Iowan nonprofit pros, board members, volunteers, and donors, that range from conferences to workshops, and grant applications to award nominations. But, life is busy, and it can be hard to keep track of what you should register for or put on your calendar. That’s why I compiled a list for your convenience:

Learning Events & Trainings

Awards

  • The AARP is accepting nominations for the 2018 Andrus Award for Community Service. AARP’s most-prestigious volunteer tribute recognizes outstanding individuals who are sharing their experience, talents and skills to enrich the lives of others.
    Nominations are due August 10.

Grants

  • Storey Kenworthy Foundation for Giving is accepting grant applications for five $5000 awards. The scope of giving priorities includes: “Honoring our Heroes, Medical Research and Support, Children & Education.” Application period available through August 31.
  • Nonprofits that on families, education or the environment are invited to apply for a grant from the Alliant Energy Foundation. Applications are accepted through September 1.
  •  Tourism-related entities (including nonprofits) based in Iowa can apply for the Iowa Tourism Grant Program. Awards range from $500 to $5,000 and require a 25% cash match. There is $150,000 available for the fiscal year 2019 grant cycle. Applications are due September 12.
  • The Mortimer & Mimi Levitt Foundation launching a grant opportunity for small to mid-sized towns and cities. Up to 15 grantees will be awarded $25,000 each in matching funds to produce their own free outdoor concert series. The prospective series should feature a diverse line-up of quality entertainment for people of different ages and backgrounds. Finalists are chosen through online public voting. Grant applications are due by September 25.

hands on phone with calendar app

There are so many great events and opportunities for nonprofits that there is no doubt I missed some in the list above. Please feel free to add applicable events for August and September in the comments below! If you would like to notify GFLF of any upcoming nonprofit-focused events and opportunities in the coming months, don’t hesitate to email GFLF’s Chief Content Officer at mackensie@gordonfischerlawfirm.com.

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Hiring at Your Nonprofit? Interview Smart From the Start

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shaking hands over interview table

As a candidate for a job, we all remember those pre-interview jitters. You’re worried you’re going to say something awkward, fail to demonstrate your aptitude and experience, or show up at the wrong time in the wrong place. Maybe your resume has grammatical errors, or you’ll have food stuck in your teeth. And, then there’s that anxious thought that you may completely freeze up when asked a question!

But, the interview is not just a daunting affair for the prospective candidate. On the other side of the interview table, the process can also be worrisome to the interviewer! Employers want to make sure they’re hiring the most qualified candidate for the job, while also assessing if the prospective employee is aligned with the organization’s mission and will fit well with company culture. To achieve this, employers (for non and for-profits alike) must be well informed on how to conduct an effective interview. An effective interview requires at least two major components from the employer: carefully prepared interview questions and carefully phrased interview questions.

Choose interview questions with care

shaking hands over table with computer

Carefully prepared interview questions require the employer to determine the critical success factors of the job. Prior to the interview, employers should formulate a detailed job description along with a list of the qualities, skills, certifications/degrees, and previous work experience they are looking for in a candidate. From this, an employer should be able to formulate questions in advance, some open-ended and some not, to ask the candidates.

Avoid certain interview questions like the plague

If you’re hiring for a position you may feel like you can just wing it–one less thing on your to-do list, right? Wrong. There are interview questions and practices that could make the organization a likely target of an employment or discrimination lawsuit. While not illegal in the strictest interpretation of the word, any questions related to the following should be avoided at all costs:

  • Race and ethnicity
  • Sex and gender
  • Race
  • Country of birth/origin
  • Religion
  • Disability
  • Age
  • Marital/family status/pregnancy

Why are questions related to these topics not okay?

Phrase interview questions with care

As an employer, it’s not just what you ask, but how you phrase it. Let’s cover a couple examples:

Age

  • You cannot ask: How old are you?
  • You can ask: Are you over 18?

Asking a candidate about their exact age can lead to accusations of age discrimination or even unconscious ageism bias in hiring.

The concern here can be whether the candidate is old enough to perform the work they are interviewing for, so ensuring that the candidate is legally old enough to work is sufficient. Child labor laws exist to prevent exploitation of minors and mean to make sure education is a higher priority for minor students than work. So, if your organization is considering hiring minors for entry-level part-time roles, make sure you have full understanding of the restrictions on the types of work that can be completed, maximum working hours, and late-night work hours limitations. For instance, work permits are mandatory in Iowa for minors under 16 and violations of limitations and permits come with civil penalties.

watch on wrist

Of course, age discrimination can go the other way too. For instance:

  • You can’t ask: How long do you plan to work until you retire?
  • You can ask: What are your long-term career goals?

According to a survey of older workers by the AARP, not getting hired is the most common type of age discrimination they experienced. An additional 12 percent of older workers say they missed out on a promotion because of age, and eight percent say they were laid off or fired due to their age.

Children and family

  • You cannot ask: Do you have children?
  • You can ask: Are you available to work overtime on occasion? Can you travel for work?

Asking a candidate about children can lead to gender and/or family discrimination. The fact that someone does or does not have children should have no bearing on consideration of the candidate.  The concern here is whether family obligations will interfere with work. Asking directly about the candidate’s availability should be sufficient.

In a similar thread, you cannot ask a female candidate if/when they plan to become pregnant. The Pregnancy Discrimination Act means employers cannot discriminate on the basis of childbirth, pregnancy, or medical conditions related to pregnancy.

two kids on scooters

As an employer, you also cannot condone Family Responsibilities Discrimination against caregivers under the Family and Medical Leave Act (FMLA). This means prohibiting discrimination against prospective and current employees who take leave from work if they have to care for a new baby, aging parent, or sick kid.

Marriage

No one is required to tell you as an employer their marital status or any marriage plans.

  • You can’t ask a female candidate: What’s your maiden name?
  • You can ask: Have you ever graduated or held a job under a different name?

Marriage - bride and groom

Physical abilities & health

  • You can’t ask: How tall are you and how much do you weigh?
  • You can ask: Are you able to perform the specific duties of this position such as lift a box weighing 50 pounds or reach items on a certain size shelf.

Asking for personal details about someone like their weight or height aren’t just “banned,” but they can so be incredibly uncomfortable for the interviewee. Some jobs do require specific physical abilities, but don’t make assumptions about a candidate based on appearance. Ask only direct questions related to what’s required of them.

person walking down path

The Americans with Disabilities Act (ADA) is another super important employment-related law under this category, as it prohibits workplace discrimination based on a person’s disabilities. The ADA defines disability as, “A physical or mental impairment that substantially limits one or more major life activities, a record of such an impairment, or being regarded as having such an impairment.” A good question to ask avoid questioning physical abilities while still gauging if the candidate can perform the job is: “Are you able to perform the essential functions of this job with or without reasonable accommodations?”

Transportation & residence

people on subway train

  • You can’t ask: How far is your commute?
  • You can ask: Are you able to start work at 8 a.m.? Or, are you willing to relocate?

Asking a candidate about where they reside can lead to location discrimination. The concern here should be whether the candidate can regularly show up to work on time. Ensuring that the candidate is able to make it to work on time for a shift or open of business is sufficient.

What else can you ask?

Don’t let all of this scare you off from interviewing and hiring the great people you need to carry out your mission! There are plenty of questions you ask that get to the important stuff related to qualifications, experience, behavior characteristics, and career goals, such as:

  • Tell me about your past work experience.
  • What are you looking to gain from this position?
  • Tell me about you previous experience managing teams.
  • What languages do you speak, read, and/or write fluently?
  • Previously, have you ever been disciplined for violating company policies regarding the use of alcohol or tobacco products?
  • Tell me how you became interested in this industry?

By carefully preparing and phrasing questions in an interview setting, nonprofit employers can minimize legal risks while eliciting information they actually need from job candidates to inform successful hiring decisions!

Interview with the right intel

two people sitting at table

It’s okay to have questions about nonprofit employment decisions like the interview process. It’s better to do it right and be legally prepared for it from the beginning to protect your organization against allegations of discrimination and potential litigation. This dedication to excellence in employment law should then extend through the entire employment process with tools like the ever-important employee handbook and well-crafted executive agreements.

Don’t hesitate to reach out to GFLF via email or by phone (515-371-6077)

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Best Board Ever: Your Nonprofit Needs this Free Guide

boardroom with large table and chairs

Recently I had the pleasure of presenting on the legal and financial duties of nonprofit boards at the Iowa Museum Association. One of my main core services is nonprofit formation and compliance, and a nonprofit’s board of directors (or supervisors, depending on what they’re called) is essential to both of those categories.

Had a great time speaking with the wonderful people at the #Iowa #Museum Association on the legal & financial duties of #nonprofit boards, earlier this week! 👨🏼‍💻👨🏼‍💼#presentation #GFLF #boardroom #nonprofitlaw

Posted by Gordon Fischer Law Firm, P.C. on Wednesday, July 11, 2018

When submitting a 501(c)(3) application (or a different type of tax exempt application), the IRS almost always requires at least three distinct individuals be listed on the board of directors. In terms of compliance, the nonprofit board is the governing body of the organization and therefore has distinct duties and obligations to the corporation.

Whether just starting out or continuing a long-standing tradition of operational excellence, it’s essential your nonprofit’s board know their responsibilities, understand their fiduciary role, and implement best practices. This goes for the board of directors as a collective body, as well as each of the individual directors.

Collective Responsibilities of Nonprofit Boards

Each nonprofit organization is unique and consequently, each nonprofit benefits from individualized counsel on how to maximize board operations. But, there are general guidelines of good advice that apply across the board. (Ha! Get it?) To that point, I’ve created a resource explaining board duties, best practices, and legal and financial responsibilities that most all nonprofits will find useful. If you’re a nonprofit leader (such as an executive director) you could even print this out and include it in board orientation materials and board handbook.

Download your copy of the “Best Board Ever” guide here!best board ever handout image

Questions? Thoughts? Need a speaker to present on a topic related to nonprofit formation and guidance or employment law? Don’t hesitate to contact Gordon via email at gordon@gordonfischerlawfirm.com or by phone at 515-371-6077.

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3 Lessons Your Favorite Charity Should Take from 2018 World Cup Champions

World Cup Trophy

What a game! Instant classic!

While I’m far from any type of soccer expert, I closely watched the FIFA 2018 World Cup final, and it struck me that there were three evident lessons from the victorious French team’s play that are transferable to your favorite nonprofit.

World Cup Final score

The Need for Speed

Croatia is a truly great team and played extremely well. But it seemed to me France was simply the faster and quicker team. Faster to loose balls, faster down the field, faster to set up defensive and offensive plays.

Does your favorite nonprofit have the requisite speed to operate in our hyper-digital, I-want-it-yesterday world?

Of course, there’s most definitely times for quiet, sure-but-steady deliberation. You don’t want to be rushed into making bad decisions.

But let me ask you: How fast is your fave nonprofit in getting out thank you notes after a donation or event?

When a potential donor contacts you, how fast is your response time?

When a potential donor contacts you with an unusual gift, a non-cash gift, how quickly can you respond as to whether you take such gifts and that you’ll take this particular gift? (A gift acceptance policy and a gift acceptance committee can work wonders here).

How quickly do you respond to someone who contacts you and wants to become more involved in your nonprofit as a volunteer, committee member, or board member?

To take the simplest example of how being quick and “on the ball” can make a difference, think about if you receive a thank you note just a couple days after a donation is made. It means more and makes a lasting impression rather than a thank you note received a month after a donation is made.

One Superstar Is Not Enough, Not Even Luka Modric

Even the most rabid fan of Les Bleus, would probably agree that Croatia’s Luka Modric is/was the best individual player on the pitch today.

Nonprofits often rely on superstars, too–the executive director who toils for decades; the board president with the knack of bringing board members together, and the volunteer who shows up every week to keep the database totally updated.

But, soccer is a team sport, and in the long game, so is philanthropy.

You don’t need just one of the “superstars,” you need all three…plus many other active staff, volunteers, board members, and stakeholders.

As awesome and spectacular as Modric is as a soccer player, he’s just one player. You need a whole supporting cast to win the match, every match, and stay consistent.

As commentators noted even before the game, France has such a litany of stars that anyone could step up to be counted on a given day. Griezmann, Mbappe, Giroud, Pogba, and others make France champions because they came to the field with such a deep bench.

Collective Responsibilities of Nonprofit Boards

Calm, Concentration, and Confidence

One of France’s coaches said he wanted his team to remember just three things during the match today: calm, confidence, and concentration. The same could be said by a leader at your favorite nonprofit.

Calm

On any day, at a small (or even large) nonprofit, all heck can break loose. Instead of one big problem, five, six, or 10 “fires” may break out. In these times, calm is needed. Don’t panic. Panicked people are not productive people. Work your way through each problem in order of importance. Communicate with the others that you’ll be back with them as soon as possible. It will get better. We all have bad days, don’t make a bad day even worse or last all week by not remaining cool and collected.

Concentration

Don’t be constantly distracted by our uber busy, get-it-to-me-yesterday work culture. Decide what’s most important and try to stick to not only tackling it but finishing it, despite the myriad of distraction that no doubt will be thrown at you.

Confidence

If you are not fully confident in your mission, goals, and objectives, potential donors and other stakeholders will be able to sense this. I believe expert legal counsel can help tremendously in this regard. To take just one prominent example, there is no such thing as being too compliant. How many of the policies and procedures the IRS asks about on Form 990 do you have? Were they copied off the Internet willy nilly or personally crafted for the unique needs of your nonprofit? When was the last time they were reviewed and updated? Demonstrate confidence by taking charge of your compliance.

Nonprofit Policy Special: 10 for Form 990

What lessons did you and your favorite charity take from today’s World Cup championship game?

Also, what was your favorite part of the match? I’d love to hear from you! Leave your thoughts in the comments below, or contact me by email, gordon@gordonfischerlawfirm.com or on my cell, 515-37-6077.

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Fresh Iowa Lawyer Mag Read: Policies & Procedures Iowa Nonprofits Need

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Have you read GFLF’s latest contribution to the Iowa Bar‘s monthly publication, The Iowa Lawyer? The piece, “IRS Form 990: 10 Policies and Procedures Most Iowa Nonprofits Need” covers:

  • how important the annual information filing (Form 990) is for tax-exempt organizations;
  • top policies and procedures highlighted on the form
  • why investing in sound policies and procedures means investing in success
  • deadlines and failure to file for Form 990

While targeted toward the attorneys who subscribe to the magazine, this article provides excellent information for all nonprofit board members, officers, staff, donors, volunteers, and other stake holders. Give the article a read and then get a jump start on top notch compliance well in advance of next year’s due date for the Form 990!

If your nonprofit hasn’t yet adopted all of policies outlined in the article (or they are in dire need of an update), what are you waiting for? Contact Gordon about the 10 for 990 deal (10 essential policies asked about of Form 990) for just $990. The rate includes a consultation, documents drafted to fit the unique needs of your organization, and one full review round. The benefits are numerous and the compliance risk is frankly too great to NOT have these important policies and procedures in place.

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Is Your Favorite (Nonprofit) Team on the Bubble?

#SelectionSunday

As we basketball fans get ready for #SelectionSunday, is your team on the bubble? Lots of reporting (like here and here and here) features teams that are oh-so-close to being in the NCAA Tournament, but perhaps not quite so.

Which reminds me to ask, how is your nonprofit team doing? In terms of compliance, is your favorite nonprofit safely “in” the compliance zone and ready to play to win, or are you hoping that the team can be just compliant enough to slide in?

Who do YOU cheer for?

person shooting on basketball court

When I say favorite nonprofit, think of it like the team you have slated to go all the way and win the final round! Perhaps your fave nonprofit is arts-oriented, like Revival Theatre Company in Cedar Rapids. Maybe your top pick is a local human services organization, like The Crisis Center in Johnson County. You could cheer the most for an animal welfare organization, like Friends of the Animal Center Foundation in Iowa City. You may be a tried and true support for a nonprofit that works for the benefit of developing countries, like Self-Help International based in Waverly, Iowa.

In any case, the nonprofit topping your list will likely need to submit an annual filing with the IRS to be “in” the compliance zone. The majority of nonprofit organizations must file some version of IRS Form 990, which asks about a number of policies and procedures.

Go for the win!

Just like the game of basketball is played within an established set of rules, tax-exempt organizations must also “play” within specific guidelines. Doing so means having specific policies and procedures in place to be compliant and in order to meet the IRS’ expectations. When a nonprofit invests in comprehensive internal and external policies and procedures it’s like investing in the right training and resources to maximize the sport team’s strengths.

To continue the analogy, consider me the coach for these policies and procedures and I want to help all Iowa nonprofits teams play their best. This is why I’m offering the 10 for 990 nonprofit policy special now through March 15. Leave the legal drafting to someone else while you continue to maximize your mission. Note that the $990 rate for the 10 important policies asked about on Form 990 also includes a comprehensive consultation and one full review round.

Help your team!

If you’re a nonprofit founder, executive, board member, or even an active volunteer, this is an excellent way to ensure the organization you’re deeply invested in is meeting (and exceeding!) the standard for tax-exempt organizations.

The 10 policies a part of this promotion will save your tax-exempt organization time, resources, and you can feel good about having a set of high quality policies to guide internal operations, present to the public (if appropriate), and fulfill Form 990 requirements.

Don’t wait for a last second shot!

As the game changes your team needs to adapt. If you already have some (or all) of the policies your team needs in place, seriously consider the last time they were updated. How has the organization changed since they were written? Have changes to state and federal laws impacted these policies at all? It may be high time for a new set of policies that fits your organization.

After you’re done filling out your March Madness bracket, commit to helping your own nonprofit team be a champion. Contact GFLF before the policy promotion is up (March 15) via email (Gordon@gordonfischerlawfirm.com) or by phone (515-371-6077) to get started.

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Nonprofit Formation: What the Parkland Students Should Do Now

In the days since the horrific school shooting in Parkland, Florida on February 14, many of the surviving students of Marjory Stoneman Douglas High School, along with students across the country and their supporters, have banded together to demand “never again.” Their battle cry is built on the disappointment and frustration with elected policymakers at the state and federal levels that fail to change the current status quo. They are calling out the politicians’ collective “there’s nothing we can do about it” shrug and the cumulative sag of the democratic system weighted by prescribed partisanship, undeniable deadlock, and constricting lobby money.

Parkland Students

Cameron Kasky, Emma Gonzalez, David Hogg, and Delaney Tarr (art by Kimothy Joy) via Vince Reinhart, Flickr

In the wake of yet another senseless mass shooting, these students are calling for actionable policy changes that will serve to protect other youth from having to face the same horrific scenario of murdered friends, teachers, and administrators that they did. Without a doubt, these teens have shown an impressive level of organization that has already resulted in some changes and important conversations on the issue. The Stoneman Douglas students have inspired school walkouts across America, published impassioned articles and op-eds, given interviews on national news, led televised press conferences, influenced a lie-in in front of the White House, took center stage at a CNN town hall, have advocated for gun control at their state Capitol, are creating “wining” social media content to spread their message to legislators and the general public, and so much more. The March For Our Lives is planned for March 24 in Washington D.C. (and in more than 460 sister sites/events around the world) as activists will “demand that their lives and safety become a priority and that we end this epidemic of mass school shootings.”

As time goes on, the #NeverAgain movement may take on different forms, pursue various routes, and try different tactics. Given the life cycle of major protests, it can be difficult to sustain the momentum of continued interest and activism so imperative for driving change. Because of this I want to offer up some legal strategies the Parkland activists and others could employ.

https://twitter.com/neveragainmsd

Form a 501(c)3

One legal strategy the Parkland youth (and other groups interested in pursuing progressive gun policies with a structured platform) could take is forming a 501(c)(3) organization. But, as we mentioned, the Never Again activists are making waves and changes without an official nonprofit platform to stand on, so why would they bother? It’s a good question, and the answer is a multitude of benefits including the following:

Tax exemption/deduction: Organizations that qualify as public charities under Internal Revenue Code 501(c)(3) are eligible for federal exemption from payment of corporate income tax. Once exempt from this tax, the nonprofit will usually be exempt from similar state and local taxes.

Tax-deductible contributions: Even better—if an organization has obtained 501(c)(3) tax exempt status, an individual’s or company’s charitable contributions to this entity are tax-deductible. (It’s true that charitable deductions are generally not as “valuable” since the changes made by the 2017 tax bill, but that’s a topic for another post entirely).

Eligibility for public and private grants: Nonprofit organizations can not only seek charitable donations from the public, they can also seek funding from grant making organizations, like foundations and government entities.

Formal structure: A nonprofit organization exists as a legal entity and separately from its founder(s). Incorporation puts the nonprofit’s mission and structure above the personal interests of individuals associated with it.

Limited liability: Under the law, creditors and courts are limited to the assets of the nonprofit organization. The founders, directors, members, and employees are not personally liable for the nonprofit’s debts. Also these folks have no personal liability for the actions and obligations of the nonprofit. Of course, there are exceptions. A person obviously cannot use the corporation to shield illegal or irresponsible acts on his/her part. Also, directors have a fiduciary responsibility; if they do not perform their jobs in the nonprofit’s best interests, and the nonprofit is harmed, they can be held liable.

Focus your giving: With charitable giving flowing through a central nonprofit organization, it’s easier for donors and the organizers alike to focus the giving on a singular mission (such as advocating for progressive gun control and reform at both the state and federal policy levels). An organized nonprofit can be much less susceptible to varied causes and cases of the different donors, volunteers, and employees, because a platform can be clarified.

With all of these benefits in mind, the present-day Women’s March is great example of a movement that has spawned dynamic nonprofits including March On, Women’s March LA Foundation, Women’s March Alliance, and Women’s March Canada. Women’s March leaders also launched a super PAC in 2017, March On’s Fight Back PAC. (Note: The 501(c)(3) organization Gathering for Justice served as the presenting partner for the Women’s March on Washington, meaning the organization lent their 501(c)(3) status to the grassroots movement, so that all donations could be tax-deductible.)

Women's March on Washington

Wait, Can Teens Even Form a Nonprofit?

Some of the criticism the Parkland students have weathered in the recent weeks has been based on their age. Without a doubt, these students have the right and have demonstrated a clear, mature ability to speak up for their cause even if some cannot legally vote in an election yet. Additionally, being a minor doesn’t prohibit them from founding a nonprofit organization. There are countless success stories of inspiring youth who haven’t let age hold them back from pursuing an amazing missions such as those behind The Ladybug Foundation, We Movement (which began as Free the Children), Kids Saving the Rainforest, Alex’s Lemonade Stand, and FUNDaFIELD (among many others).

The one things teens need to be aware of is that minors are typically not permitted to enter into legal contract unless they are emancipated. So, a teen could form a nonprofit, but then they may need to hand over control to a legal adult executive director in order for the nonprofit to pursue certain agreements and the like that would be beneficial.

person with backpack

How to Form a Nonprofit

Previously on this blog I wrote about how to form a nonprofit organization, but let’s review the basics; forming a 501(c)(3) involves four main steps:

  1. drafting, editing, and filing articles of incorporation;
  2. drafting and editing bylaws, with new board members then voting in favor of the bylaws in a duly authorized meeting;
  3. applying for an Employer Identification Number (EIN); and
  4. drafting, reviewing, and editing the IRS non-exempt status application, known as IRS Form 1023, as well as all the supporting materials IRS Form 1023 requires.

Note that each state can have different requirements for initial registration and filing, annual and employment filing, charitable fundraising compliance, and governance structure requirements. For example, in Iowa, there needs to be a minimum of one director (directors comprise the governing body of the nonprofit and serve as stakeholders in its mission and success) and an annual meeting is required.

So, if high school students in Florida form a nonprofit it would differ in process and compliance than if high school students in Iowa did the same.

What About Political Activity?

The limits on political activity is something that the Parkland students would have to adhere to if they formed a 501(c)3 organization. To maintain tax-exempt status, nonprofit organizations cannot participate with political campaigns on the behalf (or in opposition) of a candidate running for elected public office. So, this includes campaigns for U.S. president, senate, house of representatives, governor, state legislators, and even local offices like the county trustee. The IRS takes this rule super seriously and violations can result in a range of penalties from corrective actions to ensure the violation won’t reoccur, to excise taxes, to the revocation of tax-exempt status.

If the students did form a 501(c)(3), what could they do in terms of political-related activities?

peace flag

The rule of thumb here is nothing partisan. So, nonprofits can certainly engage in non-partisan activities like voter education and registration drives, as well as non-partisan political debates. (Nonprofits just need to be prepared to demonstrate that their activities don’t help or harm any particular candidate, and how the activities fit in with the organization’s exempt purposes.)

Up until now the Parkland students have been advocating largely for a specific stance (legislation that favors gun control) and not specific political campaigns. They could continue to do this issue-related advocacy work, so long as boundaries are not overstepped and the lobbying turns into political campaigning.

Remember that individuals associated with a nonprofit (say a founder or director of fundraising, for example) retain their right to participate in the democratic process by campaigning for specific candidates and vocalizing opinions; individuals just cannot do so as a representative of a nonprofit organization.

Other Options for Organization

501(c)(4)

If the Parkland students and their supporters want more of an active role in directly supporting candidates that agree and support gun control, they may want to pursue forming a 501(c)(4) instead of or in addition to the 501(c)(3).

A 501(c)(4) IRS designation indicates a “social welfare” organization, which the IRS defines as, “Civic leagues or organizations not organized for profit but operated exclusively for the promotion of social welfare.” (Note: A 501(c)(4) can also include local associations of employees.) Some commonly recognized examples of this type of organization are volunteer fire departments, homeowners associations, Disabled American Veterans chapters, and community service groups like the Rotary Club. Even Miss America Organization is a 501(c)(4)! You may also know 501(c)(4)s that are openly connected with a specific political party or ideology, like Organizing for Action and Crossroads GPS.

What differentiates the 501(c)(4) from it’s (c)(3) cousin is this type of organization is allowed to participate directly and indirectly in politics…so long as it is not the organization’s primary focus. Under this type of designation, organization representatives can conduct unlimited lobbying efforts and engage in partisan campaign activity…but only as a secondary activity. In practice, this means the organization must spend less than half of their funds on political campaigns, candidates, and the like. (Most counsel would recommend 30 to 40 percent of funds to be on the safe side).

Super PAC

Another option would be for the students to form a super political-action committee (PAC). Super PACs are not a category of nonprofit, but rather their own beast. I could (and will!) write a full post on this type of entity’s history, fundraising abilities, and limitations. What’s important for you (and the Parkland students) to know is that that super PACS have no limitations on who (be it unions, corporations, associations, or individuals) can contribute and how much they spend on elections, specific candidates, and in opposition of other candidates. This is why the 2016 presidential election saw super PACs donate massive amounts like Priorities USA Action spent more than $133 million supporting Hillary Clinton’s campaign, and Right to Rise gave $86 million to Jeb Bush’s candidacy.

When it comes to political activity, the main restriction is that a super PAC cannot spend funds “in concert or cooperation with, or at the request or suggestion of, a candidate, the candidate’s campaign or a political party,” according to the Federal Election Commission. It’s also important to note that donors can give to a nonprofit anonymously, but cannot make anonymous contributions to PACs.

Tax-exempt organizations interested in direct political work can form a PAC as a separate legal and funded entity in addition to their normal mission oriented work.

This is all to say that the Parkland students (and their supporters) have a multitude of options if they wanted to harness the benefits a nonprofit organization and/or an entity like a super PAC allows.

For anyone looking to form a nonprofit (regardless of age!) I recommend you meet with an attorney experienced in nonprofit formation and compliance to ensure you’re meeting all requirements, as well as drafting the important policies and procedures.

I would be happy to offer you a free consultation, address any questions, or help you get started on pursuing your mission-oriented organization. You can contact me via email or by phone (515-371-6077).

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10 For 990: Pitch to my Most Impressive Twitter Follower

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I’ll never forget that night. Several months ago, a simple notification popped up on my Twitter account. Very rarely have five words caused me such joy: “Soledad O’Brien is following you.”

I was social media starstruck!

Sure, I know that this was likely the doing of a digital tool that auto-follows accounts that tweet about certain subjects. Or, maybe it was one of the social media interns who saw my retweets of @soledadobrien and decided to throw me a follow as a fan. Since she follows 447k accounts I have no doubt that the impressive individual herself didn’t actually follow me…but hey, we all like to feel liked and heard even if it’s a digital facade.

To understand why this was such a Big Hairy Audacious Deal (if you got the reference to Jim Collins’ concept, applause!), let me put this into context of my small, “local” Twitter account and Ms. O’Brien’s worldwide acclaim.

A Lonely 440+

My Twitter account has merely around 440 followers (at the time of publication). I put out great content, and it’s growing slowly and surely, but would love for more people to join the party. (In fact, if you’re reading this and haven’t followed @FischerGordon yet, check out all the great info I share on estate planning, nonprofit formation and compliance, and charitable giving on top of Iowa-centric news and all around interesting factoids.) But, let’s be honest I have a long way to go to catch up to the likes of the Big Ben clock that simply tweets “bong” in various quantities and the San Francisco fog, apparently named Karl.

Soledad is Superb

In contrast to my lowly follower count, @soledadobrien has a well-deserved follower count at 809k and counting. For those few of you who are unaware, Soledad O’Brien is a world-famous broadcast journalist renowned for her roles as anchor and correspondent for MSNBC, CNN, HBO, and Al Jazeera America. She has been a tremendously well respected presence in broadcast news since 1991. She has covered so many huge stories I can’t possibly list them all. Countless times she’s been on “best of” lists and she’s won a Peabody Award and four Emmy Awards.

Presently, Ms. O’Brien is the host of Matter of Fact with Soledad O’Brien, a show focusing on politics and socioeconomic concerns produced by her very own multi-platform Starfish Media Group.

Newsworthy Nonpxrofit Policy Special Worthy of O’Brien’s Reporting

I would regularly check to see if Soledad O’Brien ever unfollowed me. Maybe the social media software algorithm wised up or the social media intern was tasked with clearing out the followings of accounts with sub-500 followers. But, my coolest follower (sorry everyone else!) is still there! This fact has, of course, let me to the inevitable conclusion: O’Brien must want me on her show! Why else would she follow an attorney who’s on a mission to maximize charitable giving in Iowa?

Why would she want me on her show at all? I’m biased, but I think the 10 for 990 nonprofit policy special (available through March 15) is certainly newsworthy! While not a political scoop, the 10 for 990 deal could benefit (Iowa) nonprofits working toward the betterment of socioeconomic issues and/or advocating for increased engagement in American democracy.

A journalist of O’Brien’s caliber would need some more details before she ever agreed to have me on as a guest. As such, the 10 for 990 offer provides nonprofits the ten policies discussed on the IRS’ Form 990 for the flat fee of only $990. (IRS Form 990 is the tax form nonprofits must complete once they’ve reached a certain monetary threshold. Just like individuals have to fill out a personal income tax form). The 10 policies asked about on the Form 990 include conflict of interest, document retention and destruction, whistleblower, compensation, fundraising, gift acceptance, financial policies and procedures, and investment.

If Ms. O’Brien were to ever interview me on this truly fantastic deal, I would share the benefits of having a qualified attorney craft these important policies and explain the collective responsibilities of nonprofit boards.

Even if you’re not an award-winning journalist turned CEO, I would love to talk to you about this policy special. Because Form 990 is typically due in May, now is the perfect time to get ahead on compliance. Nonprofit executives, board members, and even engaged volunteers should contact me via email or phone (515-371-6077) to learn how this could fit in with your organization’s goals.

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Reasons to Enlist an Attorney to Write your Nonprofit’s Policies

shaking hands across table

In the age of the Internet there’s a free template, instructional, and how-to video for just about everything under the sun. And, for many things, from great recipes, to exercise guides, to Ikea furniture blueprints (why is there always one extra piece left over?!), this is fantastic. Sometimes it’s even hard to remember what life was like before we had access to information on just about everything at our fingertips.

There are still some things that, despite being free and appearing easy to do, are better done by a trained professional. For instance, let’s say I wanted to redo my bathroom, but have extremely limited working knowledge of how to reconfigure the plumbing to make sure it’s functional within the new design of the room. I could certainly click through step-by-step instructions on Reddit or watch a smattering of YouTube videos, but I’m still not an expert. If I tried to DIY the plumbing in my new bathroom, it would certainly take me much longer than an expert and without a doubt the finished product would be of a lesser quality. There’s also a good chance I would invest all this time and energy in the project, and still mess up, and end up having to hire a professional contractor to fix my mistakes.

Some things are just better left to the professionals. In regard to your nonprofit’s policies and procedures, this is where an experienced attorney comes in.

As a nonprofit leader, you’ve specialized in a multitude of different aspects while working toward achieving your organization’s mission. But, when it comes the super important policies and procedures, you need to have in place for top of the line legal compliance, it’s best to outsource to a legal expert. You could try the DIY way by finding free templates online and trying to muddle through the process. But, if legal issues arise and your policies are called into question you’re then going to have to call in the specialized professional to help keep the bathroom from flooding (metaphorical reference to my hypothetical plumbing mishap). If written poorly, policies could provide little to no guidance because they were too vague, not applicable to your organization, or contrasting with federal/state/local laws. An attorney can help you put all the pieces of the compliance puzzle together into an image that’s valuable.

puzzle pieces

Avoid the time, energy, and monetary costs of DIY, and opt for quality policies and procedures that are written specifically for your nonprofit by an experienced attorney in nonprofit law. Need a little more information to convince the board, the boss, or yourself? Here are three practical reasons why you should work with a professional to draft your tax-exempt organization’s policies and procedures:

Save Time

Time is a common thread amongst the majority of nonprofits I’m lucky enough to work with. There’s never enough time. When it comes to initiatives like writing a full set of beneficial policies and procedures unique to your organization, it costs time! And that is time away from all the other change-making that could be happening. Without a doubt, most nonprofits are also short on administrative help. When you hire an attorney well-versed in nonprofit law it’s a double win when it comes to time—your time isn’t wasted or misused and you get to reap the benefits of a subject matter expert’s time.

https://www.gordonfischerlawfirm.com/nonprofits-form-990-due-date/

Save Money

My 10 for 990 special for nonprofits includes 10 policies asked about of Form 990 for a flat rate of $990. Sure, it’s an investment. But, less than $1,000 is worthwhile in exchange for policies that limit potential abuse, protect against vulnerabilities, and prevent activities that go beyond permitted nonprofit activities. Adopting internal and external policies can only help in the case that your tax-exempt organization is ever audited by the IRS.

Receive Dedicated Attention & Advice

Just like I tell my estate planning clients, there is no one-size-fits-all when it comes to the important documents that will be the blueprint to your legacy. The same goes for nonprofits.

Each nonprofit is unique and accordingly your internal and external guidelines will want to reflect this. For instance, a non-operating private foundation will likely need a different set of documents than a public charity. With a dedicated nonprofit attorney working on your policies, you get unparalleled and individualized service. This type of dedicated service and attention to detail will further save you from wasting resources on forms and other legal documents that aren’t useful or beneficial to the organization. Ultimately, working with a nonprofit attorney will mean counsel that sets your nonprofit up for success, unhampered by compliance issues.

The benefits of investing in a qualified attorney to craft your important policies are numerous; the right attorney will put your organization’s best interests first, saving you resources in the long run.

Form 990 Variations: Which Annual Return Should Your Nonprofit File?

Given my experience, mission, and passion for helping Iowa nonprofits, I would love the chance to fill the role of topical expert for your organization. Learn more about the 10 For 990 policy special and don’t hesitate to contact me via email (Gordon@gordonfischerlawfirm.com) or on my cell (515-371-6077).

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