Nonprofit Law Matters

Steven R. Chiodini

Posts by Steven R. Chiodini

California Franchise Tax Board and Secretary of State Publish First Batch of Delinquent Nonprofits to be Automatically Dissolved or Surrendered.

Posted in AG, IRS, FTB, & Property Tax Proceedings, Formation & Tax Exempt Status, FTB, Nonprofit Governance & Ethics

The California Franchise Tax Board (FTB), in conjunction with the California Secretary of State, published on March 1 the first batch of approximately 5,000 nonprofit corporations that will be administratively dissolved (for California nonprofit corporations) or administratively surrendered (for foreign nonprofit corporations registered in California) exactly 60 calendar days after March 1 (which falls on… Continue Reading

IRS Clarifies Position on Private Foundation Mission-Related Investments Under Section 4944

Posted in Grantmaking & Social Investing, Private Foundations, Social Enterprise

In Notice 2015-62 issued on Tuesday, the IRS explained that a private foundation and its managers will not necessarily be penalized under Internal Revenue Code Section 4944 for a mission-related investment that does not qualify as a program-related investment (PRI) and that offers a lower return than more standard alternatives, since a foundation’s charitable purposes… Continue Reading

Goodbye Flexible Purpose Corporation, Hello Social Purpose Corporation: Governor Brown Signs S.B. 1301

Posted in Social Enterprise

On September 27, Governor Brown signed into law an amendment to the Corporate Flexibility Act of 2011, which had established the flexible purpose corporation (“FPC”) as a hybrid corporate form then unique to California.  The amendment, S.B. 1301, changes existing law (found under Corporations Code Sections 2500-3503) to emphasize the social-purpose nature of the FPC,… Continue Reading

Update — Expedited Handling for Determination Letters Still Available

Posted in AG, IRS, FTB, & Property Tax Proceedings, Formation & Tax Exempt Status, Private Foundations, Public Charities, Unions, Associations, Clubs & Other Tax-Exempt Organizations

For the past few weeks, there has been some confusion over Revenue Procedure 2014-4’s apparent elimination of an expedited option for exempt-organization determination letters as discussed previously, since the subsequent Revenue Procedure 2014-9 still included the explanation from previous years about the IRS’s standards for granting expedited treatment of exempt-organization determination letters. Earlier today, the… Continue Reading

IRS Removes Expedited Handling for Determination Letters

Posted in AG, IRS, FTB, & Property Tax Proceedings, Formation & Tax Exempt Status, Private Foundations, Public Charities, Unions, Associations, Clubs & Other Tax-Exempt Organizations

*** THIS POST HAS BEEN SUPERSEDED BY NEW INFORMATION FROM THE IRS.  PLEASE REFER TO *** In Section 9.03(3) of the new Revenue Procedure 2014-4, the IRS has clarified that the option to request expedited handling is no longer available for determination letters.  The Revenue Procedure defines a “determination letter” as “a written statement… Continue Reading

IRS Issues Guidance on the Deductibility of Donations to LLC Subsidiaries of Section 501(c)(3) Organizations

Posted in Nonprofit Structures, Relationships & Transactions, Private Foundations, Public Charities

The past week saw the publication of guidance from the IRS that the charitable sector has been awaiting for eleven years:  under Notice 2012-52, donors to a limited liability company (LLC) wholly owned by a Section 501(c)(3) organization can claim a charitable deduction under Section 170.  The notice is effective for contributions made on or… Continue Reading

Could Your Nonprofit Chapter Network Be a Franchise System?

Posted in Nonprofit Network Affiliations

Charities have many legal issues on their radars, but franchise law typically isn’t one of them.  Consequently, a Wisconsin case applying franchise law to a nonprofit surprised many in the sector.  Should you worry?  As described in the opinion, the local Girl Scouts chapter in Manitou, Wisconsin, like more than 300 other local Girl Scouts… Continue Reading

Model C Fiscal Sponsorship: The More Formal, the Better

Posted in Public Charities

Model C fiscal sponsorships, where a public charity enters into a pre-approved grant relationship with an unrelated individual or organization, may be less common than Model A direct-program sponsorships, but they do offer some advantages, including the possibility of limiting a sponsor’s liability for project activities.     Unfortunately, they also pose a number of traps for… Continue Reading

Successor Liability in a Model A Fiscal Sponsorship

Posted in Public Charities

Fiscal sponsorship can be ideal for startup charitable projects:  operating under the aegis of an existing charity, organizers can test-run a concept before going through the expensive, time-consuming process of applying for exemption under Section 501(c)(3).  But there may be reasons for sponsors to take in established projects as well.  For example, organizers may find… Continue Reading