Nonprofit Laws: IRS Exemption, Social Media Policies, Contracts, L3Cs, Marketing, and More

For your reference, a roundup of recent updates on legal issues (and challenges) facing nonprofit organizations, from lawyers and law firms on JD Supra:

New Guidance for Nonprofits Regarding Social Media Policies and Punishment (Venable LLP):

“… rapidly developing law in the area of disciplining employees for voicing workplace gripes in social media such as Facebook or Twitter warrant[s] caution before punishment of such behavior, as well as a review of policies that might be found to unlawfully impinge on employee rights under the National Labor Relations Act (‘NLRA’). Two recent developments – the issuance of guidance by the Acting General Counsel of the National Labor Relations Board (‘NLRB’) and the issuance of the first decision by an administrative law judge finding a violation of the NLRA for Facebook-related firings – provide important additional instruction.” Read more»

10 Things Your Non-profit Should Include In Its Contracts (Erin McClarty):

“All too often non-profit organizations transact on a hand-shake and a wink. But doing this places not only the organization at risk, but the person contracting as well. In some states, acting too reckless could leave the person entering these oral agreements responsible should anything go wrong…” Read more»

Lobbying: What Does It Mean for Nonprofits? (Venable LLP):

“Nonprofit organizations that conduct federal lobbying must be cognizant of at least two different definitions of lobbying in order to comply with applicable federal tax law and federal lobbying disclosure laws: … the Internal Revenue Code [and] the federal Lobbying Disclosure Act… Set forth below are the different definitions and reporting requirements for public charities and other tax exempt organizations under the federal tax law and under the LDA.” Read more»

IRS Issues Liberal Ruling Regarding Exempt Organizations and Political Action Committees (Manatt, Phelps & Phillips, LLP):

“Last month the IRS issued [a ruling] which held that an organization classified as a public charity (the Parent) will not lose its Section 501(c)(3) tax-exempt status as a result of (i) [the] establishment and operation of two political action committees, and (ii) the Parent and its subsidiaries’ establishment and operation of a voluntary payroll deduction plan for employees to contribute to any Section 527 political organization.” Read more»

Playing Politics: A Menu of Options for Associations (Venable LLP):

“When associations begin thinking about becoming politically active, the most common thought is: Let’s start a PAC. A separate segregated fund, the technical term for a political action committee, is certainly one way for an association to become more involved in the political process. But there are a number of other things associations can do politically that may be even more influential than simply starting a PAC…” Read more»

The L3C: A Boon to Illinois’ Social-Purpose Businesses (The Law Offices of Marc J. Lane, a Professional Corporation):

“The Low-profit Limited Liability Company, or ‘L3C,’ is a new, for-profit business form available to social entrepreneurs who seek the legal and tax flexibility of a traditional LLC, the social benefits of a non-profit organization, and the branding and market positioning advantages of a social enterprise. Moreover, the L3C presents a unique opportunity to attract private capital to ventures with modest financial prospects, but the possibility of significant social impact.” Read more»

Avoiding Legal Pitfalls in Cause-Related Marketing (Venable LLP):

“Marketers are increasingly looking to affiliate with charities in cause-related marketing efforts, such as arrangements in which a charitable donation is built into the cost of purchase of a good or service, to both raise donations and corporate image… However, as seen by the recent class-action lawsuit filed against Lady Gaga over charity wristbands for Japanese earthquake victims, good intentions are not enough to prevent scrutiny and legal trouble.” Read more»

Could Your Nonprofit’s Chapters Be Considered “Franchises” (Venable LLP):

“A recent U.S. Court of Appeals for the Seventh Circuit decision held that the national Girl Scouts organization violated a Wisconsin franchise law when it attempted to take away territory from a local chapter as a part of the national organization’s broader plan to reorganize local council boundaries.” Read more»

Legislature Hears Testimony on Legislation Limiting the Right of Public Charities to Compensate Independent Directors (Foley Hoag LLP)

“On Tuesday, September 27, 2011, the Massachusetts Joint Committee on the Judiciary heard testimony on H.3516 – a bill that would regulate compensation of board members for public charities… The bill would prohibit Massachusetts-based public charities from compensating independent (non-employee) officers, directors and trustees, except in instances where the charity can make a clear and convincing showing … that compensation is necessary to enable the public charity to attract and retain the services of experienced and competent individuals.” Read more»

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