Under the Not-for-Profit Corporation Law (“NPCL”) it is relatively clear that (i) any committee with corporate authority must be comprised only of trustees, and (ii) committees must be appointed by the board, and not, for example, by the chair (other than special committees). (The foregoing may not apply if otherwise provided by the certificate of … Continue Reading
Note: This article is a recap of Lesley Rosenthal’s presentation at Proskauer’s 17th Annual Trick or Treat Tax Exempt Seminar, November 29, 2012 Attorneys can reap enormous rewards by serving on nonprofit boards. Lawyers derive tremendous personal satisfaction in governing an organization that is meaningful to them. They can do the public good by participating … Continue Reading
Proskauer’s 17th Annual Trick or Treat Seminar discussed: Key Provisions of the Affordable Care Act Cybersecurity Threats and Identity Theft Lawyers as Nonprofit Directors Here are some take-away points from each presentation:… Continue Reading
The goal of the revision of the IRS Form 990 is to increase transparency, encourage compliance, and emphasize the importance of ethics within a not-for-profit organization. Given that so much emphasis has now been placed on "good" governance, it is increasingly important for not-for-profit boards to draft, adopt, and implement relevant governance policies - meant to be "living" documents reflecting the organization itself, and changing as an organization grows and develops.
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Over the past few years, the IRS has become increasingly interested in monitoring the governance practices of tax-exempt organizations, particularly public charities. This interest has been shown through public statements of IRS officials, the addition of questions about board makeup and policies to the Form 990, an explanation of why the IRS considers governance important, and the development of training materials on governance for IRS personnel. Not all members of the exempt organizations community agree that the IRS should focus on governance. However, the IRS rationale is that a well-governed organization is a tax-compliant organization.
The IRS has now developed and released a governance issues checklist (the Governance Check Sheet) to be completed in each audit of an exempt organization. The checklist provides a very specific roadmap for exempt organizations to compare their practices and policies with what the IRS wants to see and to make adjustments where necessary.
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