Erin and I just returned from Georgetown Law School’s Nonprofit Governance and Representing and Managing Tax-Exempt Organizations conferences. We had a great time learning and meeting with some of the brightest and most respected professionals across the country, including several friends. I also had the honor of speaking on a panel discussing strategic advocacy using 501(c)(3) and 501(c)(4) organizations.
Tweets from Georgetown Conference – Nonprofit Governance
- Is charitable advocacy a mission imperative? Great discussion at #GeorgetownNPG. Nonprofits need shift in perspective from “Here’s our mission – support us!” to “Here’s how we can help you”
- Barriers to advocacy and lobbying: 1. Lack of funding (advocacy isn’t just a cost center); 2. lack of understanding of tax rules (so much is permitted); and 3. lack of staff skills (misperception – experts are there) – Key is understanding link to mission
- Important nonprofit lobbying case discussed at #GeorgetownNPG – Parks v. Commissioner of Internal Revenue – see https://www.bolderadvocacy.org/blog/parks-case-pauses-unresolved-questions (incl the amicus brief from @AFJustice & @COF_)
- What is electioneering? IRS “Facts and Circumstances” analysis. 501(c)(3) and 501(c)(4) [Photo – “Good Facts: no reference to candidate or elections, external factor driving timing, broad range of issues, history of similar work on issue, ongoing communication about central issue of organization; Bad Facts: reference to candidate (as candidate), timing motivated by election, political motivated targeting, compare preferred candidate to candidate position, “wedge issues””]
- Compliance depends on understanding and training on the rules and defining your organizational goals. Social media communications will require fast decision-making and ‘muscle’ memory.
- Awesome panel with @NealDenton @Ms_Nonprofit & Lauren Bright energizing us with nonprofit public policy stories and advice and preaching urgency and action aimed at decision-makers.
- Consider advocating in your personal capacity to get access to public officials. And, in your organizational capacity, inviting them to your sites to show off your programs (and give them a photo opp)
Tweets from Georgetown Conference – Representing and Managing Tax-Exempt Organizations
- States are concerned about decline of IRS as charities regulator (esp in non-revenue generating areas) and trying to fill the gaps.
- State AG: DAFs run risk for money laundering. How do you check the front end (is the money clean) as well as the back end (are you granting to a charity and is the donor not receiving a benefit)? Compare to regs for financial institutions.
- Cindy Lott predicts more uniformity in charitable reporting over next 10 years due to increasing data sharing and needs for efficiency BUT states will always have their own priorities. [See Regulation of the Charitable Sector Project, Urban Institute]
- Affiliate 501(c)(3) and 501(c)(4) orgs – shared employees – be careful of exempt vs nonexempt issue (only one common status required), overtime and what rate to choose and which employer that is responsible (fair blend)
- Reminder that IRS can hold a volunteer board member and treasurer personally liable for nonpayment of payroll taxes. IRC 6672.
- Procedural Considerations in Addressing Chapter 42 Excise Tax Consequences http://www.capdale.com/files/ABA%20Presentation%20on%20Chapter%2042.pdf … – Michael Durham
- Private foundations – be careful of grantee reports that report lobbying and bill passages as grant achievements. Appearance of #earmarking [Contextual. Grant report stating change In law may be fine if funding clearly shows no earmarking (grantee language should not suggest otherwise). But private foundation should also be careful of how it reports this publicly in relation to its funding.]
- Private foundations – Be careful of #earmarking funds to named government officials – indirect self-dealing
- Private foundations – expenditure responsibility grants – PF required to investigate potential problems or misuses of ER grant funds (i.e., “diversions”) and take appropriate action.
- Private foundations – see Mannheimer Charitable Trust case for expenditure responsibility. Also this great resource from @AdlerColvinSF https://www.adlercolvin.com/expenditure-responsibility-a-primer-and-ten-puzzling-problems/
- Unrelated business – convenience items exception for members of the general public. Rev Rul 74-399; Rev Rul 69-268.
- Substantially related business – technical assistance [good analysis in] PLR 201701002 #UBIT
- Grantmaker tools in long term related investments: change-in-control provisions, put options, march in rights around IP deployment, escrowing certain assets.
- Funding for-profit social enterprises issue – identifying the charitable class of beneficiaries. For-profit often sees serving the broader market first as the desired pathway. But private benefit problem for 501(c)(3) grantor.
- New tax laws – steep decline in individuals who will benefit from charitable contribution deduction, BUT corporations with big tax savings = shift in giving once taxpayers figure this out if corps pursue tax credits to pay even less tax
- Nonprofit forms taxable for-profit subsidiary (UBIT blocker) to hold all lines of business with NOLs (to avoid UBIT silo problem), each in a different disregarded LLC for liability protection. – Ofer Lion [See Navigating Ventures between Nonprofit and For-Profit Entities – National Geographic Society and 21st Century FOX: Thoughts on a New Deal, Nonprofit Information; PLR 201644019; Tax Challenges for Counsel to Nonprofit Joint Ventures and Alliances, Strafford, with slide deck from Michael Sanders]
- Rev. Rul. 98-15 regarding joint ventures between a nonprofit and for-profit supported by recent PLR 201744019, which described the rationale behind the revocation of an organization’s 501(c)(3) tax-exempt status which gave up enforceable control of its hospital-related charitable activities in a lease to a for-profit [See Organization’s lease of hospital to for-profit results in loss of tax-exemption, EY]
- EO Division of IRS has recently added professionals in the employment tax area – accountable plan compliance may be a target area where IRS can pick up revenues for payroll tax deficiencies