What Our Presidential Candidates Can Teach Us About Tax-Exempt Legal Compliance

What do Donald Trump and Hillary Clinton share in common?  Among so many things political and otherwise (go ahead, use your imagination), they both head up charitable foundations, which have recently received media scrutiny for apparently operating outside legal boundaries.  What are the problems?  More importantly for us regular folks, what can prudent and responsible nonprofit leaders learn from these examples?  We will focus here on several areas related to:

  1. State charitable regulation requirements,
  2. Tax exemption principles against private benefit for nonprofit insiders, and
  3. IRS requirements for staying on course with an organization’s tax-exempt purpose.

Nonprofit Corporate Purpose Statements: Legal Compliance under 501(c)(3) and Effective Communications

Public charities and private foundations are, by definition, organized and operated for tax-exempt purposes within the meaning of Section 501(c)(3) of the Internal Revenue Code.  But where does a nonprofit organization state this information?  And to what extent – and where - should a nonprofit articulate additional details about its particular tax-exempt purpose?  The answer lies within the nonprofit’s “corporate purpose statement.” 

Paper, Paperless, Past, and Future - How Should Nonprofits Handle Documents?

Nonprofits are increasingly going paperless with their documentation, and all organizations should have protocols for addressing document management, retention, and destruction.  So how should responsible nonprofit organizations develop new document retention policies or upgrade their old policies, in light of technological advances and legal compliance requirements?  Key aspects including clear guidance for nonprofit workers, liability-related issues, related best practices, IRS Form 990 reporting requirements, important accessibility considerations, and data security.

Why do we need a document retention policy?

The most basic answer is that a document retention policy provides clear instructions for a nonprofit’s governing body and staff as to which records must be kept, for how long, and whether some or all records may be stored electronically instead of physically. The retention periods associated with specific records are generally tied to the statute of limitations for actions that could arise under state or federal laws.  The time frames can vary widely from one year to permanent retention.  Without clear guidelines, a nonprofit will often fail to retain important records needed for appropriate legal, tax, or accounting protection.  As an organization grows and more employees and volunteers are involved in handling records, the need for a uniform and clear policy becomes critical.  


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