Nonprofit Organizations Committee Fast Facts
|Number of Current Members:
|Number of Active Past Chairs:
Newsletter Editorial Board
- Willard L. Boyd III, Des Moines, IA
- Cari Campbell, Kieler, WI
- Megan A. Christensen, Washington, DC
- David Levitt, San Francisco, CA
- Matthew G. Wright, Waco, TX
Greetings from the Nonprofit Organizations Committee Chair.
My recent travels abroad reminded me how much we have to learn from other countries about nonprofit organizations. Lost in the large North American
nonprofit sector, we often forget that the Canadian and U.S. systems for classification, organization, regulation, and taxation of such entities are
not the only way that they can be treated. In most of the rest of the world, nonprofits are called "non-governmental organizations" or "NGOs." The name
alone lets you know that there is a world of difference in the perception of such organizations in other countries.
In North America, the most outstanding feature is that these organizations, whether charitable or not, is perceived to be that they do not strive to
make a distributable profit. The key distinction is thus a way to divide up the private sector between for-profit and non-profit entities. The term
"non-governmental organization" may have arisen primarily in the context of international organizations, where nonprofit advocacy groups, many of them
non-charitable, have long been recognized as participants in the decision-making process. For-profit entities are not even a part of the calculus as a
matter of perception, and the emphasis appears to be more on NGOs as assistants to governments, playing a primary role in social organization.
Nevertheless, private nonprofits or NGOs, particularly charities, play a significant role in many countries, often dating back to the time when
religious organizations were the primary providers of the social safety net. Despite different legal systems, NGOs (like North American nonprofits) are
a topic of public interest for similar reasons. Headlines abroad indicate that there were concerns with insufficient funds to accomplish worthy
missions, misuse of government and donated funds, overly generous executive compensation, inappropriate relationships with donors, maltreatment of
staff and beneficiaries. We have much to learn from the ways that foreign legal systems deal with these issues. For example, Israel is considering a
partial tax credit to encourage donations. Several countries are considering different types of curbs or oversight of executive compensation. These
issues are of interest directly to North American-based organizations with international operations like foreign-aid charities and international
multilevel professional groups. But indirectly, we can learn alternative approaches that work well and those that don't, which is useful when
developing our own systems both through formal regulation and through internal self-governance approaches. Historically, the Nonprofit Organizations
Committee has hosted several CLE programs on the way different legal systems treat their nonprofit organizations. There have been programs on the laws
of Canada, Mexico, and the Far East. In North America, we often re-invent the wheel rather than look outside our own experience for models. While it is
often hard with busy caseloads and limited foreign language knowledge to keep up with the treatment nonprofits in foreign lands, the rewards can be
significant. The Nonprofit Organizations Committee will continue to search for ways to include this valuable perspective in its programs.
Michael E. Malamut
Chair, Nonprofit Organizations Committee
Submit Nominations for the 2014 Outstanding Nonprofit Lawyer Awards
The Committee on Nonprofit Organizations is calling for nominations for the 2014 Outstanding Nonprofit Lawyer Awards. These Awards are given annually in
the following categories: Academic, Attorney, Nonprofit In-House Counsel, Young Attorney (under 35 or in practice for less than 10 years) and the Vanguard
Award (for lifetime commitment/achievement).
For a nomination form, go to the Nonprofit Lawyer Awards Subcommittee's webpage
and look under "Nonprofit Lawyer Awards Documents." You can also find there a list of prior award recipients. Nominations are due by March 10, 2014.
The Awards will be announced at the Business Law Section's Spring Meeting in Los Angeles, CA April 10-12.
Send nomination forms by March 10, 2014 to:
Caplin & Drysdale
One Thomas Circle, NW
Washington, DC 20005
(202) 429-3301 (fax)
The Nonprofit Committee Needs You!
The Committee is in search of a person to serve as the Chair of the Trade and Professional Associations Subcommittee. For more information or to volunteer
for this position, please contact Michael Malumut (firstname.lastname@example.org).
Two Part Webinar Series for the "Non" Nonprofit Lawyer
The popular webinar series "Nonprofit Issues for the Non-Nonprofit Lawyer" returns on January 15, 2014. This two webinar series targets lawyers whose
practice does not exclusively focus on the representation or formation of nonprofit organizations but who sit on the board of a nonprofit organization or
periodically assist public charitable nonprofit entities. It can also be a great refresher course or update course. Both of the live webinars will provide
practical drafting advice on essential nonprofit entity documents and provide participants with an opportunity to ask questions. The speakers include
experts in the nonprofit area including a representative from the Internal Revenue Service.
This series follows a three-part series in 2013. This year's webinars will focus on documentation issues. The first 90-minute webinar
(http://apps.americanbar.org/cle/programs/t14egd1.html), to be held on January 15 at
1:00 PM (Eastern), will focus on essential governing documents - articles of incorporation, bylaws and selected governance policies. The second 90-minute
program (http://apps.americanbar.org/cle/programs/t14eff1.html), to be held on January
22 at 1:00 PM (Eastern), will focus on tax documents, and in particular the application for tax-exempt status (Form 1023) and annual return (Form 990).
The price for Business Law Section members is $125 per webinar.
Special Offer for Webinar Participants:
Save 20% on Nonprofit Governance Library (Product Code 5070392P) or on each book individually. Visit
www.ShopABA.org and enter discount code NONPROFIT14 at checkout to save on nonprofit books published by the
ABA Business Law Section.
Nonprofit Lawyer Profile: Robert Wexler
The Nonprofit Organizations Committee of the Business Law Section and the Exempt Organizations Committee of the Tax Law Section both address issues of
importance to attorneys representing nonprofit organizations. Robert Wexler is the recent incoming Chair of the Tax Section Exempt Organizations Committee.
Rob is a principal of Adler & Colvin in San Francisco. His practice focuses on tax and corporate matters for nonprofit organizations and their donors.
He has been representing nonprofit organizations for 28 years and enjoys the satisfaction that comes from helping to foster charitable and socially
In recent years, Rob has developed an interest and expertise in social enterprise, which involves applying business and market-based approaches to solving
social problems and pursuing earned revenue strategies to achieve a double- or triple- (financial, social, environmental) bottom line. He advises both
nonprofit organizations and social entrepreneurs on developing the most effective legal framework to pursue their proposed social enterprise activities,
whether through a nonprofit entity, for-profit vehicle, or some combination of the two.
Rob spent significant time as part of a working group developing legislation to create the flexible purpose corporation in California, which became
available in 2012. The objective of the flexible purpose corporation is to facilitate the organization of companies that combine profitability with a
broader social or environmental purpose and allow them greater flexibility under the law to pursue these purposes. Rob also helped found the San Francisco
chapter of the Social Enterprise Alliance, a membership organization that represents the social enterprise sector.
Rob believes that hybrid entities will continue to evolve and will become increasingly relevant for the young and socially conscious entrepreneurs emerging
As chair of the Tax Law Section Exempt Organizations Committee, Rob is open to ideas for how his committee might collaborate with the Nonprofit
Organizations Committee to improve the law for nonprofit organizations.
Feature Article: Nonprofit Revitalization Act Impacts New York Nonprofits and Organizations Registered to Solicit Contributions in the State
By Kimberly A. Lowe, Fredrikson & Byron, P.A. and Matthew Norris, J.D. Candidate, 2014, University of Minnesota Law School
On December 18, 2013, New York's Governor Andrew Cuomo ushered in a new era of nonprofit governance when he signed into law the Nonprofit Revitalization
Act. The Act, which unanimously passed the state's legislature, is the first major reform to New York's nonprofit laws in forty years.
Nonprofit corporations incorporated under New York law, which include large national organizations such as the American Heart Association and Planned
Parenthood, are directly affected by the new law. Some provisions, however, apply to any nonprofit corporation registered in New York to solicit
New York Attorney General Eric Schneiderman says the Act aims to "reduc[e] unnecessary and outdated burdens on nonprofits" while "enhancing nonprofit
governance and oversight to prevent fraud and improve public trust." Input from leaders of large and small New York nonprofit corporations, who issued a
comprehensive report to the attorney general in 2012, shaped the legislation.
Megan A. Christensen, Blank Rome LLP, Washington, DC
IRS Provides Options for Automatically Revoked Organizations to Apply for Reinstatement.
Revenue Procedure 2014-11,
issued on January 2, 2014, provides four options for applying for reinstatement of tax-exempt status for those organizations whose exemption has been
revoked for failure to file the required annual forms or notices (Form 990 series) for three consecutive years. The four options are described as (a) for
organizations eligible to file either Form 990-EZ or Form 990-N and have not previously had tax-exempt status automatically revoked ("Streamlined
Retroactive Reinstatement Process"); (b) for organizations not eligible to use the Streamlined Retroactive Reinstatement Process, if it applies not later
than 15 months after the later of the Revocation Letter or the date on which the IRS posted the organization's name on the Revocation List ("Retroactive
Reinstatement Process (Within 15 Months of Revocation)"); (c) if more than 15 months has passed since the later of the Revocation Letter or posting on the
Revocation List, an organization may apply for retroactive reinstatement only under the "Retroactive Reinstatement Process"; or (d) the
"Post-Mark Date Process" for any organization, including those eligible for any other reinstatement process. The Revenue Procedure also explains how the
new procedures apply to pending and recently approved applications, and modifies and supersedes Notice 2011-44.
IRS Issues Interim Guidance Regarding Supporting Organizations.
On December 23, 2013, the IRS issued Notice 2014-4 providing interim guidance for organizations
described in Section 509(a)(3) that are operated in connection with the public charities they support ("Type III Supporting Organizations"). Type III
Supporting Organizations are divided into two categories - those that are "functionally integrated" and those that are not. Notice 2014-4 provides interim
guidance for Type III Supporting Organizations that seek to qualify as functionally integrated by supporting a governmental supported organization. Under
the Notice, until the earlier of the date final regulations are published under Treasury Regulation Section 1.509(a)-4(i)(4)(iv) or the first day of the
organization's third taxable year beginning after 2013, a Type III Supporting Organization will be treated as functionally integrated if it (1) at least
one supported organization is a governmental entity to which the Type III Supporting Organization is responsive within the meaning of the Treasury
Regulations, and (2) engages in activities on behalf of such governmental entity that perform the functions of, or carry out the purposes of such
governmental entity and "that, but for the involvement of the supporting organization, would normally be engaged in by the governmental supported
IRS Processing Guidelines for Section 501(c)(3) Applications Involving Potential Political Campaign Intervention.
On December 10, 2013, Karen Schiller, Acting Director, Exempt Organizations, Rulings and Agreements, issued a memorandum to provide interim administrative
guidance regarding the processing and review of exemption applications under Section 501(c)(3) that indicate that the applicant may be involved in
political campaign intervention for which additional development is necessary to determine qualification for exemption. The memorandum is directed to the
Exempt Organizations Determination Unit and Exempt Organizations Determinations Quality Assurance. The memorandum states that the following activities may
suggest the potential for political campaign intervention: voter registration; inaugural and convention host committees; post-election transition teams;
voter guides; voter polling; get out the vote drives; events at which candidates speak; communications expressing approval or disapproval of candidates'
positions or actions; or other activities that appear to support or oppose candidates for public office.
IRS Issues Notices Regarding Charitable Hospitals.
The IRS has issued two Notices related to charitable hospitals regarding the requirements of Section 501(r) of the Internal Revenue Code.
confirms that hospital organizations can rely on proposed regulations under section 501(r) of the Internal Revenue Code published on
June 26, 2012,
April 5, 2013,
pending the publication of final regulations or other applicable guidance.
contains a proposed revenue procedure that provides correction and disclosure procedures under which certain failures to meet the requirements of §
501(r) of the Internal Revenue Code will be excused for purposes of § 501(r)(1) (establishing the four requirements for charitable hospitals) and
501(r)(2)(B) (hospital organizations with more than one hospital facility). Notice 2014-3 requests comments regarding the procedures set forth in the
proposed revenue procedures.
Emily Chan, Adler & Colvin, San Francisco, CA
On September 6, 2013, Governor Jerry Brown signed into law AB 491. Effective January 1, 2014, AB 491 amends the California Corporations Code to allow
California nonprofit and for-profit corporations to take certain actions relating to procedures such as notice and quorum, and adopt special governance
provisions in their bylaws for purposes of conducting the corporation's ordinary business in anticipation of or during an emergency. An "emergency"
includes events such as a natural catastrophe, a terrorist attack, or a state of emergency proclaimed by a governor or the President.
On December 19, 2013, Attorney General Martha Coakley released a 91-page report "Massachusetts Public Charities CEO Compensation Review" that examines
chief executive officer (CEO) compensation of 25 of the largest public charities in Massachusetts. The report also previews a prototype of "Schedule EC,"
the Attorney General's proposed expanded reporting requirement on CEO compensation to be introduced in early 2014 for certain nonprofit organizations in
On December 18, 2013, Governor Andrew Cuomo signed into law the Nonprofit Revitalization Act of 2013 which is intended to (1) enhance nonprofit governance
and oversight to prevent fraud and improve public trust; and (2) reduce unnecessary and outdated burdens on nonprofits. The Nonprofit Revitalization Act is
the state's first overhaul of its not-for-profit corporation law in over 40 years. See the Feature Article of this newsletter above, for more