Improve Your Nonprofit Legal Knowledge and Practice

By October 23, 2017Nonprofit

Have you heard anyone in your organization say something like this?

“Google Images is a great place to find pictures.”

“We’re a nonprofit so it’s okay to send out letters asking for donations, and promising that they are tax deductible.”

Since, as in the statements cited above, there is misinformation in the workplace, it is important to gain some basic legal knowledge applicable to the nonprofit sector. Even though you run a nonprofit organization, it is still vital to conform to the law for all matters pertaining to incorporation, taxes, donations, intellectual property and more.

A new free paper called “Let’s Go Legal” offers nonprofit organizations guidance in these and other matters to help them follow the law  in all their operations. Reading and understanding this paper is a good first step to help improve your organization’s compliance with federal, state, and local laws.

Non-Profit Law Is Complicated

Since non-profit law is complicated, it is to ensure you receive professional guidance on legal issues.

Even non-profit organizations, should still be run like corporations, requiring the completion. of paperwork to maintain your corporate status annually. Once a non-profit becomes an official entity in the eyes of the state, it also becomes a corporation and must be run like one to maintain its legal status.

Five Important Legal Areas

Like for profit companies, non-profit organizations have five areas of law to pay attention to:

  1. Federal: Federal law includes charitable purposes and assets, private benefits, lobbying, political campaigns and donations to campaigns, and public documentation.
  2. State: State law includes articles of incorporation, bylaws, fiduciary duties, recordkeeping, and state taxes.
  3. Employment: Employment laws govern the hiring, employment, pay rates, and firing of employees. Included in this category is the employment status of your workers, independent contractors, payroll, anti-discrimination laws and policies, and areas pertaining to human resources.
  4. Intellectual property: Intellectual property includes assets that can be copyrighted, such as text, photographs, videos, artwork and other works; respect of ownership of such property; patents and trademarks; website and online usage; and privacy policies.
  5. Fundraising: Covered under fundraising are the laws pertaining to how fundraising activities are conducted, reporting donations, registration and reports, written acknowledgments, and restricted gifts.

As you can see, non-profit law can be complex. But there are several steps you can take to make sure you are doing the right things.

Basics of Non-Profit Legal Compliance

It takes years to earn a law degree, however,  you can take steps to ensure that your non-profit is compliant with typical rules and regulations.

  • Maintain accurate records of Board meetings, Annual Reports, and other paperwork.
  • Pay any dues, such as annual incorporation fees, promptly.
  • Understand your duties and obligations for payroll processing, maintaining proper employment records, and any tax obligations as they pertain to employees. Just because you run a non-profit organization doesn’t mean that your employees do not have to pay income taxes.
  • Keep paperwork such as W9 forms and independent contractor agreements on file and updated for every employee.
  • Respect intellectual property rights. Properly license photographs from the copyright owners or from legitimate stock photography sources, following licensing agreements. Maintain records, contracts, and other paperwork on the source and use of intellectual property. Teach your employees the basics of respecting IP rights of others.
  • Track all financial reports, records, donations, and receipts carefully. Use a good non-profit financial accounting method or software.
  • Conduct an annual audit. Hire a CPA firm well-versed in nonprofit financial accounting to complete the audit.
  • When in doubt, seek the answer from your attorney, CPA, or another professional service provider.

Non-profit law is an area where many individuals have questions. Finding the answers, and following the basics, can go a long way to keeping your organization compliant.

Welter Consulting

Welter Consulting bridges people and technology together for effective solutions for nonprofit organizations. We offer software and services that can help you with your accounting needs. Please contact Welter Consulting at 206-605-3113 for more information.