The Law Office works with organizations that are contemplating incorporating as non-profits corporations to determine if this is the best organizational structure and, if it is, to secure the recognition as such from both the federal and state governments. The Law Office also assists these organizations in establishing good governance practices.
A non-profit corporation is an organization that has been formed as a corporation under state law for purposes other than an individual's personal or financial gain. A non-profit can be a school, a church, a medical or legal aid provider, a professional organization, or a charity, to name a few possibilities. To incorporate under state law, the organization must adopt articles of incorporation that contain the provisions required by state of incorporation. The incorporators or the initial board of directors also must adopt by-laws for the corporation. With the state-approved articles of incorporation in hand, the organization can then seek tax exempt status from the federal government. Incorporating under state law as a non-profit does not mean that the organization is automatically tax exempt. To become tax exempt, the corporation must meet ceratin requirements and must file an application of recognition of exemption under Section 501 of the Internal Revenue Code. Once that application is approved, there are usually additional steps under state law to be recognized as tax exempt for state tax purposes.
The Law Office works with its non-profit clients to ensure that the foundations for good governance are in place. An organization's Board of Directors is responsible for the financial health of the organization and the effectiveness of its programs. The Board members are legally accountable for the operation of the organization. A major task facing any Board is to put in place the appropriate policies and governance practices to guide the organization in its operation. This has always been the case, but the importance of doing so has been highlighted in the wake of the Sarbanes-Oxley Act. Of course, the Sarbanes-Oxley Act was in response to scandals in the for-profit sector and, in the main, only applies to publically traded companies. But its passage began a new focus on greater accountability and disclosure in the non-profit sector as well. Boards of Directors of non-profit corporations today should reexamine their role in the life of the organization and should evaluate the governance structures they have in place to determine their effectiveness. The days of merely following the lead of the Executive Director are past. The failure of members of the Board to vigorously fulfill their responsibility has the potential to jeopardize the organization’s reputation and to expose individual board members to potential liability.
Good governance practices make good sense even before Sarbanes-Oxley. Today, however, pressure for greater accountability for non-profits comes from heightened scrutiny of non-profits from the media. But it also comes from the demands of potential donors, who expect good stewardship of organizations who ask for their money.
A non-profit corporation is an organization that has been formed as a corporation under state law for purposes other than an individual's personal or financial gain. A non-profit can be a school, a church, a medical or legal aid provider, a professional organization, or a charity, to name a few possibilities. To incorporate under state law, the organization must adopt articles of incorporation that contain the provisions required by state of incorporation. The incorporators or the initial board of directors also must adopt by-laws for the corporation. With the state-approved articles of incorporation in hand, the organization can then seek tax exempt status from the federal government. Incorporating under state law as a non-profit does not mean that the organization is automatically tax exempt. To become tax exempt, the corporation must meet ceratin requirements and must file an application of recognition of exemption under Section 501 of the Internal Revenue Code. Once that application is approved, there are usually additional steps under state law to be recognized as tax exempt for state tax purposes.
The Law Office works with its non-profit clients to ensure that the foundations for good governance are in place. An organization's Board of Directors is responsible for the financial health of the organization and the effectiveness of its programs. The Board members are legally accountable for the operation of the organization. A major task facing any Board is to put in place the appropriate policies and governance practices to guide the organization in its operation. This has always been the case, but the importance of doing so has been highlighted in the wake of the Sarbanes-Oxley Act. Of course, the Sarbanes-Oxley Act was in response to scandals in the for-profit sector and, in the main, only applies to publically traded companies. But its passage began a new focus on greater accountability and disclosure in the non-profit sector as well. Boards of Directors of non-profit corporations today should reexamine their role in the life of the organization and should evaluate the governance structures they have in place to determine their effectiveness. The days of merely following the lead of the Executive Director are past. The failure of members of the Board to vigorously fulfill their responsibility has the potential to jeopardize the organization’s reputation and to expose individual board members to potential liability.
Good governance practices make good sense even before Sarbanes-Oxley. Today, however, pressure for greater accountability for non-profits comes from heightened scrutiny of non-profits from the media. But it also comes from the demands of potential donors, who expect good stewardship of organizations who ask for their money.