An Overview to Nonprofit Law, Ethics, and Advocacy

1. An Overview to Nonprofit Law, Ethics, and Advocacy Virginia Commonwealth University—Nonprofit Learning Point Day 1-March 22, 2012 Instructor, Deborah Barfield Williamson, JD, MPA

2. Legal Disclaimer This workshop is intended for educational and informational purposes only. Nothing contained in this workshop is to be considered the rendering of legal advice for specific cases. Participants are responsible for obtaining such advice from their own legal counsel.

3. Part I--Who Expects Whatfrom You and the Organization You Serve Effective, lawful, and ethical practices—along with a commitment to transparency—are critical to ensure stewardship of mission and resources and to justify policies that support nonprofit autonomy. Test Your “Accountability IQ”

4. Defining “Accountability” from Webster, “an obligation or willingness to accept responsibility or to justify/explain one’s actions” Accept Responsibility for What? Justify/Explain What Actions?

5. What Do We Mean by “Accountability” for Nonprofits? Is this operating as a legitimate 501(c) organization? How fiscally responsible is this organization? What impact will my donation have? Is the organization meeting my needs? Can I easily find out all I should know about this organization?

6. Organized Efforts to Ensure Accountability • Regulators (government-driven) • VA State Corporation Commission, www.scc.virginia.gov • VA Office for Consumer Affairs, www.vdacs.virginia.gov/consumers/cgi-bin/char_search.cgi • Internal Revenue Service, www.irs.gov, http://www.irs.gov/pub/irs-pdf/f990.pdf • Funders’ Evaluations • “Independent” Watchdogs • Guidestar, www.guidestar.org • Charity Navigator, www.charitynavigator.org/ • BBB’s Wise Giving Alliance, www.bbb.org/us/ • Sector-Driven • See Independent Sector compendium, www.independentsector.org • Principles for Good Governance and Ethical Practice, at www.nonprofitpanel.org • State Nonprofit Associations, www.marylandnonprofits.org ****

7. What are accountability “standards”? Benchmarks to ensure: • Legal compliance • Transparent operations • Efficiency and Effectiveness • Ethical conduct • Use of “best practices” • Quality assurance

8. Keys to Ensuring Accountability • Policies and Procedures – annually review and revise • Ongoing Training and Communication -- Don’t assume every employee and volunteer understands best practices, legal requirements, and expectations for ethical behavior.

9. Part II—Maintaining the Organization’s Legal Status as a “Nonprofit Organization” • Choice of Business Entity • Tax Exempt Status • Public Charity vs. Private Foundation • Revenue Generation • Advocacy • Conflicts of Interests • Compensation • Financial Management

10. How Are You Organized? • Charitable Trust, Unincorporated Association, Limited Liability Company, or Non-Stock Corporation? • Where are your Governing Documents? • Are you doing your Annual Reporting?

11. Are You Tax-Exempt? • Nonprofit vs. Tax Exempt • Tax Exemption at Each Level of Government • Federal Tax Exempt Entities • Annual Reporting • Public Inspection

12. How Do You Generate Revenue? • Fundraising • Charitable Registration • Acknowledgment and Disclosure • Earned Income • Unrelated Business Income Tax

13. Do You Engage in Advocacy?

14. Do You Engage in Transactions with Individuals Close to the Nonprofit? Conflicts of Interests arise when director/officer or key employee has a direct or indirect and material interest in an organizational transaction. • Develop a policy • Require disclosure • Require recusal • Record

15. Do You Pay People? • Unreasonable Compensation • Employer Responsibilities/Employee Rights • Payroll Taxes • Unemployment Insurance • Workers’ Compensation

16. How’s Your Financial Management? • Audits • Record Retention • Whistle Blower

17. Part III – Value Your ValuesEthics in Action in the Nonprofit Sector • What are nonprofit leaders ethical obligation to the organization? • What are nonprofit organizations ethical obligations to society?

18. Part IV – Launching Your Passion…Nonprofit Start-Up Basics • A nonprofit organization has a purposes that provides some public, mutual, or religious benefit. • The organization may or may not also be a federal tax-exempt entity [501(c)]or enjoy other forms of tax exemption. • Ordinarily, a nonprofit’s profits (excess revenue) may not lawfully accrue to the benefit of any private shareholder or individual.

19. Virginia Charitable Nonprofits:What Types?

20. Learn the Vocabulary • Nonprofit, Not for Profit • Nongovernmental • Faith Based Organization • Tax Exempt • Charitable • Stakeholders • Founder • Executive Director, CEO • Volunteer • Board of Directors, Board of Trustees • Clients, Constituents, Members, Beneficiaries • Funders, Donors • Capacity, Sustainability, Accountability

21. Nonprofits Experience a Lifecycle • Start Up • Growth and Development • Maturity • Decline • Reorganization, Merger or Dissolution

22. Nonprofits Experience a Lifecycle • Start Up • Growth and Development • Maturity • Decline • Reorganization, Merger or Dissolution

23. The Mechanics of “Starting Up” • A Helpful resource is the SCC’s Business Registration Guide, http://www.state.va.us/scc/division/clk/forms/brg.pdf • Develop the “organizing documents” – Articles, Bylaws • Obtain a Federal Employer Identification Number • Satisfy Local Requirements, e.g., business license, zoning requirements • Register with the VA Employment Commission • Register with the VA Commissioner of Agriculture and Consumer Affairs (Va. Code §57-48 through §57-69) • Register with the VA Department of Taxation • Consider Insurance Needs • Apply for federal tax exempt status

24. End Day One