Nonprofit Law and Governance For Dummies

Jill Gilbert Welytok, JD, CPA, LLM, practices in the areas of corporate law, nonprofit law, and intellectual property. She is the founder of Absolute Technology Law Group, LLC (www.abtechlaw.com). She went to law school at DePaul University in Chicago, where she was on the Law Review, and picked up a Masters Degree in Computer Science from Marquette University in Wisconsin where she now lives. Ms. Welytok also has an LLM in Taxation from DePaul. She was formerly a tax consultant with the predecessor firm to Ernst & Young. She frequently speaks on nonprofit, corporate governance–taxation issues and will probably come to speak to your company or organization if you invite her. You may e-mail her with questions you have about Sarbanes-Oxley or anything else in this book at jwelytok@abtechlaw.com. You can find updates to this book and ongoing information about SOX developments at the author’s website located at www.abtechlaw.com. Daniel S. Welytok, JD, LLM, is a partner in the business practice group of Whyte Hirschboeck Dudek S.C., where he concentrates in the areas of taxation and business law. Dan advises clients on strategic planning, federal and state tax issues, transactional matters, and employee benefits. He represents clients before the IRS and state taxing authorities concerning audits, tax controversies, and offers in compromise. He has served in various leadership roles in the American Bar Association and as Great Lakes Area liaison with the IRS. He can be reached at dsw@whdlaw.com.

Foreword xix

Introduction 1

Part I: Nonprofits in the 21st Century 7

Chapter 1: Defining and Scrutinizing the Nonprofit Sector 9

Chapter 2: Regulating Nonprofits: Who’s in Charge? 21

Chapter 3: The State of the Nation’s Nonprofits 33

Part II: The Nuts and Bolts of Nonprofits 45

Chapter 4: Starting Up and Staying True to the Mission 47

Chapter 5: Getting Tax-Exempt Status 69

Chapter 6: Paying Nonprofit Directors, Officers, Staff, and Volunteers 87

Part III: Structuring a Nonprofit to Meet Its Mission 101

Chapter 7: Filing the Dreaded Form 990 103

Chapter 8: The Responsibilities of the Board 117

Chapter 9: Creating the Right Committee Structure 135

Chapter 10: All About Audit Committees 141

Part IV: Some Special Types of Nonprofits 151

Chapter 11: Forming a Solid Foundation 153

Chapter 12: Capitalizing on Cooperatives 165

Part V: Legal Landmines 179

Chapter 13: Existing in a World of Sarbanes-Oxley 181

Chapter 14: Some Sticky Accounting Issues That All Nonprofits Face 199

Chapter 15: Communicating Comfortably with the IRS 217

Part VI: The Part of Tens 227

Chapter 16: More Than Ten Web Sites Every Nonprofit Should Visit 229

Chapter 17: Ten Questions to Ask Before Agreeing to Join a Nonprofit Board 235

Chapter 18: Ten Ways to Lose Tax-Exempt Status 243

Chapter 19: Ten Tips for Dealing with the Media 249

Part VII: Appendixes 255

Appendix A: Sample Nonprofit Bylaws 257

Appendix B: Sample Audit Committee Report 261

Appendix C: State Regulatory Authorities for Nonprofits 263

Appendix D: Selections from the Revised Model Nonprofit Corporation Act (1987) 275

Index 325