FIRMDOCS-#70083505-v1-FIRMDOCS-#70048853-v1-Tax ......-1- 70083505.1 Tax Issues for the Tax Exempt (aka "I didn't know that") I. DEFINITIONS A. "Nonprofit corporations" are corporations

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Tax Issues for the Tax Exempt (aka "I didn't know that")

I. DEFINITIONS

A. "Nonprofit corporations" are corporations formed under ORS Chapter 65. Nonprofit corporations have no shareholders. They may or may not have "Members." (See ORS 65.001(26) for the definition of a "Member.") They may or may not be tax exempt or a charity.

B. "Hybrid entities" are mutated business entities. They include low-profit limited liability companies ("L3C"s), benefit corporations (aka "B" corporations), and flexible purpose corporations. Oregon allows business corporations, LLCs, or professional corporations to be classified and operated as a "benefit company" (see 2013 HB 2296, effective January 1, 2014).

C. "Tax exempt" entities are not subject to federal (or, generally, to State of Oregon) income tax, because they are "exempt" from taxation. Note that this status has little or no bearing on whether such entities might be subject to local taxes or fees (such as City of Portland Business License Fee or the Multnomah County Business Income Tax), property tax, sales and use taxes (in other states), payroll taxes and withholdings, etc. (See III, below.)

D. "Charities" are generally organizations (corporations or trusts) that have obtained Internal Revenue Code section 501(c)(3) status by submitting an IRS form 1023 (or 1023EZ) and receiving a favorable "determination letter."

1. Beware IRS form 1023EZ. Form 1023EZ receives little or no detailed analysis by IRS. If the form is filled out accurately and completely, 501(c)(3) exemption will be granted.

a. Exercise caution when assisting clients with forms 1023EZ; are you inadvertently giving an opinion that the organization qualifies for 501(c)(3) status?

b. The chance of later examination may be heightened if a form 1023EZ is used.

2. Charities are automatically assumed to be "private foundations," but may qualify for status as a "public charity." (See IRC section 509 and the private foundation excise tax rules at IRC sections 4940 et. seq.)

3. Group exemptions may be granted in appropriate situations. (See IRS Revenue Procedure 80-27.)

4. IRS form 1024 is a generally an optional application for recognition of exemption of a variety of other exempt entities.

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5. "Religious organizations" are not required to submit a form 1023, receive a determination letter, or file form 990, although they may do so.

6. "Gross income does not include income derived from any public utility or the exercise of any essential governmental function and accruing to a State or any political subdivision thereof." (IRC section 115.)

7. Deduction of charitable donations is generally controlled by IRC section 170.

8. IRS issued a memorandum, September 8, 2015, revising the agency's procedures for requesting information from applicant organizations who have filed forms 1023 (and 1024?). (TEGE-07-0915-0022) Under the revised procedures, applicants will have 28 days to respond to such inquiries. If no response is received, the case may be closed, the application fee will be retained, and the applicant will be required to re-file for exemption. 14 day extensions are available from case managers, on a facts and circumstances basis.

II. FORMATION AND OPERATION OF 501(C)(3) AND OTHER NONPROFIT ORGANIZATIONS

A. IRC section 501(c)(3) provides that:

1. Entities must be, "organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary, or educational purposes, or to foster national or international amateur sports competition * * *, or for the prevention of cruelty to children or animals * * *" (Italics added);

2. "[N]o part of the net earnings * * * inures to the benefit of any private shareholder or individual * * *"; and,

3. "[N]o substantial part of the activities of which is carrying on propaganda, or otherwise attempting, to influence legislation [with an exception for IRC section 501(h), as described below], and which does not participate in, or intervene in * * * any political campaign on behalf of (or in opposition to) any candidate for public office." (Italics added. See also, Treasury Regulation section 1.501(c)(3)-1, for additional information.)

4. Treasury Regulation section 1.501(c)(3)-1(b)(4) states that, "an organization is not organized exclusively for one or more exempt purposes unless its assets are dedicated to an exempt purpose. An organization's assets will be considered dedicated to an exempt purpose, for example, if, upon dissolution, such assets would, by reason of a provision in the organization's articles or by operation of law, be distributed for one or more exempt purposes, or to the Federal government, or to a State or local government, for a public purpose, or would be distributed by a court to another organization to be used in such manner as in the judgment of the court will best accomplish the general purposes for which the dissolved organization was organized."

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B. Some (select) Oregon statutory requirements for nonprofit corporations:

1. Corporations organized as public benefit, nonprofit corporations, trusts who hold assets in Oregon for charitable beneficiaries, and corporations organized in other states as nonprofit corporations which solicit, hold assets, or do business in Oregon must register with the Charitable Activities Section of the Oregon Department of Justice. (See http://doj.state.or.us/charigroup/pages/index.aspx and ORS 128.610 et. seq., the "Charitable Trust and Corporation Act.")

2. ORS 65.047 requires the articles of incorporation of an Oregon nonprofit corporation specify whether it is a public benefit, mutual benefit, or religious corporation and whether it has "Members." (See Section I.A, above, for reference to definition of a "Member.")

3. ORS 65.307 requires at least three directors if the corporation is a public benefit corporation.

4. Written consent rules and electronic or telephonic meeting rules applicable to nonprofit corporation member or board of director meetings may vary from those for Oregon for-profit (Chapter 60) entities. (Compare similar provisions in ORS chapters 60 and 65.)

5. See ORS 65.354 re authority and composition of board committees. Board committees comprised of non-board of director members may not take formal action, but may make recommendations to the board for formal action.

6. No board of director proxies. Participation as a member of the board of directors is personal and may not be delegated.

7. ORS 65.311(2) provides for a self-perpetuating board of directors, when there are no Members. ORS 65.251 provides additional ways to elect directors. Consider rotating three-year terms for directors, especially in volunteer organizations.

8. ORS 65.364 contains significant restrictions on making loans to, guaranteeing an obligation of, or modifying a preexisting loan or guarantee to or for the benefit of a director or officer of an Oregon nonprofit corporation.

9. HB4067 (2016)

a. Creates an affirmative defense to any civil or criminal charge against whistleblower/employees of Oregon 501(c)(3) nonprofits who receive public funds by way of grant or contract. Employee must have a "good faith and objectively reasonable belief of a violation of federal, state or local law, rule or regulation by the employer." Certain exceptions apply.

b. Requires applicable Oregon 501(c)(3) nonprofits to establish and implement a policy regarding employees who invoke their rights under this section. Policy must delineate all rights and remedies provided to employees…and be delivered to each employee in a written or electronic copy.

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c. Includes those serving on the board of directors of an applicable nonprofit in the definition of "employee."

10. Mergers (ORS 65.481 et. seq.) Beware attempts to merge a non-profit into a for-profit corporation, with the for-profit corporation surviving. (Previous attempt to file Articles of Merger to accomplish same were denied by the Secretary of State and Department of Justice.)

C. IRC section 170 and Treasury Regulation section 1.170A-13 contain recordkeeping and return requirements for income tax deduction of charitable contributions. Essentially, no deduction is allowed for all or any part of any contribution of $250 or more unless the taxpayer substantiates the contribution with a contemporaneous written acknowledgement from the donee organization. (1.170(A)-13(f)(1).) The details of the "written acknowledgement" are spelled out at 1.170(A)-13(f)(2).

Proposed Regulations, amending §1.170A-13(f)(18) and adding §1.170A-13(f)(19), published September 17, 2015, provide rules under IRC §170(f)(8)(D) that allow charitable donees to file a return with IRS, copy to donor, on or before February 28th of the year following the time of donation, in lieu of providing the contemporaneous written acknowledgement described above. However, the Proposed Regulation is not yet final and space is reserved for specifying a "prescribed form."

D. ORS 128.001 et. seq. contains the Oregon "Charitable Solicitations Act." See also, ORS 646.605 et. seq., the "Unfair Trade Practices Act."

E. Although there are no statutory requirement that nonprofits or tax exempt entities have a conflict of interest policy, it is a best practice. ORS 65.361 contains rules for board of director conflicts of interest. Note that in Oregon there is no requirement a conflicted board member recuse him or herself from discussion or not vote on the matter.

F. IRC section 4958 imposes excise taxes on certain "disqualified persons" of 501(c)(3) and 501(c)(4) organizations who receive an "excess benefit," and on the organization's managers who approve the excess benefit transaction. Excess benefit transactions include compensation matters and can be created "automatically" by failure to document a benefit or inadvertently, by (for example) providing for non-fixed payments. (See Treasury Regulations section 53.4958-(c)(3) and (a)(3)(vi).

G. IRC section 118 excludes contributions to the capital of a corporation from gross income.

H. IRC section 277 limits deductions of certain taxable membership organizations operated primarily to furnish services or goods to members to income derived from such transactions.

I. IRC section 514 contains the unrelated debt financed income rules creating unrelated business taxable income for certain debt financed real property.

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J. Eliminate the uncertainty of the IRC section 501(c)(3) limitation on lobbying. IRC section 501(h) provides an annual election, made each year on form 990, to allow expenditures by public charities to influence legislation, provided they do not exceed the statute’s formula (based on gross revenues).

III. FEDERAL, OREGON, AND LOCAL TAX AND REPORTING

A. Tax exempt entities are generally required to file an IRS form 990 (there are several versions, including 990EZ, 990N, 990PF, and 990-T), annually, by the 15th day of the fifth month following fiscal year-end.

a. Failing to file any version of forms 990 for three years is automatic grounds for losing exemption and requires a new application (for 501(c)(3) status).

b. Form 990 has boxes that need to be checked “yes” if an exempt organization changes its governing documents or operations during the tax year (and specifics of the changes need to be attached).

B. Oregon form CT12 is required annually, by the 15th day of the fourth month following fiscal year-end, for organizations registered (see Section II.B.1, above) with the Charitable Activities Section of the Oregon Department of Justice.

C. Oregon Property tax exemption.

1. Does not follow federal income tax exemption. No blanket exemption for "literary" or "scientific" activities unless coupled with a charitable objective. (See ORS 307.130 et. seq.)

2. Requires the property be "* * * actually and exclusively occupied or used in the literary, benevolent, charitable or scientific work carried on * * *."

3. Includes ownership or lease, provided lease meets certain requirements. (See ORS 307.112.)

a. Lease must expressly provide that the rent payable by the institution, organization or public body has been established to reflect the savings (below market rent resulting from exemption from property tax).

b. Beware time restrictions on application. Generally, the claim for exemption must be filed on or before April 1 preceding the property tax year (July 1 – June 30) for which the exemption is claimed, with certain exceptions, including late filing fee pursuant to ORS 307.162.

4. ORS 307.022 provides that limited liability companies owned by nonprofit corporations can qualify for property tax exemption, overcoming a limitation in the original statutory scheme that references only "nonprofit corporations."

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5. IRC section 506, applicable (generally) to IRC section 501(c)(4) organizations established after December 18, 2015 (and to some existing before that date), requires IRS notification no later than 60 days after the organization is established. To-be-issued regulations will set out the manner in which IRS must be notified.

IV. USE OF LLCS IN NONPROFIT PRACTICE

A. Although IRS will recognize an LLC as a 501(c)(3) entity, see ORS 63.074(1) that limits Oregon LLC purposes to, "* * * any lawful business or purposes which a partnership, corporation or professional corporation * * * may conduct or promote." Note that ORS 63.001(5) defines the term "Corporation" to mean a corporation for profit, incorporated under ORS chapter 60 (not a nonprofit corporation, incorporated under ORS chapter 65).

B. IRS Notice 2012-52 clarified that charitable donations made to the wholly owned and controlled limited liability company of a single qualified U.S. charity under IRC section 170(c)(2) will qualify for the charitable income tax deduction.

C. Consider forming a wholly owned LLC entity for charities to hold donated real estate or other assets. Real estate is a particularly attractive asset to hold in a separate LLC, since that structure can limit liabilities, including environmental liabilities, from impacting other assets owned by the charity. With the IRS Notice referenced in B above, and the property tax exemption referenced in Section III.C.4 above, this structure becomes easier to accomplish, because contributions of real property (or other assets) can be made directly to a charity-owned LLC without compromising the donor's charitable deduction.

V. PRACTICE TRAPS

A. Whom do you represent? Does the person (group) you are working with have apparent or actual authority to engage you and to engage in the transaction you have been asked to handle? Consider a written engagement letter. If incorporating a new entity, consider an organizational resolution specifically referencing your engagement and authority to engage you.

B. Recommend against serving on the board of directors (or as an officer) and providing legal advice.

1. Especially if your firm is providing legal advice and you are serving on the board or as an officer (but worthwhile even if your firm is not), consider written correspondence confirming that (a) you are not acting as a lawyer or providing legal services or advice, (b) your board service is personal/individual, and, (c) no attorney/client privilege attaches to your communications.

2. Before agreeing to serve on a board or as an officer, consider the potential for conflict of fiduciary duties you would owe as a member of a legal practice serving the client and in your volunteer capacity. The PLF (and some malpractice carriers) will not provide professional errors and omission coverage unless you are acting as an attorney.

SEE APPENDIX FOR PRACTICE AIDS

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William S. Manne

Miller Nash Graham & Dunn LLP

(503) 205-2584

[email protected]

Chapter 2-Tax Issues for the Tax Exempt (or "I Didn't Know That")

Contact the Following Agencies for Assistance Charitable Activities Internal Revenue Service Secretary of State

Section Phone <877)829_5500 Corporation Division Oregon Department of Justice Website: hllp:/lwww.irs.gov 1515 SW 51

• Avenue, Suite 410 Portland, Oregon 97201-54 51 Phone: (971 )673-1880 TTY: (800)735-2900 Fax: (971)673-1882 Email: charitable.activities@doj .state.or. us Website: hllp:/lwww.doj.state.or.us

Issues Questions about annual reports for charitable organizations-Forms CT-12, CT-12F, and CT-12S Registration of charitable organizations and trusts Merging nonprofit organizations Dissolving nonprofit organizations Reporting illegal activity by nonprofit organizations Serving as a board member of a nonprofit organization Information about charitable organizations and copies of annual reports Questions about raffles and other charitable gaming

Forms RF-C, Registration Fonn for Charitable Organizations RF-T, Registration Form for Trusts CT-I 2, Annual Report Fonn for Oregon Charities CT-12F, Annual Report Form for Foreign Charities CT-12S, Annual Report Form for Split-Interest Trusts Closing Form

Publications Oregon Wise Giving Guide A Guide to Non-Profit Board Service in Oregon

Oregon Revised Statutes Chapter #65 , Nonprofit Corporations Chaptcr#l28, Trusts; Charitable Activities Chapter #130, Uniform Trust Code Chapter #464, Charitable Gaming Chapter #646, Trade Practices & Antitrust Regulations

Oregon Administrative Rules Chapter# 137-010-0005 et seq.

Issues Obtaining federal tax identification number or federal tax-exempt status Completing federal tax forms

Forms 990, Return of Organization Exempt From Income Tax 990-EZ, Short Form - Return of Organization Exempt From Income Tax Schedule A, fo: Form 990 and 990-EZ 990-PF, Return of Private Foundation 990-T, Exempt Organization Business Income Tax Return 1023, Application for Recognition of Exemption Under §501(c)(J) 1024, Application for Recognition of Exemption Under §501 (a) 1041 , U.S. Income Tax Return for Estates and Trusts 1041-A, U.S. Information Return -Trust Accumulation of Charitable Amounts 1128, Application to Adopt, Change, or Retain a Tax Year 4720, Return of Cena.in Excise Taxes on Charities and Other Persons 5227, Split-Interest Trust Return 5768, Election/Revocation of Election by an Eligible Section 50 I ( c )(3) Organization to Make Expenditures to Influence Legislation 8822, Change of Address 8868, Application for Extension of Time to File an Exempt Organization Return

Publications Pub. 526, Charitable Contributions Pub. 538, Accounting Periods and Methods Pub. 557, Tax-Exempt Status for Your Organization Pub. 583, Staning a Business and Keeping Records Pub. 598, Tax on Unrelated Business Income of Exempt Organizations Pub. 3079, Gaming Publication for Tax-Exempt Organizations

Veterans' Services

If you are or know a veteran and would like more information about benefits, please see DOJ Veterans Resources available through the Department of Justice' s website at: http://www.doj.stale. or. us

Public Service Building 255 Capitol Street NE, Suite 151 Salem, OR 97310-1327 Phone: (503)986-2200 Fax: (503)378-4381 Website: hllp; !sos. oregon.govlbusinessiPages!defaul I. os px

Issues Forming a new corporation Merging nonprofit corporations Dissolving nonprofit corporations Amending articl es of incorporation Obtaining copies of filed articles of incorporation and amendments

Forms Articles of Incorporation Assumed Business Name Registration Articles of Amendment Restated Articles Articles of Dissolution Revocation of Dissolution

Publications Oregon Business Guide

Oregon Department of Revenue

Revenue Building 955 Center St. NE Salem, OR 97301 Phone: (503)378-4988 and (800)356-4222 TTY: (800) 886-7204 Website: hllp:f!www.oregon.gov!DOR

Issues State taxation and filing requirements

Forms 20, Oregon Corporation Excise Tax Return 41, Oregon Fiduciary Income Tax Return

State of Oregon

Website: http://www. oregon.gov

From Form CT-12S for Split-Interest Trusts, Charitable Activities Section, Oregon Department of Justice, for Accounting Periods Beginning in 2014, http:/ /www.doj.state.or.us/charigroup/ pdf/2014_web_ct-12s.pdf.

Broadbrush Taxation: Tax Law for the Nonspecialist 2-7


42 I The Practical Tax Lawyer Winter 2007

PRACTICE CHECKLIST FOR

Potholes To Avoid In Road-Tripping With 501 (c)(3) Organizations

Charitable, religious, and educational organizations often seek and qualify for exemption under Internal

Revenue Code ("Code") section 50 l (c)(3). Civic and community groups, as well as organizations that work

to secure or protect civil rights, civil liberties, or public rights, if they limit their operations appropriately,

may also qualify. So when you do your pro bona service in helping these organizations, what are the potholes

you need to avoid?

Activities outside 501 (c)(3)'s narrow definitjons are being conducted.

_ Services provided are to small subset of public (e.g., eight people being served by dog obedience

school);

_Efforts perceived as educational go only to those who are already educated in that arena (e.g. , the orga

nization exists to sponsor house meetings addressing "how to get the city council to pay more attention to

the neighborhood council's opinion");

_ Social activities are ofren conducted, but not all participants are from charitable class;

_ Fundraising activities independent of other charitie.s are what the organization exists to conduct;

_ Economic development activities are conducted in a neighborhood or region that is not economically

blighted.

Ineffective governance.

_Boards not meeting or meeting infrequently (e.g., only annually);

_ Minutes of Board meetings evidence fevv actions by Board;

_ Board or officers/key employees populated with those who have family or business relationships to each

other;

_Significant transaction(s) contemplated or consummated without employment of basic conflict of inter

est policies-procedures;

_ Organization is employing contractors, officers, or employees who have family or business relationships

with members of board or officers without appropriate safeguards or review;

_ No or poor evidence that officers' /key employees' compensation or terms of significant transactions

are subject of board revievv:

Organization fails to appreciate the "no substantial lobbying" limit.

Organization confused about electioneering proscription and/ or definition of "non-partisan" with

respect to election cycle activities.

Failing to honor the multitude of reporting mandates triggered by fundraising or other non-exempt

purpose activities.

Confusion over the public support test.

To purchase the online version of this article, go to www.ali-aba.org and click on "online".



SMALL NONPROFIT CONSULTATION CHECKLIST American Bar Association Tax Section Exempt Organizations Committee Meeting,

January 24, 2014

Note: This checklist is designed for small public charities organized as nonprofit corporations. Charitable trusts, private foundations and supporting organizations should not rely on this checklist.

Governing Documents

Articles of Incorporation • Were the m1icles of incorporation and all amendments filed with the proper state agency? • Is the purpose clause consistent with the organization's current (and planned) activities,

mission, and tax-status? • Is the dissolution clause appropriate? e If the articles state the organization has members, is it clear whether they have voting

rights? • Are there any outdated provisions? (e.g., is the life of the corporation limited?)

Bylaws • Do the bylaws accurately describe the organization's current structure and operations? 11 If the bylaws have a separate purpose clause, is it consistent with the purpose clause in

the articles of incorporation? • Does the organization operate with the minimum required nwnber of directors? • Does the organization have all of the officers required by its bylaws? • Does the organization maintain a list of the names, addresses and terms of office of all

officers and directors? • Does the organization provide appropriate notice of board and committee meetings or

obtain waivers? e Do the bylaws provide for a voting membership? If so, is the organization properly

tracking who is entitled to vote? Is the organization noticing and holding member meetings?

e Are the bylaws consistent with cmTent state law? • Are there any unusual or outdated provisions? (e.g., are Roberts Rules incorporated by

reference?)

Policies and Procedures Does the organization have a conflict of interest policy? Does the policy cover officers, directors, key employees, highly compensated employees, and those with substantial influence? Does it require disclosure of conflicts, recusaJ by interested persons, and decision bv disinterested decision makers? ls it followed?



• Does the organization have any contracts, agreements or other transactions with organization founders, officers, directors, key employees, substantial donors, their businesses or family members apd/or anyone else in a position to influence the organization? If so, are the transactions with the organization: approved by the disinterested members of the board or an independent committee; based on appropriate comparability data; and concurrently documented in writing by the board or committee?

• Does the board of directors annually review the performance of the organization's chief executive?

e Does the organization have a whistleblower policy? Is it followed? • Does the organization have a document retention and destruction policy? Is it followed? • Does the organization have a gift acceptance policy? Is it followed? • Does the organization have a travel and expense reimbursement policy? Is it followed?

What other types of policies and procedures does the organization have in place? • Are the individuals to whom the organization's policies and procedures are applicable

informed about such policies and procedures and have easy access to them? • Is there a board orientation process? • Are boai·d members trained regarding their fiduciary duties, oversight responsibilities,

and the key laws that govern charities? Board Meetings and Minutes

• Does the organization maintain a minute book? • If so, do the minutes properly record attendance, key actions, votes and abstentions? If

not, how are board actions memorialized? • ls a schedule of board (or member) meetings mandated and if so, are meetings noticed

and held in accordance with the bylaws? • Is selection of directors and election of officers reflected in the minutes (and conducted as

set-forth in the bylaws)? • Do the minutes reflect any conflict of interest transactions, and if so, are they properly

managed?

State Compliance

Annual Reports and Filings with the State e Is the organization in good standing with its state of domicile? • Is the organization "doing business" in other states? If so, should it register to do business

as a foreign corporation? Should it obtain recognition of state tax-exemption in these other states?

© If the state requires articles of incorporation to be published, have the articles and all amendments been published?

• Are aimual reports up to date?



• Is the organization required to file periodically with the Secretary of State and/or Attorney General (e.g., annual registration in state of domicile, registration as foreign organization in other states, annual reports as charitably-soliciting organization)? If so, are all such filings up to date?

Statutory Agent

• Is the statutory agent listed with the state still at the address on file?

• If the statutory agent is a private individual, can the organization still rely on that person to accept service of process and mai] for the organization?

Tax Issues

Tax-Exemption Issues

• Does the organization understand its determination letter and its public charity status? Are the same confirmed by IRS website's "select check function" (polling what had been Publication 78)?

• If the determination letter is an advance ruling and the advance ruling date expired before June 9, 2008, has the organization filed Form 8734 with the IRS?

• Is there a state exemption letter (ifrequired)?

• Does the organization w1dcrstand and comply with the prohibition against paiiicipating in political campaigns for or against candidates for public office?

4t Does the orgai1ization understand and comply with the requirement that all lobbying activities must be an insubstantial part of the organization's overall activities? Has the organization considered filing Form 5768 to make the 501 (h) election, which provides for relatively generous lobbying expenditure limits \vithout violating the prohibition against substantial lobbying?

• If the organization receives revenues from regularly conducted business activities that are not related to its exempt purpose, does it correctly account, report and pay taxes on those funds ; if not, has it qualified those activities as excepted from the unrelated business income tax?

• Has the organization made any significant changes to its mission, programs, or primary sources of support that have not been reported to the IRS via Form 990/990-EZ?

• Have changes to the governing documents been repmied to the IRS via Form 990/990-EZ?

Tax Returns

• If the organization is required to file some form of Fonn 990, is the organization timely fi1ing annual notice, Fonn 990-N (or filing the Form 990-EZ or Form 990 annually)? If not, check IRS website's "select check function" access of Publication 78 to determine whether the organization is still recognized as a tax-exempt entity.



111 Is the organization properly reporting its public charity status (i .e. , the basis by which it self-asserts current qualification, which need not be that "ruled upon" via exemption determination letter or later requalification)?

• Is the organization passing the public suppmi test (if applicable)?

• Does the organization make its completed Application for Recognition of Tax-Exemption Form 1023 available for public inspection (if filed after July 1987)?

• Does the organization make each filed Form 990, 990 EZ, 990-N and 990-T available for public inspection for the required three year period of time?

• Ts the organization properly reporting its lobbying, if any? • If the organization pays directors or officers, is compensation properly reported, and did

the independent members of the board properly approve it?

• Does the organization timely file any state tax and/or information return required under applicable state law?

Fundraising

• Does the organization fulfill its state registration requirements? g If the organization solicits donations in other states, is it complying with registration

requirements in those states? • Does the organization appropriately acknowledge gifts of $250 or more in writing?

• If the organization provides goods or services of more than a nominal value to a donor who makes a contribution in excess of $75, does it provide a good faith estimate of the fair market value such goods or services?

• If the organization receives non-cash gifts, does it appropriately follow the IRS requirements for substantiation of such gifts?

• If the organization participates in charitable sales promotions, is it and its partners complying with commercial co-venture laws in the states ·where the sales promotion is offered?

• If the organization participates in raffles are the raffles compliant with state law?

Employees, Independent Contractors, and Volunteers

• If the organization has workers, does it appropriately distinguish among employees, independent contractors, interns and volunteers?

• Does the organization distinguish between exempt and non-exempt employees? (e.g., those employees that are exempt from federal and state wage and hour laws)

• Does the organization verify all employees are eligible to work in the Unfred States by

requiring all employees to complete a Form I-9?



Iii If the organization has employees, has it considered adopting an employee handbook describing employee hours, dress code, benefits, paid holidays, vacation policies, grievance procedures, review procedures, and other employment practices? If so, does the organization follow it?

" Does the organization timely 'vithhold and remit payroll taxes for its employees? • Docs the organization provide a From W-2 for employees and a Form 1099 for any

independent contractors paid more than $600 in a calendar year? e Does the organization comply with state workers compensation and unemployment laws? • If the organization has volunteers, does the organization have a volunteer handbook with

policies and procedures? • If the organization works with vulnerable populations, does it perform background

checks on employees, independent contractors, and/or volunteers?

IntelJcctual Property

• Has the organization taken reasonable steps to ensme that none of its intellectual property (including names, logos, web content, other ''vritten materials, and videos) infringes on the rights of another party?

• Has the organization registered or otherwise obtained protection for any of its unique logos, or written materials or been appropriately advised that such protection is not necessary?

• Does the organization allow third parties to use its logos, trademarks, and copyrighted materials? If so, has it considered entering into license agreements with third parties to use such materials?

• Does the organization record video or take photos at its events? Does it obtain photo releases from subjects appearing in film or digital media? Does the organization use the logos, trademarks and/or copyrighted materials of others? If so, does it obtain licenses or pem1ission to use such materials?

Insurance and Risk Management

o Docs the organization have directors and officers insurance? a Does the organization have general liability insurance? • Does the organization have other necessary insurance? • Does the organization require program participants to sign appropriate waivers and

releases? Has the organization developed and implemented, or considered developing and implementing, appropriate risk management policies to protect the organization, its



directors and officers, e.rpployees, volunteers, agents, program pariicipants, beneficiaries and visitors?
