Unrelated Business Income Tax: Nonprofit Organizations & UBIT Cases
Nonprofit

Unrelated Business Income Tax: Nonprofit Organizations & UBIT Cases

1. Unrelated Business Taxable Income The purpose of this article is to explain developments in the area of unrelated business income (“UBI”) and the unrelated business income tax (“UBIT”). This article focuses on important court decisions. The decisions have been grouped, for the most part, into three perennial areas of controversy: social clubs, advertising, and…

How Much Does It Cost to Set Up a 501(c)(3) Nonprofit Organization?
Nonprofit

How Much Does It Cost to Set Up a 501(c)(3) Nonprofit Organization?

When business owners want to give back to their community and support their philanthropic values, they sometimes ask me how much it costs to start a tax-deductible charitable donation. This article summarizes the costs (as of 2020) to creating your own 501(c)(3) nonprofit organization. What are the costs to set up a 501(c)(3) nonprofit organization?…

Nonprofit Organizations Can Lose Their Tax-Exempt Status
Nonprofit

Nonprofit Organizations Can Lose Their Tax-Exempt Status

1. Taxation of Revoked Tax-Exempt Organizations: the Synanon Case When attorney Paul Morantz discovered the hard way that a four-foot rattlesnake was residing in his mailbox one day in October 1978, he had more pressing concerns than to wonder about the possible income tax implications of the event. Although he immediately might have suspected that…

Minnesota Charity Law: Guide for Nonprofit Board of Directors
Nonprofit

Minnesota Charity Law: Guide for Nonprofit Board of Directors

Guide for Charity Board Members This Guide is provided by the Minnesota Attorney General’s Office to assist board members with the important responsibilities they assume when elected to a nonprofit corporation’s board of directors. It is only a guide and is not meant to prescribe exactly how board members must act in all situations. Each…

Overview of Minnesota Nonprofit Law
Nonprofit

Overview of Minnesota Nonprofit Law

Minnesota nonprofit organizations are governed by the Minnesota Nonprofit Corporation Act, Minn. Stat. ch. 317A.  A nonprofit corporation’s purpose and activities must serve the organization’s mission to benefit the public, and may not be operated to profit other persons or entities. Tax-Exempt Status of Nonprofits Most nonprofits are exempt from taxation.  There are more than two…

Nonprofit Organization Members Have These 4 Legal Rights
Nonprofit

Nonprofit Organization Members Have These 4 Legal Rights

Members of Minnesota nonprofit organizations have a variety of legal rights established in the Minnesota Statutes. These rights are especially important when the members have a dispute with their organization’s board of directors. The following are a few examples of some of your rights as a member of a nonprofit organization in Minnesota. 1. You…

How Updates to Minnesota’s Nonprofit Corporation Act Impact You
Nonprofit

How Updates to Minnesota’s Nonprofit Corporation Act Impact You

Given the frenetic state of national politics you would be forgiven for not looking too deeply into what the updates to Minnesota’s Nonprofit Corporation Act (Chapter 317A) mean to you and your organization. On April 18, 2017, the Minnesota Senate approved changes to the Act and the Minnesota House approved the same changes on February…

The Johnson Amendment: What its Repeal Would Mean to your Nonprofit Organization
Nonprofit

The Johnson Amendment: What its Repeal Would Mean to your Nonprofit Organization

What is the Johnson Amendment In 1954, then Senator Lyndon Johnson sponsored legislation that applied to organizations recognized as tax-exempt under Section 501(c)(3) of the Internal Revenue Code. The legislation prohibited tax-exempt organizations, largely churches, from “directly or indirectly participating in, or intervening in, any political campaign on behalf of (or in opposition to) any…

Starting a New Business: Nonprofit or For-Profit Sector?
Nonprofit

Starting a New Business: Nonprofit or For-Profit Sector?

Say you have a brilliant idea and want to start an organization to actualize your vision. Oftentimes, these ideas are more than classic profit maximizing endeavors, they may have positive social impacts as well. What type of organization should you start? The first question to ask is, what sector should your organization be in? The…

Social Enterprise: A Nonprofit, For Profit, or Something In Between? 
Nonprofit

Social Enterprise: A Nonprofit, For Profit, or Something In Between? 

What is a social enterprise? A social enterprise is an organization applying commercial strategies to maximize improvements in human and environmental well-being; can include maximizing social impact alongside profits for external shareholders Organizations can be social and profitable in three main ways: 1) Social By Sharing – “Social” because they share some or all of their profit with…

Churches and Other Religious Organizations: Ancillary Activities
Nonprofit

Churches and Other Religious Organizations: Ancillary Activities

What are religious organization ancillary activities? Activities undertaken by a church or a religious organization that are in addition to or outside the traditional activities of a church or religious organization. Are there different types of religious organization ancillary activities? Yes, there are four different types of ancillary activities. 1) Primary Purpose Activities – Outgrowth…

Social Franchising: Franchise a 501(c)(3) Nonprofit Organization
Nonprofit

Social Franchising: Franchise a 501(c)(3) Nonprofit Organization

This article explains issues to consider when exploring the concept of expanding a nonprofit organization into various geographic areas by working jointly with a local leader in those areas. This article does not address nonprofit organizations owning business franchises. Social Franchising: Geographic Expansion of a Nonprofit Nonprofit organizations have begun using a franchise model to…

How to Start a Nonprofit Organization in Minnesota
Nonprofit

How to Start a Nonprofit Organization in Minnesota

This article summarizes the steps involved in starting a 501(c)(3) nonprofit organization in Minnesota. Introduction There are two stages to consider when creating a nonprofit organization in Minnesota: first, drafting and filing the legal documents required to create a nonprofit organization, and second, applying to the IRS for 501(c)(3) status, if desired. Stage 1: Form…