Version from Nov 2, 1994, 9:37:44 AM.
SOC.ORG.NONPROFIT and USNONPROFIT-L FREQUENTLY ASKED QUESTIONSPart 4 of 4
==============================
Subject: TABLE OF CONTENTS
-
----------------------------------- Part 1 ----------------------------
======== FAQ posting information
FPI-01 Copyright
FPI-02 Disclaimers
FPI-03 Format
FPI-04 Differences
======== Section 0: SOC.ORG.NONPROFIT (and relationship to
USNONPROFIT-L)
Q00-01 What is USNONPROFIT-L? How do I subscribe? Unsubscribe?
Q00-02 Is USNONPROFIT-L only for the United States?
Q00-03 What is soc.org.nonprofit?
======== Section 1: STARTUP AND DEFINITIONS
Q01-01 Where to start
Q01-02 How do I go about incorporating an organization as a nonprofit?
Q01-03 Do I need a lawyer to do this? How much should I pay?
Q01-04 What actual documents do I need? Which filings come first?
Q01-05 Can the organization operate during this process?
Q01-06 Which is right: nonprofit, non-profit or not-for-profit?
Q01-07 Will a trademark protect my organization's name on the net?
======== Section 2: HARDWARE/SOFTWARE
Q02-01: How important is a computer system? Can I get hardware donated?
Q02-02: My board really doesn't want to spend money
Q02-03: My Board member says to use his/her brother-in-law as a vendor.
Q02-04: What's reasonable to spend?
Q02-05: What if they won't even spend that?
Q02-06: How can I get software donated?
Q02-07: What's the best kind of accounting software?
Q02-08: What's the best kind of client or donor-tracking software?
======== Section 3: MANAGEMENT/BOARDS
Q03-01 What are good jobs to keep board members involved productively?
Q03-02 Shouldn't Board members be out raising money and doing PR?
Q03-03 How can my organization do a self assessment?
Q03-04 Do a nonprofit's board meetings have to be open to the public?
Q03-05 Don't Board lists have to be made public?
Q03-06 We can't afford a full office and staff. Where can we turn?
-
----------------------------------- Part 2 ----------------------------
Q03-07 Are Board members personally liable? Do we need D & O
Insurance?
Q03-08 What are some good programs in Non-profit Management?
======== Section 4: ANNUAL AND CAPITAL CAMPAIGNS/PROGRAM FEES/OTHER
SOURCES
Q04-01 How can I determine my program costs easily?
Q04-02 How can I get non-philanthropic corporate support?
======== Section 5: EVENTS
Q05-01 What kind of events are best to raise money with little cost?
======== Section 6: NON-CASH DONATIONS
Q06-01 Can donated equipment be deductible for the donor?
Q06-02 Can we sell the donated equipment and use the proceeds?
======== Section 7: GRANTSEEKING & GRANTWRITING
Q07-01 I keep hearing about people getting grants -- how do they do it?
Q07-02 Where do we start?
Q07-03 How can we decide which foundations to send proposals to?
Q07-04 How can we learn more about what funders want in a proposal?
-
----------------------------------- Part 3 ----------------------------
Q07-05 How do you get started writing a proposal?
Q07-06 What characterizes a good proposal?
Q07-07 How can we better the odds of getting a grant?
Q07-08 Sources of information for grantwriting and research.
======== Section 8: NON-DONATED INCOME
Q08-01: When can a NPO charge?
Q08-02: Can I sell things and still be a tax-exempt organization?
======== Section 9: PLANNED GIVING: WILLS, TRUSTS AND BEQUESTS [In
preparation.]
======== Section 10: MARKETING
Q10-01 What is marketing?
Q10-02 Why would nonprofit organizations want to market?
Q10-03 Why are nonprofits so reluctant to market?
Q10-04 Where can I find some simple marketing ideas?
Q10-05 What if all our money comes from government contracts and
donations?
Q10-06 How do I market my agency?
Q10-07 How do I define my programs so people will understand?
Q10-08 How do I determine my market?
Q10-09 To whom do I aim my marketing?
Q10-10 How do I set my marketing strategy?
Q10-11 What are some simple, low or no cost things I can do to start?
Q10-12 What is marketing research?
Q10-13 How is "market research" different from "marketing research"?
Q10-14 When should I conduct marketing research?
Q10-15 How do I do market research?
Q10-16 How do I do some low cost marketing research?
Q10-17 What's this business about "internal marketing"?
Q10-18 How do I carry out internal marketing?
Q10-19 What should we say to our employees about philanthropy?
======== Section 11: INTERNET RESOURCES
Q11-01 Where can I find useful resources on the net?
Q11-02 What are some ways that nonprofits can use the net?
-
----------------------------------- Part 4 ----------------------------
======== Section 12: COMMUNITY RELATIONS
Q12-01 Local Organizations State-by-State
Q12-02 National Support and Advocacy Organizations
Q12-03 White House and Federal Agency Liaisons
======== Section 13: INTERNATIONAL [In preparation.]
======== Section 14: BIBLIOGRAPHY
======== Section 15: THEORY AND BACKGROUND
Q15-01 Can a nonprofit be a business?
Q15-02 Who can benefit from a nonprofit's activities?
======== Section 16: CONTRIBUTORS TO THIS FAQ DOCUMENT
==============================
Subject: FAQ posting information
FPI-01 Copyright
This
document (c) Copyright 1994, all rights reserved. Redistribution of
this document is hereby freely granted so long as the document is
redistributed in its entirety (here interpreted as all text which were
not
automated generated by software as part of the distribution process); in
particular, with attributions and this copyright notice.
==============================
Subject: 12. COMMUNITY RELATIONS
Q12-01 Local Organizations State-by-State
[In
preparation. If you know the name and address of another organization
that should be listed here, please send the information by e-mail to
pba...@eskimo.com with
a subject line that reads "npo <name-of-state>
organization". If you know the name and address of your state's filing
office for nonprofit incorporations (often the Secretary of State),
please
send the information by e-mail to pba...@eskimo.com with
a subject line
that reads "npo <name-of-state> filings info". Thank you.]
On
October 26, 1994, the following list of statewide associations of
nonprofit organizations was provided by the National Council of
Nonprofit
Organizations (Patti Milberg, HN0943). Where a HandsNet ID appears
(as with Patti Milberg's name), e-mail can be sent to that an address
that consists of that ID @handsnet.org .
ALASKA
Association of Nonprofit Corporations
P.O. Box 100956, Anchorage, AK 99510
Jim Mallery (907)
279-2511 FAX 907-276-1424
ARKANSAS
Nonprofit Resources, Inc.
500 Broadway, Suite 403, Little Rock, AR 72201-3342
Linda Boone (501)
374-8515 FAX 501-374-6548 HN1221
CALIFORNIA
California Association of Nonprofits
P.O. Box 1478, Santa Cruz, CA 95061-1478 HN0080
Alan Reed-Erickson (408)
458-1955 FAX 408-458-9486
COLORADO
Colorado Association of Nonprofit Organizations
225 E. 16th Avenue, Suite 1060, Denver, CO 80203
Patricia Read (303)
832-5710 FAX 303-894-0161
CONNECTICUT
Conn. Nonprofit Human Services Cabinet
c/o Conn. Assoc. for Human Services
880 Asylum Avenue, Hartford, CT 06105
Alison L. Johnson (203)
522-7762 FAX 203-520-4234
DELAWARE
Delaware Association of Nonprofit Agencies
500 Duncan Road, Suite A, Wilmington DE 19809
Drew Hastings (302)
762-9240 FAX 302-762-9240 HN3294
DISTRICT
OF COLUMBIA
Washington Council of Agencies
1001 Conn. Ave., N.W., Ste. 925, Washington, DC 20036
Betsy Johnson (202)
457-0540 FAX 202-457-0549
FLORIDA
Florida Association of Nonprofit Organizations
7480 Fairway Dr., #206, Miami Lakes, FL 33014
Marina Pavlov (305)
557-1764 FAX 305-821-5228
GEORGIA
Nonprofit Resource Center
The Hurt Building, Suite 220, Atlanta, GA 30303 HN2257
Suzanna Stribling (404)
688-4845 FAX 404-521-0487
INDIANA
Indiana Nonprofit Solutions
4451 Central Avenue, Indianapolis, IN 46205
Harriet O'Connor (317)
283-6352 FAX 317-931-0972
MAINE
Planning Committee for Maine Association of Nonprofits
c/o The Polis Group
565 Congress Street, Suite 301, Portland, ME 04101
John Walker (207)
871-1885 FAX 207-780-0346
MARYLAND
Maryland Association of Nonprofit Organizations
190 W. Ostend Street, Ste. 201, Baltimore, MD 21230
Peter Berns (410)
727-6367 FAX 410-727-1914 HN2241
MASSACHUSETTS
Mass. Council of Human Service Providers
34 1/2 Beacon Street, Boston, MA 02108 HN3440
Boyce Slayman (617)
742-3236 FAX 617-742-3551
MICHIGAN
Michigan League for Human Services
300 N. Washington Sq., Ste. 401, Lansing, MI 48933
Ann Marston (517)
487-5436 FAX 517-371-4546 HN0809
MINNESOTA
Minnesota Council of Nonprofits
2700 University Ave. West, #250, St. Paul, MN 55114
Jon Pratt (612)
642-1904 FAX 612-642-1517
MISSISSIPPI
Mississippi Center for Nonprofits
633 North State Street, Suite 602A, Jackson, MS 39202
Nathan Woodliff-Stanley (601)
968-0061 FAX 601-355-6499
NEW
HAMPSHIRE
Granite State Association of Nonprofits
125 Airport Road, Concord, NH 03301
Gordon Allen (603)
225-0900 FAX 603-225-4346 HN1498
NEW
JERSEY
Center for Nonprofit Corporations
15 Roszel Road, Princeton, NJ 08540 HN0812
Martha Golensky (609)
951-0800 FAX 609-951-8770
NEW
MEXICO
IMPACT New Mexico
5 Avalon Place, Santa Fe, NM 87505
David Tobin (505)
466-2834 Fax (505) 466-2834
NEW
YORK
Council of Community Services of New York State
901A Madison Avenue, Albany, NY 12208
Doug Sauer (518)
489-4791 FAX 518-489-5212
Nonprofit
Coordinating Committee of New York
121 Sixth Ave. 6th Flr., New York, NY 10013
Peter Swords (212)
925-5340 FAX 212-925-5675 HN0225
NORTH
CAROLINA
North Carolina Center for Nonprofits
4601 Six Forks Road, Ste. 506, Raleigh, NC 27609-5210
Jane Kendall (919)
571-0811 FAX 919-571-8693 HN1154
OHIO
Ohio Association of Nonprofit Organizations
P. O. 164353, Columbus, OH 43216-4353
David Maywhoor (614)
224-1336 FAX 614-224-6472
PENNSYLVANIA
Pennsylvania Association of Nonprofit Organizations
c/o Delta Housing, Inc., P.O. Box 5342, Harrisburg, PA 17110
Ed Trask (717)
232-2970
RHODE
ISLAND
Ocean State Nonprofit Association
18 Imperial Place, Ste. 6F, Providence, RI 02403
Jane Arsenault (401)
861-1920 FAX 401-273-0540
TENNESSEE
Council of Community Services
2012 21st Ave., South, Nashville, TN 37212
Karen Franklin (615)
385-2221 FAX 615-385-2157
UTAH
Utah Nonprofits Association
254 West, 400 South, Suite 340, Salt Lake City, UT 84101
Richard Starley (801)
531-0522 FAX (801) 531-0575
WASHINGTON
Northwest Nonprofit Resources
525 East Mission Ave., Spokane, WA 99202-1824
Sandy Gill (509)
484-6733 FAX 509-483-0345
Corporations
Division
Secretary of State
PO Box 4220, Olympia, WA 98504-0220
(206)753-2896
WISCONSIN
Wisconsin Association of Nonprofit Organizations
c/o Society for Nonprofit Organizations
6314 Odana Road, Suite 1, Madison, WI 53719
Linda Sunde (800)
424-7367 FAX 608-274-9978
Q12-02 National Support and Advocacy Organizations
[In
preparation. If you know the name and address of another organization
that should be listed here, please send the information by e-mail to
pba...@eskimo.com with
a subject line that reads
"npo national organization". Thank you.]
Q12-03 White House and Federal Agency Liaisons
An
April 1994 press release from the White House lists the Administration
Liaisons to the Nonprofit Sector for federal departments. In most cases
there's an official person and a "contact"; I've included the contacts'
names and phone and fax numbers. There's a brief description of the
goals
of this project at the end of the list.
___________
Agriculture: Mike Derian, 202/720-6643,
202/720-8819
________
Commerce: Jonathan Silver, 202/482-5283,
202/482-2741
_________________________________________________________
Commerce, National Oceanic and Atmospheric Administration:
Monica Gonzales, 202/482-3567,
202/482-6318
_______
Defense: Sondra Seba, 703/697-6647,
703/695-1149
_________
Education: Audrey Hutchinson, 202/205-5451,
202/205-8748
______
Energy: Patricia A. DeVeaux, 202/?386-6771, 202/690-7098
_________________________
Health and Human Services: Alexandra Milonas, 202/690-6347,
202/690-7098
_____________________________
Housing and Urban Development: Luis Burguillo, 202/708-0030,
202/401-3991
______________________________________________________
Housing and Urban Development, Special Actions Office: Maureen
Warren, 202/708-1547,
202/401-6725
________
Interior: Lucia Wyman, 202/208-6416,
202/208-5133
_____________________
Justice, Civil Issues: Bob Hussey, 202/514-3465,
202/514-2504
________________________
Justice, Criminal Issues: Bert Brandenberg, 202/514-3465,
202/514-2504
_____
Labor: Claudette Tidwell, 202/219-6141,
202/219-7971
_____
State: Michael Schneider, 202/647-9796,
? 202/647-0753
______________
Transportation: Dick Suisman, 202/366-1524,
202/366-7907
________
Treasury: Joyce Carrier, 202/622-2970,
202/622-2808
________________
Veterans Affairs: Mary Wallace, 202/273-6659/6660, 202/273-6672
____
AIDS: Steve Lee on Tanya Dean, 202/632-1090,
202/632-1096
________________________________
Corporation for National Service: Chuck Supple,
202/606-5000x219,
202/606-4921
_______________________________
Environmental Protection Agency: Elaine Koerner, 202/260-4454,
? 202/260-0130
___________________________________
Federal Emergency Management Agency: Harvey Ryland,
202/646-4211,
[none]
_________________________________________________________________
National Endowment for the Arts, National Endowment for the
Humanities, Institute for Museum Services, Sandy Crary (NEA),
202/682-5652,
202/682-5639
______________________________________
Office of National Drug Control Policy: Arthur Houghton,
202/395-6750,
202/395-6744
_____________________________
Small Business Administration: Katie Broeren, 202/205-6605,
202/205-6802
__________________________________
United States Trade Representative, Amy Aiken, 202/395-6850,
202/395-3390
______________
United Nations: Laura Bowman, 202/736-7555,
202/736-7551
___________
White House: Doris Matsui, 202/456-2930
The
White House Press Release says that these people "will be
responsible for communicating with the non-profit community and
collaborating on matters that affect them." The list as a whole
is also viewed as "a forum for interagency approaches to issues
affecting the nonprofit community." And lastly, these persons
serve as "points of contact to exchange information and ideas in:
policy formation, funding of programs, implementation and service
delivery, strategies for accomplishing goals, sharing of
information, and other related activities."
The
press release didn't list any e-mail addresses. It would be
nice to discover whether any of these people is on the 'net.
Typed by Putnam Barber, who may well have made mistakes.
==============================
Subject: 13. INTERNATIONAL ISSUES
[In
preparation.]
==============================
Subject: 14. BIBLIOGRAPHY
[Note:
The starting point for this list was provided on October 16, 1994,
by Putnam Barber.]
AAFRC
Trust for Philanthropy. Giving USA: The Annual Report on Philanthropy
for the year 1992. Ann E. Kaplan, ed. New York: 1993. [Annual.]
Accountants
for the Public Interest. What a Difference Nonprofits Make: A
Guide to Accounting Procedures. Washington, DC: 1990. (Available for
purchase
from 1012 14th St, NW, #906, Washington, DC 20005.)
Bennett,
James T. & Thomas J. DiLorenzo. Unfair Competition: The Profits of
Nonprofits. Lanham, MD: Hamilton Press, 1989. This analysis focusses on
certain Standard Industrial Codes with large groups of both for-profit
and
nonprofit (including governmental) firms (such as recreation and
exercise
facilities and printing) and takes the position that the nonprofit
organizations enjoy illegitimate advantages.
Ben-Ner
and Gui, eds., The Nonprofit Sector in a Mixed Economy. Ann Arbor:
University of Michigan Press.
Bozeman,
B. All Organizations Are Public: Bridging Public and Private Organi
zational Theories. San Francisco: Jossey-Bass, 1987.
Brodhead,
William M. Competition Between For-Profits and Nonprofits: What's
Fair? What Serves the Public Good? (An Independent Sector Occasional
Paper).
Washington, DC: 1988.
Business
Coalition for Fair Competition. The Model State Unfair Competition
Bill Annotated. Alexandria, VA: 1993. (Available for $25 from 1101 King
Street, Alexandria, VA 22314.)
Clotfelter,
Charles, ed. Who Benefits from the Nonprofit Sector? Chicago:
University of Chicago Press, 1992.
Facchina,
Bazil, Evan Showell and Jan E. Stone. Privileges and Exemptions
Enjoyed by Nonprofit Organizations: A Catalog and Some Thoughts on
Nonprofit
Policymaking. New York: New York University School of Law, The Program
on
Philanthropy and Law, 1993. ($9.50 from room 205, 110 W 3rd St., NYC
10012.)
Foundation
Center, The. The Literature of the Nonprofit Sector. New York: The
Foundation Center, 1989-1993 (annual). Comprehensive, carefully indexed
and
annotated bibliography.
Gale
Research, Encyclopedia of Associations. Arlington, VA: Gale Research,
1994. Lists more than 22,500 associations with alphabetical and key-word
indexes.
Gallagher,
Janne G. Sales Tax Exemptions for Charitable, Educational, and
Religious Nonprofit Organizations. Washington, DC: The Independent
Sector,
1992.
Gaul,
Gilbert M. and Neill A. Borowski, Free Ride: The Tax-Exempt Economy.
Kansas City, MO: Andrews and McMeel. 1993.
Gronbjerg,
Kirsten. "Nonprofits in the U.S. Political Economy: Industry
Dimensions of Nonprofit Relations to State and Market." Paper prepared
for "Private Action and Public Good" a conference of the Program on
Governance of Nonprofit Organizations of IUPUI (Indiana University?).
November 1993.
Hall,
Peter Dobkin. Inventing the Nonprofit Sector and Other Essays on
Philanthropy, Voluntarism, and Nonprofit Organizations. Baltimore: The
Johns
Hopkins University Press, 1992.
Hammack,
David C., and Dennis R. Young, eds. Nonprofit Organizations in a
Market Economy: Understanding New Roles, Issues and Trends. San
Francisco:
Jossey-Bass, 1993.
Haycock,
Nancy. The Nonprofit Sector in New York City. New York: The Non
profit Coordinating Committee of New York, 1992.
Hodgkinson,
Virginia A., et al. A Portrait of the Independent Sector: The
Activities and Finances of Charitable Organizations, Washington, DC: The
Independent Sector, 1993. There is no state-by-state information
included in
the Portrait, but there is a wealth of information based on a sample of
all
501(c)(3)s and religious organizations (special surveys were conducted
to
supplement the information available in Form 990).
- ----. Nonprofit Almanac 1992-1993. San Francisco: Jossey-Bass, 1993.
-
----, Richard W. Lyman, et al., The Future of the Nonprofit Sector:
Challenges, Changes, and Policy Considerations. San Francisco:
Jossey-Bass, 1989. Essays by a variety of observers and scholars on a
broad range of topics.
Hone,
Michael C., reporter. Revised Model Nonprofit Corporation Act, adopted
by the Subcommittee on the Model Nonprofit Corporation Law of the
Business Law
Section of the American Bar Association, Summer 1987. Clifton, NJ:
Prentice
Hall Law and Business, 1988.
Hopkins,
Bruce. A Legal Guide to Starting and Managing a Nonprofit Organiza
tion (2nd edition). New York: John Wiley & Sons, 1993.
-
----. The Law of Tax Exempt Organizations (5th edition). New York:
John Wiley & Sons, 1987. (There is a 1991 edition.)
Independent
Sector, The. Why Tax Exemption: The Public Service Role of
America's Independent Sector. Washington, DC: n.d. (1993?).
Internal
Revenue Service, Statistics of Income Division, Compendium of Studies
of Tax Exempt Organizations, 1974-87. Washington, DC: 1991.
James,
Estelle, ed. The Nonprofit Sector in International Perspective: Studies
in Comparative Culture and Policy. New York: Oxford University Press,
1989.
Johns
Hopkins Comparative Nonprofit Sector Project, Helmut Anheir and Lester
Salamon, Directors: The Nonprofit Sector in the United Nations System of
Accounts: Definition, Treatment and Practice. In Search of the Nonprofit
Sector 1: The Question of Definitions. In Search of the Nonprofit Sector
2:
The Problem of Classification. Baltimore: Institute for Policy Studies.
Koch,
Deborah. The Nonprofit Policy Agenda: Recommendations for State and
Local Action (A publication of the Nonprofit Policy Agenda Project).
Washing
ton, DC: The Union Institute, 1992.
Lohman,
Roger A. "And Lettuce is a Non-animal: Toward a Positive Economics of
Nonprofit Action." San Francisco: Nonprofit and Voluntary Sector
Quarterly,
18(1989):4, pp. 367-83.
-
----. "The Commons: A Multidisciplinary Approach to Nonprofit
Organizations,
Voluntary Action and Philanthropy." San Francisco: Nonprofit and
Voluntary
Sector Quarterly, 21(1992):3, pp. 305-24.
-
----. The Commons: New Perspectives on Nonprofit Organizations and
Voluntary
Action. San Francisco: Jossey-Bass, 1992.
Mancuso,
Anthony. How to Form a Nonprofit Corporation. Berkeley: Nolo Press,
2nd Edition, 1994. ($39.95) Good for all 50 states; comes with disk
having
all necessary incorporation documents.
National
Council of Nonprofit Associations. State Tax Trends for Nonprofits
(quarterly). Washington, DC. ($45 per year from 1001 Connecticut Avenue
NW,
#900, Washington, DC 20036.)
Orlans,
Howard, ed. Nonprofit Organizations: A Government Management Tool.
New York: Praeger Publishers, 1980. Report of a conference called to
address
the concerns of government officials regarding delegation of management
of
government programs to nonprofit organizations.
Powell,
Walter W., ed. The Nonprofit Sector: A Research Handbook. New Haven:
Yale University Press, 1987. Includes valuable summary chapters by
several
leaders in the field of formal research.
Rekart,
Josephine. Public Funds, Private Provision: The Role of the Voluntary
Sector. Vancouver, BC: University of British Columbia Press, 1993.
Focuses on
the delivery of social services under contract with the government in
British
Columbia.
Rose-Ackerman,
Susan, ed. The Economics of Nonprofit Institutions: Studies in
Structure and Policy. New York, NY: Oxford University Press, 1986.
Smith,
Bradford. "The Use of Standard Industrial Classification (SIC) Codes to
Classify the Activities of Nonprofit, Tax-Exempt Organizations" (Working
Paper
No. 19). San Francisco: Institute for Nonprofit Organization Management,
University of San Francisco, 1992.
Smith,
David Horton. "Four Sectors or Five? Retaining the Member-benefit
Sector." San Francisco: Nonprofit and Voluntary Sector Quarterly,
20(1991):2,
pp. 137-51.
Taft
Group, The. National Directory of Nonprofit Organizations. 2 volumes.
Arlington, VA: Gale Research. 1994. Lists all organizations filing 990s
with
the IRS and is extensively indexed.
Walsh,
Jennifer R. The Shadow State: Government and the Voluntary Sector in
Transition. New York: The Foundation Center, 1990. The author is
concerned
about the co-optation of health and welfare organizations by government
financing and by growing regulation of both revenues and charities.
Weisbrod,
Burton A. The Nonprofit Economy. Cambridge: Harvard University
Press, 1988.
Wellford,
W. Harrison, & Janne G. Gallagher, Unfair Competition? The Challenge
to Charitable Tax Exemption. Washington, DC: The National Assembly of
National Voluntary Health and Social Welfare Organizations, 1988.
NOTE:
Suggestions of other useful and interesting printed materials are,
of course, very welcome. Please send them as e-mail to pba...@evergreen.com
with the subject npo resource for FAQ. The best sort of listings are
brief
and yet give the full publication information, including price if
possible,
and a capsule description of its contents.
==============================
Subject: 15. THEORY AND BACKGROUND
Q15-01 Can a nonprofit be a business?
Someone wrote in usnonprofit-l:
You
don't "establish a business as non-profit". If you are a
business, you are not non-profit as defined under the Internal
Revenue Code.
Putnam Barber replied:
It's
easy to get tangled up in word games here, but I'd like to weigh in
on the other side of this debate and say that (1) it seems to me there
are
+lots+ of "nonprofit businesses" and (2) there's nothing wrong with it.
Organizing
a nonprofit involved agreeing to certain standards (defined by
the state in which you incorporate and, if you choose to apply for
tax-exempt status, by the section of the Internal Revenue Code you
choose
to rely upon). These laws don't +exclude+ business-like activities. In
fact, most of the time they expect it. What they deal with is the
+ownership+ of the corporation, what will be done with any available
surplus funds (or other assets), and a few details of how it will do its
work.
There's
no question that these matters are subtle, and that the language
used by lawyers, accountants and tax-agents is "specialized". But I
can't
find any reason to conclude that there is something "wrong" (in the
sense
of against the law) about a nonprofit organization +making+ a profit.
The
laws are designed to ensure two things: that the activities of the
organization are "exempt in character" (and if they're not, that
"unrelated business income taxes" are properly paid); and that any
surplus is used to extend the corporation's efforts directed toward its
public-benefit purposes (and not, in other words, distributed to its
owners or directors).
Generally,
it's the +federal+ law that you're dealing with when you
consider income and income-taxes. And the +state+ law that sets the
terms for incorporation and defines the rights and limitations on
"owners" (if they're allowed at all) or directors.
+If+
your state allows substantial tax or other benefits to "nonprofit
corporations", then it may also have laws that set strong standards for
the sorts of things nonprofits can do that qualify for such benefits.
These provisions vary widely among states and experience gained in one
may be totally useless in another. A close look is well worth the time
in a library.
Q15-02 Who can benefit from a nonprofit's activities?
Someone wrote in usnonprofit-l (in July 1994):
Non-profits
are organizations and no individual or group is
supposed to benefit financially from the activities of the
organization.
Putnam Barber answered:
I
think this comment would be stronger if it said that no-one involved in
the organization is supposed to benefit /personally/ from its
activities. The issue is confused because we use the word "benefit" for
so many purposes in talking about nonprofits (no-one objects, do
they, to the "employee benefits package"?).
Because
the issue is confused, observers have tended to follow the
language of the IRS code and speak technically of "a prohibition against
private inurement." /Inurement/ is a an old-fashioned word for getting
used to something. We've seen it in the common phrase "become inured to"
a wrong. It's been extended in this special context to mean
something like "enjoyment of ill-gotten gains."
The
lawyers, accountants and tax-agents have struggled mightily trying to
come up with clear and consistent standards in this area but is much
confusion and dispute still. In my state (Washington), most nonprofit
corporations are (1) not allowed to have stockholders and (2) "no part
of"
their "income" may be distributed to "members, directors or officers."
I
know this thought is not what the original comment was pointing at, but
it's still important to recognize that /of course/ individuals (people
who
get scholarships from foundations, for example) and groups (apple
growers
who benefit from the work of the Apple Commission, for another example)
"benefit financially" from the work of nonprofits. The prohibition on
"private inurement" is designed to bar an organization from using
tax-exempt (donated!) income exclusively to grant scholarships to the
children of its board members, or to prevent suppliers from taking
control of a trade association and controlling the selection of
printers,
insurance companies, etc., so that only the suppliers who are in on the
deal can get the association's business.
I
believe a major part of the difficulty that infects this whole
discussion is that people tend to go at it "negatively" -- trying to
describe what is /not/ permitted -- rather than affirmatively focusing
on
the goal.
What
is supposed to happen is that a group of people get together with
some public-spirited purpose and agree to marshal resources from among
themselves and the wider community to be used to address that goal. Laws
and regulations get into the story at three points:
1.
States allow people to form nonprofit corporations because it's
useful to all of us to make it easier for people to work together in
this
public-spirited way. We don't have to worry too much about exactly what
they're doing or how they go about it as long as its their own money
they're using and all of it goes to the public purpose.
2.
Many state governments (though not all) and the federal government
have over the years identified some "public-spirited purposes" as being
worthy of further encouragement. Encouragement -- tax-exemptions and
other benefits -- is given only to organizations which qualify. The
rules
for qualifying are often complicated and obscure. In Washington, there
are 33,000 regular nonprofit corporations; 7,000 organizations (4,500 of
them churches) have qualified for exemption from state-and-local
property taxes.
If
you're interested in this topic in detail, NYU School of Law will send
you for $9.50 a 120-page compendium of "Privileges and Exemptions
Enjoyed
by Nonprofit Organizations." Write room 205, 110 W 3rd St, NY, NY 10012.
More than half of most pages in this useful book is used for references
to
laws, regulations and other sources.
3.
If the organization solicits donations from the public, most states
and the federal government get involved in (a) encouraging some sorts of
donations to some sorts of organizations and (b) protecting donors from
some kinds of scams and rip-offs.
The
familiar "section 501(c)(3)" is a reference to the section of the IRS
code that allows certain organizations ("religious, charitable,
scientific
or educational" organizations, in the language of 1894 that survives to
this day) to pass on to their donors a further benefit: the right to
deduct the amount of the donation when calculating their /personal/
income
taxes ("subject", of course, "to other provisions of the law").
Many
states have laws that regulate "charitable solicitations" and try to
ensure that organizations seeking donations from the public will do so
in
ethical ways and use the proceeds for public-spirited purposes. Whether
or not an organization has been recognized by the IRS under section
501(c)(3), it is worth checking with /state/ authorities to be sure all
the rules are understood and followed /before/ planning any serious
fund-raising efforts that depend on soliciting donations from
individuals.
==============================
Subject: 16. CONTRIBUTORS TO THIS FAQ DOCUMENT
The
editor of SOC.ORG.NONPROFIT FAQ is Ina Frank. Suggestions and
comments for new questions, new answers, corrections and additions to
this document should be sent to her <inaf...@rain.org>.
The
maintainer of the FAQ is Putnam Barber. Complete new entries (such
as the names and addresses of organizations, books to be included in the
bibliography, etc) can be sent to him, as well as comments on the
general
formatting and presentation of the FAQ or ideas about how to make is
more
useful to the on-line community.
The
list of known contributors to the first posting of SOC.ORG.NONPROFIT
FAQ is below. Not every name was properly recorded, though, in the early
days of capturing traffic in the newsgroup. If you can help us correct
or extend this list to give fuller credit to the many people who
contribute to the field by posting here, please do.
Putnam
Barber <pba...@eskimo.com>
Carol Bowles-Tyndale <car...@oldcolo.com>
James R. Caplan <capl...@servax.fiu.edu>
Jayne Cravens <Jcra...@aol.com>
Ina Frank <inaf...@rain.org>
Michael Goldstein <mgol...@capcon.net>
Madeline Gonzales <made...@SPOT.COLORADO.EDU>
Alice Hershiser <hers...@clpgh.org>
Munn Heydorn <mu...@interaccess.com>
Ping Huang <psh...@MIT.EDU>
Cliff Landesman <clan...@panix.com>
Tim Mills-Gronigner <it...@igc.apc.org>
Thomas A. Newman <new...@cobra.ordata.com>
Nancy Normen <NaA...@aol.com>
(11/2/94)
End
of soc.org.nonprofits FAQ Digest Part 4/4
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