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theOREGON
NONPROFITCORPORATIONHANDBOOK
Fourth edition
Cynthia Cumfer and Kay Sohl
Published by:Technical Assistance for Community Services
www.tacs.orgEastbank Commerce Center
1001 SE Water Street, Suite 490Portland, OR 97214
503.239.4001 fax 503.236.8313
Copyright © 2005, 2001, 1996, 1993 by Cynthia Cumfer and Kay Sohl. All rightsreserved. No part of this publication may be reproduced, stored in a retrievalsystem, or transmitted, in any form or by any means, electronic, mechanical,photocopying, recording or otherwise, without the prior written permission ofCynthia Cumfer and Kay Sohl.
Cover design by Gini Chin
To order a copy of The Oregon Nonprofit Corporation Handbook, visit www.tacs.org or orders@tacs.org to place your order online, or call TACS at 503.239.4001 toplace your order over the telephone. Visit our website or call TACS for pricingand shipping information. If you are ordering bulk quantities, special discountsmay apply.
A Practical Guide for Boards of Directors & Officers of Oregon Nonprofit Corpora-tions (Chapter 13 of the Handbook) is also available. Please call TACS at thenumber above for more information and for prices.
We have done our best to produce accurate information, forms, and samples. Laws aresubject to differing interpretations and can change, and each group has its own uniquefacts. Neither the authors nor publisher assumes liability in connection with the use ofthe information, forms, and samples in this book. You should have an attorney oraccountant review your paperwork and the decisions you make based on this book.
TO MY FATHER, DONALD A. CUMFER, WITH LOVE
Thanks, Dad, for your sense of ethics, your faith in me, your kind heart, your goodbusiness and common sense, and your hard-headed stubbornness that sees a difficult
project through from beginning to end.
CINDY
TO MY MOTHER, CAROL GEORGE SOHL
Thank you for surrounding me with nonprofit organizations, and for sharing yourjoys and frustrations as a nonprofit executive, a tireless board member, and lifetime
civic activist.
KAY
iv
v
TABLE of CONTENTS
ACKNOWLEDGMENTS xxviHOW TO USE THIS BOOK xxviiWHAT'S NEW IN THIS BOOK xxixHOW TO FIND AN ATTORNEY OR AN ACCOUNTANT xxxi
PART 1 — GETTING STARTED 1
1 SHOULD YOUR ORGANIZATION BE A NONPROFITCORPORATION? 3
2 THE STRUCTURE AND TYPES OF OREGON NONPROFITCORPORATIONS 16
3 SETTING UP YOUR OREGON NONPROFIT CORPORATION 314 WRITING BYLAWS 47
PART II – THE TAX-EXEMPT ORGANIZATION 85
5 FEDERAL TAX-EXEMPT STATUS 876 FILLING OUT THE TAX-EXEMPT APPLICATIONS 1207 PUBLICLY SUPPORTED ORGANIZATIONS AND FEE/ACTIVITY
SUPPORTED ORGANIZATIONS (PSOS AND FASOS) 1458 POLITICAL ACTIVITY AND LOBBYING BY TAX-EXEMPT
ORGANIZATIONS 1749 BUSINESS ACTIVITIES BY TAX-EXEMPT ORGANIZATIONS 20210 FISCAL SPONSORSHIP 21511 STATE AND LOCAL TAX EXEMPTIONS 23212 TAX RETURNS FOR TAX-EXEMPT ORGANIZATIONS 240
PART III – SUCCESSFUL FUNCTIONING: PEOPLE 257
13 BOARD OF DIRECTORS AND OFFICERS 25914 MEMBERS AND MEMBERSHIP CORPORATIONS 31515 EMPLOYEES 33616 INDEPENDENT CONTRACTORS 37117 VOLUNTEERS 38918 HOW TO SUCCESSFULLY RESOLVE CONFLICT 415
vi
PART IV – SUCCESSFUL FUNCTIONING:MONEY, RECORDS AND RULES 427
19 UNDERSTANDING FINANCIAL MANAGEMENT 42920 MAKING A BUDGET 43521 FUNDING: OBTAINING RESOURCES FOR YOUR
ORGANIZATION 46422 PROTECTING YOUR NONPROFIT FROM FRAUD AND ERRORS 49823 KEEPING BOOKS AND PREPARING FINANCIAL REPORTS 51624 PAYROLL REQUIREMENTS AND PROCEDURES 55725 EVALUATING YOUR ORGANIZATION'S FINANCIAL HEALTH 57126 ELECTIONEERING AND LOBBYING BY ALL NONPROFIT
CORPORATIONS 59227 RECORDKEEPING, REGISTRATION, AND RULES 617
PART V – CHANGING YOUR CORPORATION 643
28 REVIEWING AND CHANGING YOUR ARTICLES AND BYLAWS 64529 MERGING WITH ANOTHER CORPORATION OR SELLING YOUR
ASSETS 66430 DISSOLVING YOUR OREGON NONPROFIT CORPORATION 677
APPENDICES 689
FORMS
INDEX
vii
EXPEXPEXPEXPEXPANDED TANDED TANDED TANDED TANDED TABLE ABLE ABLE ABLE ABLE ofofofofof CONTENTS CONTENTS CONTENTS CONTENTS CONTENTS
ACKNOWLEDGMENTS xxviHOW TO USE THIS BOOK xxviiWHAT’S NEW IN THIS BOOK XXIXHOW TO FIND AN ATTORNEY OR AN ACCOUNTANT xxxi
PARPARPARPARPART IT IT IT IT IGETTING STGETTING STGETTING STGETTING STGETTING STARARARARARTED 1TED 1TED 1TED 1TED 1
1 SHOULD YOURORGANIZATION BE ANONPROFIT CORPORATION?3
Types of NonprofitOrganizations 4
Nonprofit Corporation 4Formation 4Liability 5Control 5Continued Existence 5Registrations, Books andRecords 5Tax Consequences 5
Trusts 5Formation 6 Liability 6Control 6Continued Existence 6Registrations, Books andRecords 6Tax Consequences 7
Associations 7Formation 7Liability 7Control 7Continued Existence 8Registrations, Books andRecords 8Tax Consequences 8
Other Types ofBusiness Organizations 8
Cooperative 8Major Features 8
Profit (Business) Corporations 9Major Features 9
General Partnerships 10Major Features 10
Limited Partnerships 11Major Features 11
Limited Liability Companies 11Major Features 11
Sole Proprietorships 12Major Features 12
Advantages and Disadvantagesof Being a NonprofitOrganization 12
Advantages of the NonprofitOrganization 12
Tax Advantages 12Funding 13Public Profile 13Postal Benefits 13
Disadvantages of the NonprofitOrganization 13
Financial Drawbacks 13Paperwork 13
Which Nonprofit StructureIs Best for You? 14
2 THE STRUCTURE AND TYPESOF OREGON NONPROFITCORPORATIONS 16
The Board of Directors 17Powers and Duties 17Qualifications of Directors 18Number of Directors 18Election, Designation and
viii
Appointment of Directors 18Composition of Board 19Terms of Directors 20Multiple Roles by Directors 20Standard of Conduct for Directors21Committees of the Board 22
Committees ExercisingAuthority of the Board 22Committees that Do NotExercise Authority of the Board22
Officers 23Standard of Conduct for Officers23
Membership orNonmembership Corporations23
Types of Oregon NonprofitCorporations 25
Which Type Is Your Nonprofit? 26Major Features of Each Type 26
Public Benefit Corporations 26Religious Corporations 27Mutual Benefit Corporations 27
Nonprofit CorporationsConnected with GovernmentalAgencies 28
Issues 29
3 SETTING UP YOUR OREGONNONPROFIT CORPORATION31
Choosing and Reserving a Name32
Filling Out and Filingthe Articles of Incorporation 32
Filling Out the Articles ofIncorporation 33Other “Additional Provisions” toConsider for Your Articles 37
Item of Interest to Almost AllNonprofits 37Items of Greater Interest to
Many Nonprofits 38Filing Your Articles ofIncorporation 39
Writing Your Bylaws 40
Holding theOrganizational Meeting 42
Setting Your Fiscal Year 43Loans by Founders 43
Registering withthe Department of Justice 44
Applying for a Federal Tax IDNumber 44
Registering in Other States 45
Doing Business Under AnotherName 45
Obtaining Licenses and Permits45
Applying for Postal Benefits 45
4 WRITING BYLAWS 47
How Bylaws Fit with OtherRules 49
Articles of Incorporation 49Bylaws 49Board Resolutions 49
Tips for Drafting Bylaws 50Consistent with Laws 50Consistent with Your Articles 50Internally Consistent 50Understandability and Utility 51Completeness 51Using Bylaws to Handle Conflict51
Bylaws forNonmembership Corporations51
Article I: Purpose 52Article II: Nonmembership 52Article III: Board of Directors 53Article IV: Committees 60Article V: Officers 61Article VI: Corporate Indemnity 63
ix
Article VII: Amendments toBylaws 64
Bylaws forMembership Corporations 65
Article I: Purpose 65Article II: Members 66Article III: Board of Directors 69Article IV: Committees 77Article V: Officers 79Article VI: Corporate Indemnity 81Article VII: Amendments toBylaws 82
PARPARPARPARPART IIT IIT IIT IIT IITHE TTHE TTHE TTHE TTHE TAX-EXEMPTAX-EXEMPTAX-EXEMPTAX-EXEMPTAX-EXEMPT
ORGANIZAORGANIZAORGANIZAORGANIZAORGANIZATION 85TION 85TION 85TION 85TION 85
5 FEDERAL TAX-EXEMPTSTATUS 87
Tax Exemption: Do You Want It?89
§501(c)(3):Public Benefit andReligious Organizations 90
Who Qualifies for §501(c)(3)Exemption 90
Structure 91Exempt Purposes 91Organized and Operated 94No Inurement or InsubtantialPrivate Benefit 95Lobbying 96Political Activity 96
Classifications of §501(c)(3)Groups 96
Private Foundations 97Public Charities 100
Who Must File the Application 106Effective Date of the Exemption107
Soliciting Contributions BeforeYou Receive Your ExemptionLetter 108
What Type of Ruling to Seek 108New Groups 109Groups Less than Four YearsOld 110Groups More than Four YearsOld 111Final Reminder 111
Cost of Applying 111
§501(c)(4):Civic Leagues and SocialWelfare Organizations 111
Other Exempt Groups 112Labor, Agricultural andHorticultural Organizations– (c)(5)113Business Leagues– (c)(6) 113Social Clubs – (c)(7) 114Fraternal Societies – (c)(8) and(c)(10) 114Veterans Organizations – (c)(19)115Political Organizations – §527 115Miscellaneous Exempt Groups 115
General InformationFor Organizations Seeking AnyTypeof Tax Exemption 116
Cost of Applying 116Public Inspection of Application &Annual Returns 116
Applications 117Annual Returns 117
Unrelated Business Income 118Group Exemption 118
6 FILLING OUT THE TAX-EXEMPT APPLICATIONS 120
Filling Out Form 1023 121Part I – Identification of Applicant121Part II – Organizational Structure123Part III – Required Provisions 124Part IV – Narrative Description125
x
Part V – Compensation 127Part VI – Your Members andOthers You Benefit 130Part VII – History 131Part VIII – Specific Activities 132Part IX – Financial Data 135Part X – Public Charity or PrivateFoundation Status 137Part XI – User Fee Information 139Signature Line 139Attachments to the 1023 139Schedules 140Schedule E – OrganizationsFormed More Than 27 MonthsBefore Filing 140Schedule G – Successors to OtherOrganizations 142
Filling Out Form 1024 143
Questions Back From the IRS144
7 PUBLICLY SUPPORTEDORGANIZATIONSAND FEE/ACTIVITYSUPPORTEDORGANIZATIONS (PSOS ANDFASOS) 145
Support Requirementsfor PSO’s and FASO’s 147
How to Calculate theTotal Support Base 148
1. Contributions, Grants andMembership Fees. 1492. Gross Receipts from RelatedBusiness Activities 1503. Net Income from UnrelatedBusiness Activities 1504. Gross Investment Income 1515. Certain Tax Revenues 1516. Certain Services and FacilitiesFurnished by the Government 152
Summary of the Formulas 152
How to Calculate Your Support
from Qualified Sources for thePSO Test 153
The Mechanical Test (or One -Third Support Test) 154
Governmental Unit Support 154Direct Public Support 154Indirect Public Support 159
Facts and Circumstances Test 161Financial Support Percentage161Support Sources 162Representative Governing Body162Public Facilities, Services,Programs, Policies andParticipation 162Membership Relations 163
How to Calculate Your Supportfrom Qualified Sources for theFASO Test 163
One-Third Support Test 164Qualified Support 164
One-Third Gross InvestmentIncome Test 166
The Normalcy Period 167General Rule 167Exception: Substantial Changes inSources of Support 167
Recordkeeping Issues 168
8 POLITICAL ACTIVITY ANDLOBBYING BY TAX-EXEMPTORGANIZATIONS 174
Who Needs This Chapter? 175
Political Activity 176Prohibited Activities for (c)(3)s 176Permissible Activities for (c)(3)s177
Voter Education and CandidateForums 177Voter Registration 178Issue Advocacy 178Candidate Education 179
The Internet and Political Activity
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179Penalties for Engaging inCampaigning 180
Lobbying and §501(c)(3) Groups:Two Tests 180
Lobbying Tests 181The “Substantial Part” Test 181The Mathematical Test: TheLobbying Election [the §501(h)Election] 181
Choosing Whether to ComeUnder the Lobbying ElectionRules 182How to Make the Election 183
Understanding the LobbyingElection 184
What Is Lobbying 184What Is Not Lobbying 186Special Rules AboutCommunications 187
Communications with Members187Mass Media Advertisements 189The Internet and Lobbying 189
The Lobbying ElectionComputations 190
Lobbying Expenditures 190Exempt Purpose Expenditures(EPE) 190Making the Calculations 191Additional Whammy for Failureto Comply 192Calculating the LobbyingExpenditures–An Example 192
Special Rules for AffiliatedOrganizations 193
Proving Compliance with theLobbying Rules 194
Keep Good Records 194Under the Substantial Part Test194Under the Lobbying Election194
Educate and Monitor 197
The §501(c)(4) Alternative 197
Restrictions on Federal Funds 198
Affiliated Organizations 199
Notice to Members AboutDeductibility of Dues Used forLobbying 200
Other Laws Concerning PoliticalActivity and Lobbying 201
9 BUSINESS ACTIVITIES BYTAX-EXEMPTORGANIZATIONS 202
Unrelated Business Income 203Who is Subject to the UnrelatedBusiness Income Tax (UBIT)? 203What is Unrelated BusinessIncome? 203
Trade or Business 204Regularly Carried On 204Substantially Related to ExemptPurpose 205
Examples of Unrelated BusinessIncome 208
Services 208Sales of Goods 209
Exceptions to the UnrelatedBusiness Income Rules 210How to Calculate and Pay theUnrelated Business Income Tax211When Does Unrelated BusinessIncome Threaten Your TaxExemption? 212
How to Protect Your Tax-ExemptStatus 213
10 FISCAL SPONSORSHIP 215
Proper Uses ofFiscal Sponsorships 217
New and Small Projects 217Ongoing Project with a MajorDonor/Funder 217Assistance to QualifiedIndividuals 218
xii
Private Foundation Project 218Support for Common IssueOrganizations 218Bookkeeper for Another §501(c)(3)Organization 219
Misuses of Fiscal Sponsorships219
Pass-Through Donations andGrants 219Conduit for Gifts or Grants toIndividuals 219Conduit to NonexemptOrganizations 220Avoidance of the Public SupportTest 220Avoidance of the Lobbying ExciseTax by Private Foundations 221
Consequences of theMisuse of Fiscal Sponsorships221
Issues in theFiscal Sponsor Relationship 221
Control 221Handling of Donations and Grants222
Donors 222Private Foundations 223Options for Handling Funds 223
Recordkeeping 224Ownership of Property 224Payments to the Sponsor 225Liabilities 226Public Relations 226Special Issues of the Sponsor 226
Mission and Purpose 226Activities Disclosed to IRS 226
How to Structure aFiscal Sponsorship 227
Nonexempt Projects 227Sponsor’s Project 227Independent Contractor 228Sponsor As Grantor 228
Exempt Projects 230Supporting Organization 230Group Exemption 230Technical Assistance 231
11 STATE AND LOCAL TAXEXEMPTIONS 232
State Income Tax Exemption 233Who is Covered by theExemption? 233How to Apply for the Exemption233Other Forms You Must File 233
Tri-Met andLane Transit District Taxes 234
County Business Tax Exemption234
County Property Tax Exemption234
Whether to Apply for theExemption 235What Groups Are Covered by theExemption 235
Literary, Charitable, ScientificGroups, Art Museums 235Religious Groups 236Some Schools and EducationalOrganizations 236Fraternal Organizations 236Other Groups 237
How to Apply for the Exemption237Leases and Lease Options 238
Building/Land 238Personal Property 238
Local Business License Fees 238
12 TAX RETURNS FOR TAX-EXEMPT ORGANIZATIONS240
Filing Federal Returns 242Who Must File Form 990 or 990 EZand Form 990 Schedule A 242What Is Schedule 990A and WhoMust File It? 243When and Where to File Form 990,990 EZ or Schedule 990A 243How to Deal with 990, 990 EZ andSchedule 990A Late Filing
xiii
Penalties 243What Is the Accounting Period forForm 990, 990 EZ and Schedule990A? 244How to Change Your Fiscal Year245What Are the AcceptableAccounting Methods for the 990,990EZ and Schedule 990A? 245How Do You Change Your Methodof Accounting? 246Public Inspection of Your 990,990EZ and Schedule 990A 246How to Complete the 990, 990EZ,and Schedule 990A 247Most Common 990 Mistakes andProblems 248
Functional Accounting 249Reporting FundraisingExpenses 249Loans 250Unrelated Business Activities250Political Activity and Lobbying251Private and Non-privateFoundation Status 251Related Organizations 253Signatures 253
Filing State Returns 253Who Must File Form CT-12 andWhen Is It Due? 254Filling Out Form CT-12 254
Filling Out the Inventoryand Personal PropertyAssessment 255
PARPARPARPARPART IIIT IIIT IIIT IIIT IIISUCCESSFULSUCCESSFULSUCCESSFULSUCCESSFULSUCCESSFUL
FUNCTIONING: PEOPLEFUNCTIONING: PEOPLEFUNCTIONING: PEOPLEFUNCTIONING: PEOPLEFUNCTIONING: PEOPLE257257257257257
13 BOARD OF DIRECTORSAND OFFICERS 259
Recruiting and Retaining theDirectors Your OrganizationNeeds 261
The Duties and Responsibilitiesof Directors 264
Duty to Act with Due Care 264Observe Corporate Formalities265Act as a Nonprofit Corporation265Actively Manage 266Make Reasonable Decisions 267Provide Financial Management267Investigate SuspiciousCircumstances. 270Establish Proper EmployeePolicies 270Avoid Excess BenefitsTransactions 270Observe Laws on Tax-ExemptStatus 271Make Policies 271
Duty to Be Loyal to theCorporation 274
Conflicts of Interest 275Duty to Act in the Corporation’sBest Interest 276
Balancing Board Protection withSensible Management 277
Board Styles:How Different Boards FulfillTheir Duties 277
Community Based Start-up Board277Institutional Start-up Board 279Community Based Boards After
xiv
Start-up 279Institutionally Based Boards AfterStart-up 280Clarifying Your Board’sExpectations 281Board/Staff Relationships 282
Board Meetings 283Meetings 283
Why Have Meetings? 283Holding Legal Meetings 284Action Without a Meeting 287
Notice 287Regular Meetings 287Special Meetings 287Emergency Meetings 288Calling a Meeting 288Waiver of Notice 288
Minutes 288Holding Effective Meetings 289
Late Starts and Late Endings290Lack of Clarity on Decisions 290Not Getting to the ImportantIssues Until There’s No TimeLeft 290Re-doing Committee Work withthe Full Board 292Failing to Provide for Directors’Needs 292
Board Committees 292Board Level Committees 293
Duties and Responsibilities 293Meetings, Notices, and Minutesof Board Level Committees 293
Advisory and Task-OrientedCommittees 294Responsibilities of Non-committeeMembers 294
Staff as Directors 294
The Duties andResponsibilities of Officers 296
Standard of Conduct for Officers296
Personal Liabilityof the Board and Officers 296
When You Are Personally Liable297
Failure to Act With Due Care orBreach of Duty of Loyalty 297Agreement to Be Liable for theCorporation’s Debt 298
Who Can Sue You 298Your Nonprofit Corporation298Employees, Members, andOthers Associated with theCorporation 299The Government 299Outsiders 299
Which Boards Are MostVulnerable to Being Sued 300
Protection of YourBoard and Officers 300
Create an Advisory Board 300Educate Your Board 301Maintain Proof of CorrectBehavior 301Reliance on Reports 302Proper Handling of Conflicts ofInterest 302
The Fairness Doctrine 303Approval by Disinterested Vote303Approval by Outside Sources305
Limited Liability of Directors andOfficers 305
Federal Law 305State Law 305All Directors andUncompensated Officers 306
Reimbursement by theCorporation When You Are Sued306
When the Corporation MustIndemnify Its Directors andOfficers 307When the Corporation CanIndemnify Its Directors andOfficers 307When the Corporation Cannot
xv
Indemnify Its Directors orOfficers 307
Insurance 308Directors and Officers Insurance308Errors and Omissions Insurance308Personal Insurance Coverage309Other Types of Insurance 309
Conclusion 309
Replacing Directors and Officers309
Expiration of Terms of Office ofDirectors 310Resignation of Directors 310Removal of Directors 310
Removal of Directors Elected byDirectors 311Removal of Directors Elected byMembers 311Removal of Designated orAppointed Directors 312
Vacancy on the Board 312Resignation and Removal ofOfficers 312
Evaluating the Effectivenessof Your Board 313
14 MEMBERS ANDMEMBERSHIPCORPORATIONS 315
Admission of Members 317Criteria for Admission 317Consent of Members 317
Rights, Obligations, andLiabilities of Members 319
Classes of Members 319Members’ Rights and Obligations319Liability of Members 319Membership Dues 320
Notice of Meetings 320Who Gets Notice? 320
Contents of Notice 320How Notice Is Given 321Notice of Adjournment ofMeetings 321Waiver of Notice 321Record Date 322
Meetings of Members 323Who Attends the MembershipMeetings 323Types of Members’ Meetings 324
Annual Meeting 324Regular Meetings 324Special Meetings 324
Conduct of Meeting 325Minutes 325Action Without Meeting 325Delegates 326
Voting by Members 326Quorum Requirements 326Voting Requirements at Meetings327Voting by Proxy 327Voting By Written Ballot 328Voting and Vote Splitting 328Corporation’s Acceptance of Votes329
Election of the Board 330Election of Directors 330Vacancy on the Board 330Removal of Directors 330
Inspection of Your Recordsby Members 331
Records Subject to InspectionWithout a Reason by the Members331Inspections That Require a ProperPurpose 332
What Is a Proper Purpose? 333Restrictions on Members’ Rights toInspect and Copy 333
Resignation and Terminationof Members 334
Resignation 334Expulsion, Suspension, orTermination 334
xvi
15 EMPLOYEES 336
Wage and Hour Laws 337Who Is Subject to the Laws 337
Federal Law Coverage 337State Law Coverage 338
Exempt and NonexemptEmployees 338Overtime and Volunteer Time 339“Comp” Time 340Attendance at Training,Conference and Staff Meetings 341Enforcement of Wage and HourLaws – the Real Whammy 341
Excess Compensation 342
Discrimination Issues 342
Unionization 342
Personnel Policies andEmployee Handbooks 343
Developing an EmployeeHandbook 345Your Approach to an EmployeeHandbook 345What to Include in Your EmployeeHandbook or Personnel Policies348
The Philosophy and Purpose ofyour Program 348Noncontractual Nature of theEmployee Handbook orPersonnel Policies 348Organization Chart 349Nondiscrimination Policies 349Personnel and Medical Recordsfor Each Employee 350Hiring Policies 351Job Descriptions 353Conditions of Employment 353Employment Categories 355Compensation 357Benefits 358Other Benefits 363Reimbursements 364Job Reclassification 364Employee Evaluation 364
Disciplinary Action 365Termination of Employment 366Appeals Procedures forDiscipline and Termination 367Grievance Procedure 367Amendments to PersonnelPolicies or EmployeeHandbooks 368
Distribution of the EmployeeHandbook 368Administering Personnel Policiesor the Employee Handbook 369
Evaluating the ExecutiveDirector 370
16 INDEPENDENTCONTRACTORS 371
Who Is an IndependentContractor? 372
Federal Income Taxand Social Security Issues 373
State Income Tax issues 376The Independent Contractor TestBefore 2006 376The Independent Contractor TestBeginning in 2006 (We Think) 378
Workers’ Compensation Issues379
Your Service Providers 379The Test for “Worker” 379Exceptions to the “Worker” Test381
Workers for Those With WhomYou Subcontract 381
State Unemployment Issues 382
Federal and StateWage and Hour Laws 383
Federal Law 383State Law 384
The Importance of Complyingwith the Laws 384
Danger Signals 385
Protections for Your
xvii
Nonprofit Organization 386Expert Opinion in Writing 386Ask the IRS – Form SS-8 387Assessing and Limiting YourExposure 387Independent ContractorAgreement 388
17 VOLUNTEERS 389
Recruiting, Screening, andPlacing Volunteers in YourOrganization 391
Recruiting Volunteers 391
394Screening Volunteers 394Placing Volunteers in the RightSpot in Your Organization 395
Orienting, Training, Supervisingand Evaluating Volunteers 396
Orienting Volunteers 396Training 396Supervising Volunteers 397Evaluating Volunteers 398
Recognizing and RewardingVolunteers 399
Volunteers Who AreReally Employees 400
Volunteers and Liability 402Assessing the Risk of Harm byVolunteers 403
When Your VolunteersFace Personal Liability 403
When Your Organization isLiable for the Actions of YourVolunteers 404
When You Are Negligent 405When You Are Not Negligent 406
When Your Volunteer Is Injured407
Assessing the Risk of Harm toVolunteers 407
Protection for Your Volunteersand Your Organization 408
Federal and State Law Protections408Preventive Actions 409Damage Control 409
Recordkeeping 409Releases 410Insurance 410
Protection for Your NonprofitOrganization and Your VolunteerWhen Your Volunteer Is Injured412
Releases 412Insurance 413
18 HOW TO SUCCESSFULLYRESOLVE CONFLICT 415
Preventing OrganizationalConflict 416
Identification of Conflicts 417
Steps to Conflict Resolution 4181. Clarification 4182. Negotiation – Mediation 4193. Follow-up 421
Gaining Insight Into SpecialProblems 421
Communication Styles 424
Summary 425
PARPARPARPARPART IVT IVT IVT IVT IVSUCCESSFULSUCCESSFULSUCCESSFULSUCCESSFULSUCCESSFUL
FUNCTIONING: MONEYFUNCTIONING: MONEYFUNCTIONING: MONEYFUNCTIONING: MONEYFUNCTIONING: MONEY,,,,,RECORDS AND RULESRECORDS AND RULESRECORDS AND RULESRECORDS AND RULESRECORDS AND RULES
427427427427427
19 UNDERSTANDINGFINANCIAL MANAGEMENT429
Signs ofGood Financial Management430
Achieving Your Mission 430
xviii
Solvency – Staying in the Black 430Liquidity – Paying What You Oweon Time 430Documenting the Observance ofRestrictions 430
The Big Picture 431Planning: 431Execution: 432Recording: 432Reporting: 432Monitoring: 432
Timing for theFinancial Management Cycle 433
Financial Management Check-up 433
20 MAKING A BUDGET 435
Budget Terminology 436
Why Have a Budget? 437
Basic Budgeting Guidelinesfor Nonprofit Organizations 437
Budget Development Steps 439Projecting Income 439
1. Government Grants andContracts 439 2. Foundation Grants andCorporate Donations 4413. Contributions 4414. Special Events 4425. Program Service Fees 4426. Membership Fees 4437. Interest or Investment Income4438. Other Income 443
Projecting Expenses 4431. Salaries 4432. Employer Taxes 4443. Fringe Benefits 4454. Professional Service Contracts4455. Non-Personnel Costs 446
Fixed and Variable Costs 446The Effect of Volume of Services
and Activities on Costs 446
Functional Budgeting 447Management Costs 448Fundraising Costs 448Cost Allocation 449
Direct Costs 451Shared Costs 451Choosing a Cost AllocationMethod 452Allocating Management(Administration) Costs 452
Cost Allocation Plans 453
Budgets for Grants 454Start with Your Annual OperatingBudget: 454Budgets When Funders SupportOnly New Projects 455Grant Budget Notes 456
Budgeting for Restricted Funds457
Capital Budgets 457
Cash Flow Projections 459
Your Budget Process 460
Boards and Budgets 461
21 FUNDING: OBTAININGRESOURCES FOR YOURORGANIZATION 464
Foundation Grants 465Foundation Funding Preferences466
The Strength of theOrganization 466The Clarity, Logic, andImportance of the Project forWhich Funding Is Sought 467Foundation Funding Priorities467Personal Relationships 467Organization and Persistence inYour Efforts 468
Corporate and Other Business
xix
Giving 468
Individual Contributions 470
Fundraising Events 472Determining the Purpose of theEvent 472Projecting the Income andExpenses for the Event 473Considering the True Cost of theEvent 473
Bingo, Raffles, and OtherGaming 474
Exceptions to Licensing 474Getting A License 475Note for §501(c)(3) Tax-ExemptGroups 475
Membership Fees 476
Civic and ReligiousOrganizationsas Funders 477
Civic Organizations 478Religious Organizations 479
Government Grants andContracts for Services 480
Government Grants 480Government Contracts 481
Program Service Fees 483
Product Sales 485
Social Enterprise and BusinessVentures 487
Investment Income 488Components of an InvestmentPolicy 488
Risk 489Return 489Social Responsibility 489
Who Makes Investment Decisions?489
In-kind Contributions 490
Using the Internet to RaiseFunds 492
Ethical and Legal Issuesin Fundraising 493
Ethical Fundraising 493Consulting 493Staff Fundraiser 493Contract with a FundraisingOrganization 493Workshops and Trainings 494
Unethical Fundraising 494Grantwriting with the FeeDetermined as a Percentage ofGrant Funds Received 494Fundraising Companies whichKeep Most (above 60%) of theMoney for Their “Costs” butUse Your Nonprofit’s Name andTax-exempt Status 494Fundraising Events orIndividual Donor Solicitationsin Which the Fundraiser is Paida Percentage of What is Raised496Rules on Solicitation for Non-(c)(3) Exempt Groups 496
Final Tips 497
22 PROTECTING YOURNONPROFIT FROM FRAUDAND ERRORS 498
Who Should Do What:DevelopingFinancial Policies andProcedures 499
Key Banking Issues 500Opening Your Checking Account501Common Set-up Mistakes 501Check Printing Choices 502
Checks for Manual CheckWriting 503Checks for Computerized CheckWriting 503
Keep Unused Check Stock UnderControl 503Protect Your Account fromUnauthorized Checks 504Never Permit Blank Checks to Be
xx
Signed 504Should We Require TwoSignatures on Each Check? 504Should We Use On-line PaymentFeatures? 505Bank Deposit Slips and Records505 Do We Need to Get Our ProcessedChecks Returned with Our BankStatement? 505Bank Reconciliations Are Essential506Dealing with Multiple BankAccounts 507
Petty Cash Funds 508
Processing Payments 509
Handling Cash Receipts 510
Acknowledging Donations 511Substantiation Rules 511Disclosure Rules 512
In-Kind Contributions 513
Insurance Protection 514
23 KEEPING BOOKS ANDPREPARING FINANCIALREPORTS 516
What is Accounting? 518
Big Choices for Your AccountingSystem 519
Should You Use the Cash or theAccrual Method? 519Do You Need to Track MultiplePrograms or Multiple FundingSources? 521How Will You Meet IRS ReportingRequirements? 522Do You Want or Need to UseGenerally Accepted AccountingPrinciples (GAAP) for Nonprofits523
Accounting Requires More ThanTracking Revenues andExpenses 524
Double-Entry Accounting IsEssential 525
Very Small Nonprofits: BasicAccounting and Reporting 526
Monthly Financial Statements528
Statement of Financial Position 528Statement of Activities 530Statement of Functional Expenses531Statement of Cash Flows 531Key Connection Between FinancialStatements 532
What’s Special About NonprofitAccounting? 532
Three Classes of Net Assets 533Distinguish Contributions fromPurchases of Services or Goods 534Classification of Contributions534Fulfilling Restrictions 535
How Can All Expenses BeUnrestricted When Some ofThem Are Met with RestrictedGifts? 535Board Directions AreDesignations, Not Restrictions536Recording Promises to Give 536Multi-year Grant Commitments537
Program Fees Received inAdvance 537Using Deferred Revenue to TrackGrant Income 538Government Grants and Contracts538Cost Allocation Plans 539Accounting for Fundraising Costs539Accounting for In-KindContributions 541Accounting for Land, Building,and Equipment 542
Tips for Useful Financial
xxi
Reports 545
Government Funds AccountingRequirements 548
Whatever Happened to FundAccounting? 549
Accounting Software Choices550
Tips for QuickBooks Users 552
Who Should Do YourNonprofit’s Accounting? 554
Small Organizations 554Mid-sized or Small Nonprofitswith Multiple Programs orMultiple Restricted FundingSources 554Larger or Complex Nonprofits 556
24 PAYROLL REQUIREMENTSAND PROCEDURES 557
Establishing Payroll Procedures559
Explanation of Payroll Terms 560
Employer Taxes 562Unemployment 563
Federal Unemployment 563State Unemployment 563
SAIF or Workers’ Compensation564Local Governmental Unit Taxes565
Preparing Your Own Payroll 565Setting Up Your Payroll System565
Payroll Withholding Tax Tables566
Payroll Records 567Payroll Processing Procedures 567
Timesheets 568Prepare and Approve thePayroll Journal 568Signing Paychecks 568Payroll Tax Deposits and PayrollTax Report Submission 568
Payroll Tax ReportRequirements 568
Payroll Reports 569
25 EVALUATING YOURORGANIZATION’SFINANCIAL HEALTH 571
How to Ask the Right Questionsabout Your Financial Statements573
How Financially Strong is ThisOrganization? 573Can the Organization Meet ItsObligations on Time? 573Are There Limitations on What theOrganization Can Do With ItsResources? 574How Can I Tell If the OrganizationIs Complying with Restrictions onthe Use of Funds? 576Is the Organization “BreakingEven”? 577Is the Organization Using ItsResources Wisely? 578Are the Books In Balance? 579How Do We Know the FinancialStatements Are “Right”? 579
The Manager’s Rolein Monitoring FinancialPerformance 580
Steps to Be Sure the Reports AreAccurate: 580Steps to Determine WhetherAction Is Needed to Protect theOrganization’s Financial Health581
Should Your Nonprofit Have anIndependent Audit or Review?582
Audits 582Reviews 583Choosing Your Auditor 584
Understanding and Preparingfor Audits 585
Types of Audits 585
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Independent Audit by aCertified Public Accountant(CPA) 585Funding Source Audit 585Payroll Tax Audit 585990 or CT-12 Audit 586
Preparing for an Audit 586
Will Your Organization Needan A-133 Federal Funds Audit?587
The Nonprofit Organization’sResponsibilities 587The Auditor’s Responsibilities 588The Focus of the Audit 589Steps to Prepare for A-133 Audits590
26 ELECTIONEERING ANDLOBBYING RULES FOR ALLNONPROFIT CORPORATIONS592
Federal Election Rules 594Contributions to Candidates andPolitical Committees 595Express Advocacy 595Issue Advocacy 597
Broadcast Communications 598Coordination 599The (c)(4) Ideological NonprofitException 599
Federal Political Committees 600Political Action Committees(PACs) 601Disclosure Requirements 603
Voter Activities 603
Federal Lobbying Rules 604(c)(3) Organizations 605
Oregon Rules GoverningPolitical Campaigns 606
Independent Expenditures 607Political Committees 608
Involuntary Classification as aPolitical Committee 608Choosing to Form a Separate
Political Committee 609Contributions to PoliticalCommittees 611
Electioneering Conduct 611(c)(3) Organizations 611
Oregon Lobbying Rules 612
Use of Federal Funds forPolitical and LobbyingActivities 613
Political Expenditure Tax 614
27 RECORDKEEPING,REGISTRATION, AND RULES617
Books and Records 618What Books and Records ShouldYou Keep? 618
Books: Financial Records 618Records 618
How Long Should You KeepThem? 619
Permanently 619At Least Ten Years 619At Least Seven Years 620At Least Three Years 620Other Periods 620
Who Can See or Copy Your Booksand Records 620
Members 620Nonmembers’ Rights to Inspectand Copy Books and Records621
What Records Can and Must BeProtected 622
Reports and Registrations 622Secretary of State (CorporationCommissioner) 622Department of Justice (AttorneyGeneral) 623Other State and Local Licenses andFilings 624
Notices 624
Releases 626
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Terrorism Laws 626Actions that Aid SuspectedTerrorists 627Sanctions for Aiding SuspectedTerrorists 627
Freezing Your Assets 627Criminal Penalties 628Civil Lawsuits 628Revocation of Tax-ExemptStatus 628Treasury Department’sVoluntary Guidelines 629
What Should You Do? 629Government Lists of SuspectedTerrorists 630
Tax-Exempt Groups: OperationalRules 630
Public Inspection and Copying ofPapers 631
What Can be Inspected andCopied 631Inspection Rules 632Copying Rules 632
Rules on Solicitations and Dues632Donee Information Returns 633Changes in Activities 633Group Exemptions 633Special Requirements for Schools634Excess Benefits Transactions 634
PARPARPARPARPART VT VT VT VT VCHANGING YOURCHANGING YOURCHANGING YOURCHANGING YOURCHANGING YOUR
CORPORACORPORACORPORACORPORACORPORATION 643TION 643TION 643TION 643TION 643
28 REVIEWING ANDCHANGING YOUR ARTICLESAND BYLAWS 645
Reviewing YourArticles of Incorporation 646
Changing Your RegisteredAgent or Registered Office 646
Amending Your Articlesof Incorporation 647
Amendment by Corporations withNo Members or No Members withVoting Rights on Amendments 647Corporations With VotingMembers 648
By the Board Without MemberApproval 648By the Board, Members, andOthers 648
Class Voting by Members onAmendments 650
Religious Corporations 650Public Benefit Corporations 650Mutual Benefit Corporations650
Filing of Amendment 651Tax-Exempt Organizations 651
Restating Your Articlesof Incorporation 652
Reviewing Your Bylaws 652Understanding the Hierarchy 653
Articles of Incorporation 654Bylaws 654Board Resolutions 654
Tips for Reviewing Bylaws 654Consistent with Laws 654Consistent with Your Articles655Internally Consistent 655Readability and Utility 655Completeness 655
Common Pitfalls in Bylaws 656All Oregon NonprofitCorporations 656Membership Corporations 658Nonmembership Corporations661
Amending Your Bylaws 661Amendment by Corporations withNo Members or No Members withVoting Rights on Amendments 661Corporations With No MembersWho Vote on the Bylaws 662
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Corporations With VotingMembers on the Bylaws 662Tax-Exempt Organizations 662
29 MERGING WITH ANOTHERCORPORATION OR SELLINGYOUR ASSETS 664
Mergers 665Why Nonprofits Decide to Merge665Some Merger Terminology 665Limitations on Mergers by PublicBenefit or Religious Corporations666An Overview of the MergerProcess 666
The Steps of the Merger 667Formation of a PlanningCommittee 667Letter of Understanding 667The Due Diligence Investigation668
Issues to Deal With in a Merger668
Purpose and Structure of theSurviving Organization 669Assets and Liabilities 669Employee Issues 669Leases and Contracts 670Audits 670Funders 670Remedies If the SurvivingCorporation Violates the MergerAgreement 671
Creating the Plan of Merger 671Adopting the Plan of Merger 672
Adoption by the Board 672Adoption by the Members 672Abandonment 673
Filing the Articles of Merger 673The Effect of a Merger 674Special Note for Tax-ExemptCorporations 674
Sale of Your Corporation 674In the Usual Course of Your
Activities 674Not in the Usual Course of YourActivities 675
Adoption by the Board 675Adoption by the Members 675Finalizing the Sale 676
§501(c)(3) Groups 676Creditors 676
30 DISSOLVING YOUR OREGONNONPROFIT CORPORATION677
Voluntary Dissolution 678Issues to Consider 678Overview of the DissolutionProcedure 680
Dissolution by Incorporators680Dissolution by Directors,Members and Third Parties 680Notice to the Attorney General681Articles of Dissolution 682Revocation of Dissolution 682
Claims Against a DissolvedCorporation 682Effect of a Dissolution 685
Involuntary Dissolution 685Administrative Dissolution 685
Reinstatement 686Judicial Dissolution 687
Activities After Dissolution 687
Special Note for Tax-ExemptCorporations That AreVoluntarily or InvoluntarilyDissolved 687
APPENDICESAPPENDICESAPPENDICESAPPENDICESAPPENDICES
1 Source Material 691
2 List of Tax and RegulatoryAgencies 722
3 Types of Oregon NonprofitCorporations 726
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4 Open Records and OpenMeetings Laws 730
5 Additional Provisions for YourArticles of Incorporation 734
6 Homeowners Associations 737
7 Form 1024 743
8 Political Organizations under§527 751
9 Substantiation and DisclosureStatement 754
10 Letter to Donors 755
11 Disqualified Person InquiryLetter 757
12 Forms for Tax-ExemptOrganizations 759
13 Tax Forms Required of BothExempt and NonexemptOrganizations 760
14 Letter of Agreement for RegularEmployment 761
15 Letter of Agreement forTemporary Employment 762
16 Table of Contents for FiscalPolicies and ProceduresManual 763
17 Budgets for Administrative andIndirect Costs 765
18 Cash Flow Projection 777
19 Chart of Accounts 778
20 Statement of Functional Expenses780
21 Functional Revenue and ExpenseStatement 781
FORMSFORMSFORMSFORMSFORMS
Ballot for Election of Directors
Ballot for Proposed Action
Bylaws of a MembershipCorporation
Bylaws of a NonmembershipCorporation
Complete Release
Complete Release and HoldHarmless Agreement by Client
Complete Release and HoldHarmless Agreement by Volunteers
Conflicts of Interest Policy
Consent to Corporate Action Withouta Meeting by the Board of Directors
Consent to Corporate Action Withouta Meeting by the Members
Depreciable Property
Excess Benefits Transactions Policy
In-Kind Contribution Record
Minutes of First Meeting of Board ofDirectors
Minutes of Meeting of the Board ofDirectors
Minutes of Meeting of the Members
Promissory Note
Proxy Vote
Waiver of Notice of Meeting ofDirectors
Waiver of Notice of Meeting ofMembers
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Acknowledgments
We would like to thank our families, who put up with us while we have put outthis book four times. Thanks, Valerie and Kiera, for your excellent love andpatience and good nature. Thanks, Chris and Morgan, for accepting “the book”as a demanding member of our family.
We have so many other people to thank that we put Oscar winners to shame.We are very grateful to Kristen Gurdin, a nonprofit attorney at Davis WrightTremaine in Portland, for her review of much of this book and to AlyssaTormala, an employment attorney with the Miller Nash law firm in Portland,for her review of Chapter 15. We also benefited greatly from reviews and feed-back in the past from two of Oregon’s premier nonprofit experts, attorney DavidAtkin of Nonprofit Support Services in Eugene, and Gary McGee, CPA, ofMcGee and Company in Portland. In addition to much other assistance, Garyprovided the Indirect Cost materials in the Appendix. We are also grateful toJim Richman, CPA, for assistance with many of the sample financial reports.Oregon is very fortunate to have an excellent Assistant Attorney General, RossLaybourn, in charge of the Department of Justice’s Charitable Trust Divisionthat oversees public benefit nonprofits. We thank Ross for his help with severalimportant points in this book, for his unflagging assistance to nonprofits andfor his patience with our many questions over the years.
Many thanks to Joan Pinkert for her expert advice on desktop publishing; toRuth Gundle of Eighth Mountain Press for guidance in the intricacies of select-ing a printer; and to Gini Chen for the cover design. We appreciate Tere Mathernof TACS for her help with the graphics and Kris Bell and Abe Conway of TACSfor their computer wizardry. If you’re wondering how we knew exactly theinfo you wanted, you can thank Erica Rubin and Carol Cheney, coordinators ofthe TACS Nonprofit Organization Information and Referral Helpline, who arethe source of many of the questions this book tries to answer. We’d also like tothank Casey Caesar, Kinsey Loudon and the techies at Consolidated Press whomoved our work from computer disk to published book.
Most importantly, we want to thank the people who start and run nonprofitorganizations. Over the past 28 years we have been privileged to meet manyvery dedicated and able people who often make great sacrifices of time andmoney for a project that enhances the public good. We all owe them a debt ofgratitude.
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How to Use this Book
This is a large book. It is unlikely that any group will need ALL the informationin this book, so don’t be daunted by the size. We have written this book for bothbeginners and for technical people. If you are new to the nonprofit arena andare using this book to get started, you will find that in many places we tell yousections and chapters you can skip. The parts that you do read are not meant tobe read all at once – for instance, it’s unlikely that you will need to know how toincorporate and how to dissolve in the same month. (At least we hope not!)Keep this book as your reference book over time.
This book has an improved INDEX located at the very end of the book. Ifyou are looking for information on a specific topic, you may want to check theindex first. We have learned that preparing an index is one of the great chal-lenges of producing a book of this size. If you don't find the topic you are look-ing for in the index, you may want to check the EXPANDEDTABLE OF CONTENTS as well.
There are tear-out FORMS near the end of the book. In order to make themmore usable, the forms do not have page numbers on them. In the book, werefer to the forms by name and the forms are alphabetized by name so that youcan find the form you want more easily. The Forms section does not includeforms that you can get from the government on-line. Because these formschange from time to time and are now so accessible, we refer you to the websiteswhere you can obtain them. If you don't have access to the web, you can getcopies by contacting the appropriate agency. Appendix 2 provides a list of theagencies and their contact information and web addresses.
If you are a technical person – a lawyer, accountant, or similar professional–we have added a new feature to this book. Appendix 1 contains a list ofSOURCE MATERIALS that we rely on in each chapter. The Sources sectionincludes citations to statutes, administrative regulations and rulings, cases, gen-erally accepted accounting principles and general reference material to assistyou. You may also want to peruse the forms and the more detailed informationin the Appendices. We’ve also included some references in Appendix 1 to ma-terials accessible to and of interest to all readers. We alert you to these materialsat the end of each chapter as appropriate.
If you want to obtain additional copies of this book or if you want extrareprints of Chapter 13 to use as a Board of Directors manual, see the ORDERINFORMATION on the back of the title page.
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Technical Assistance for Community Services, the publisher of this book, isa §501(c)(3) nonprofit organization that is a training and consulting resourcefor nonprofits. TACS maintains a website at www.tacs.org. TACS may from timeto time include updated information about matters included in this book. Youshould check the website.
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What's New in this Book
The Fourth Edition adds 140 pages to the Third Edition and contains someexciting additions and updating. Among the most important are these:
� An extensive listing of SOURCES for professionals, includingstatutes, administrative regulations, cases and accounting stan-dards, and some excellent listings for the general reader in Ap-pendix 1
� More coverage of political activities permissible for §501(c)(3)groups in Chapters 8
� A new chapter, Chapter 26, that contains a greatly expandeddiscussion of federal and state campaign finance reform, electionand lobbying rules as these rules apply to all nonprofit corpora-tions
� A completely revised Chapter 6 with detailed instructions onhow to fill out the new application for tax exemption under§501(c)(3) revised in October 2004 (IRS Form 1023)
� More indepth discussion of fraud prevention in Chapter 22
� QuickBook tips for nonprofits in Chapter 23
� Accounting and reporting on administrative and fundraisingcosts in Chapter 23
� More extensive coverage of indirect cost rates in Chapter 20 andAppendix 17
� A discussion of capacity building and sustainability strategiesin Chapter 21
� Information on social enterprises and how nonprofits can earnincom while fulfilling their mission in Chapter 21
� Coverage of the new IRS regulations on excess benefit transac-tions for §501(c)(3) organizations in Chapter 27 with a new samplepolicy in the Forms section
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� A discussion of the new anti-terrorism laws in Chapter 27
� The implications of the Sarbanes-OxleyAct for nonprofits inChapter 13
� More specific discussion of board duties and policies in Chapter13 and a new sample Conflicts of Interest policy in the Forms sec-tion
� Coverage of new laws on homeowners associations in Appen-dix 6
� A more indepth discussion of membership nonprofits in Chap-ter 14
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How to Find an Attorneyor an Accountant
“What?” you may be saying, “I bought this book so I wouldn't have to see anaccountant or an attorney.” With this book, you may be able to do much of youraccounting and legal work yourself. At the least, it will provide you with a lotof information that should cut down on how much time (and money) you haveto spend on a professional.
Still, there are a variety of circumstances when you may need to get help:
1. You may have special problems or issues that this book does not address.
2. You should get an accountant’s help to get your books set up properly,so that your financial information can be easily conveyed to the forms that arerequired for nonprofit and tax exempt groups.
3. You should have a professional review your papers before you submitthem to the state or federal government to be sure they are correct.
4. You should run any significant decisions you make by a professional tobe sure you are doing everything properly.
There are a number of ways to choose an attorney or accountant. Keep inmind that nonprofit law and accounting are quite specialized areas within theirfields and most attorneys and accountants know little or nothing about it. Tech-nical Assistance for Community Services (TACS) operates the Nonprofit Orga-nization Information and Referral Helpline (503.233.9240 or 1.888.206.3076), afree service providing referrals to qualified professionals with experience as-sisting nonprofits. This is probably your best place to start.
If you already know a professional that you feel is competent and trustwor-thy, you could ask that person if they do nonprofit work or can recommendsomeone who does. If you don't know an attorney or accountant you feel isgood and the Helpline can’t help you, ask around among other nonprofitgroups to see who they use and like. You may also call the Oregon State Bar–Lawyer Referral Services or the Oregon Society of CPA's and tell them you arelooking for an attorney or accountant who does nonprofit work. As a last re-
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sort, you could call an attorney or accountant in the phone book, but your oddsof finding someone who knows much about nonprofits are probably less than 1in 100.
Before you actually call an accountant or an attorney, it is a good idea tomake a list of questions. These questions might include:
•Are you familiar with nonprofits? How much of your practice is with non-profits? Have you worked with our type of nonprofit? How long have you beenworking with nonprofits?
•Are you comfortable with working with a group that wants to do as muchof its own work as possible?
• How much will you charge?
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