What Our Presidential Candidates Can Teach Us About Tax-Exempt Legal Compliance

What do Donald Trump and Hillary Clinton share in common?  Among so many things political and otherwise (go ahead, use your imagination), they both head up charitable foundations, which have recently received media scrutiny for apparently operating outside legal boundaries.  What are the problems?  More importantly for us regular folks, what can prudent and responsible nonprofit leaders learn from these examples?  We will focus here on several areas related to:

  1. State charitable regulation requirements,
  2. Tax exemption principles against private benefit for nonprofit insiders, and
  3. IRS requirements for staying on course with an organization’s tax-exempt purpose.

Paper, Paperless, Past, and Future - How Should Nonprofits Handle Documents?

Nonprofits are increasingly going paperless with their documentation, and all organizations should have protocols for addressing document management, retention, and destruction.  So how should responsible nonprofit organizations develop new document retention policies or upgrade their old policies, in light of technological advances and legal compliance requirements?  Key aspects including clear guidance for nonprofit workers, liability-related issues, related best practices, IRS Form 990 reporting requirements, important accessibility considerations, and data security.

Why do we need a document retention policy?

The most basic answer is that a document retention policy provides clear instructions for a nonprofit’s governing body and staff as to which records must be kept, for how long, and whether some or all records may be stored electronically instead of physically. The retention periods associated with specific records are generally tied to the statute of limitations for actions that could arise under state or federal laws.  The time frames can vary widely from one year to permanent retention.  Without clear guidelines, a nonprofit will often fail to retain important records needed for appropriate legal, tax, or accounting protection.  As an organization grows and more employees and volunteers are involved in handling records, the need for a uniform and clear policy becomes critical.  

FAQs: IRS Requirements for Private School Racial Nondiscrimination Policies

Since the early 1970s, the IRS has embraced racial nondiscrimination requirements as an express condition of Section 501(c)(3) status for private schools.   Such racial nondiscriminatory policy must be well publicized and applies to all facets of student life:  admissions, financial aid, and all school programs.  Here’s what leaders at private schools need to know about the policy requirements, legal compliance, and related practical aspects.

1.         How did the IRS develop this racial nondiscriminatory policy requirement?  

The origins of today’s nondiscrimination policies for schools date back to the landmark Supreme Court 1954-decision, Brown v. Board of Education, which ruled separate public schools for black and white students unconstitutional.  In 1970, the IRS extended the racial nondiscrimination laws beyond public schools by creating an internal policy mandating that all private schools seeking to qualify for Section 501(c)(3) tax exemption must operate on a racially nondiscriminatory basis.  The policy was formalized in 1975, when the Service issued Revenue Procedure 75-50, which sets forth the racial nondiscriminatory policy requirements for private schools exempt under Section 501(c)(3).