legal and tax issues for nonprofit associations george e. constantine, iii, esq. venable, llp,...

Legal and Tax Issues Legal and Tax Issues for Nonprofit for Nonprofit AssociationsAssociationsGeorge E. Constantine, III, Esq.George E. Constantine, III, Esq.Venable, LLP, Washington, DCVenable, LLP, Washington, DC

(202) 344-4790(202) [email protected]@venable.com

Fall CAE Immersion 2006

The Center for Association Leadership

Presentation September 7, 2006

George E. Constantine, III, Esq.George E. Constantine, III, Esq.

Counsel to tax-exempt trade Counsel to tax-exempt trade associations, professional societiesassociations, professional societiesFormer Staff Counsel for the Former Staff Counsel for the American Society of Association American Society of Association ExecutivesExecutivesConcentrates practice on tax, Concentrates practice on tax, contracts, intellectual property contracts, intellectual property licensing, election law, corporate licensing, election law, corporate governance and other issues governance and other issues affecting tax-exempt, nonprofit affecting tax-exempt, nonprofit corporations.corporations.


Today’s ProgramToday’s Program

IntroductionIntroduction

Legal IssuesLegal IssuesGovernanceGovernance

ContractsContracts

TaxTax

Intellectual PropertyIntellectual Property

AntitrustAntitrust

MarketingMarketing

Application to Application to Association Association ActivitiesActivities

MeetingsMeetings

PublicationsPublications

Board activitiesBoard activities

Contracting with Contracting with VendorsVendors

Promoting eventsPromoting events

OtherOther


Corporate GovernanceCorporate Governance

Hierarchy of AuthorityHierarchy of AuthorityState Nonprofit Corporation Law (statute State Nonprofit Corporation Law (statute and common law)and common law)

Articles of IncorporationArticles of Incorporation

BylawsBylaws

Board Policies and ProceduresBoard Policies and Procedures

Unwritten Common PracticesUnwritten Common Practices



Governance StructureGovernance StructureBoard of directorsBoard of directors

Executive committeeExecutive committee

Other committees of the board Other committees of the board (nominating, finance)(nominating, finance)

Other committeesOther committees

StaffStaff



Fiduciary DutiesFiduciary DutiesCareCare

LoyaltyLoyalty

ObedienceObedience



Roles of board members are defined by Roles of board members are defined by articles, bylaws, board policies manual, articles, bylaws, board policies manual, common practice.common practice.Board sets the policy and the mission of Board sets the policy and the mission of the organization; staff is charged with the organization; staff is charged with carrying out the policy and the mission.carrying out the policy and the mission.Boards are generally only allowed to act in Boards are generally only allowed to act in a meeting.a meeting.While members may have some powers, While members may have some powers, power of the board of directors is power of the board of directors is paramount.paramount.


ContractsContracts

What is a contract?What is a contract?OfferOfferAcceptanceAcceptanceConsiderationConsideration

Memorandum of understandingMemorandum of understandingLetter of intentLetter of intentOral vs. writtenOral vs. writtenWho can bind your organization?Who can bind your organization?


Contracts —Contracts —Tips for Negotiating, Tips for Negotiating,

Reviewing Reviewing

Start with the Start with the RFPRFPEverything is Everything is NegotiableNegotiableWarrantyWarrantyLiability IssuesLiability IssuesPayment TermsPayment Terms

Intellectual Intellectual PropertyPropertyTerm and Term and terminationterminationRead EverythingRead EverythingBe Willing to Be Willing to Walk AwayWalk Away““Special” Special” considerationsconsiderations


TaxationTaxation

The BasicsThe BasicsAssociations are usually exempt Associations are usually exempt from tax under Section 501(c)(6) from tax under Section 501(c)(6) or Section 501(c)(3).or Section 501(c)(3).

But that does not mean they are But that does not mean they are exempt from exempt from all all taxes.taxes.


TaxationTaxation

Basic requirements (c)(6)Basic requirements (c)(6)•Not organized for profit•Membership organization with

meaningful membership support•No “private inurement”


TaxationTaxation

Basic requirements (c)(3)Basic requirements (c)(3)• Religious, charitable, scientific ,

testing for public safety, literary or educational purposes (among others)

• No “private inurement”• No “private benefit”• No substantial part is “carrying on of

propaganda” or other wise attempting to influence legislation

• No political actvities


TaxationTaxation

Unrelated Business Income TaxUnrelated Business Income Tax• Trade or business• Regularly carried on• Not substantially related

ExceptionsExceptions• Royalty• Sponsorship• Qualified conventions and trade

shows• Investment income



Copyright: Generally protects Copyright: Generally protects original works of authorship, original works of authorship, such as books, articles, songs, such as books, articles, songs, software, paintingssoftware, paintingsTrademarks: Generally those Trademarks: Generally those items that readily identify the items that readily identify the association or its association or its projects/activities, such as projects/activities, such as names, logos, slogans names, logos, slogans



CopyrightCopyrightMust be an original work (not Must be an original work (not copied)copied)

Must consist of “expression” (not Must consist of “expression” (not just ideas)just ideas)

Must be fixed in a tangible form Must be fixed in a tangible form (when you put pen to paper)(when you put pen to paper)



CopyrightCopyrightRegistrationRegistration

Fair useFair use

Works for hire (association Works for hire (association volunteers)volunteers)

Transfers and licensesTransfers and licenses


AntitrustAntitrust

Sherman Antitrust ActSherman Antitrust Act

Federal Trade Commission ActFederal Trade Commission Act

Clayton ActClayton Act

Robinson-Patman ActRobinson-Patman Act


AntitrustAntitrust

Contract, combination or Contract, combination or conspiracy unreasonably in conspiracy unreasonably in restraint of traderestraint of trade

Must be some form of Must be some form of agreement to unlawfully restrain agreement to unlawfully restrain trade — agreement need not be trade — agreement need not be formalformal


AntitrustAntitrust

Association activitiesAssociation activitiesMembership restrictionsMembership restrictionsStandardsStandardsCertificationCertificationMeetingsMeetingsInformation reportingInformation reportingCooperative buying and sellingCooperative buying and sellingLobbyingLobbying


Marketing LawsMarketing Laws

E-mail promotion (CAN-SPAM)E-mail promotion (CAN-SPAM)

Fax promotion (new law Fax promotion (new law enacted)enacted)


Application to Application to Association ActivitiesAssociation Activities

MeetingsMeetings

PublicationsPublications

Board activitiesBoard activities

Contracting with VendorsContracting with Vendors

Promoting eventsPromoting events

OtherOther


Questions?Questions?

http://www.venable.com/associations/publicatiohttp://www.venable.com/associations/publicationsns


Contact InformationContact Information

George E. Constantine, IIIGeorge E. Constantine, IIIAttorney-at-LawAttorney-at-LawVenable LLPVenable LLP575 7th Street, NW575 7th Street, NWWashington, DC 20004-1601Washington, DC 20004-1601Phone: 202-344-4790Phone: 202-344-4790Fax: 202-344-8300Fax: 202-344-8300Email: Email: [email protected]@venable.com

legal and tax issues for nonprofit associations george e. constantine, iii, esq. venable, llp,...

Documents

private inurement slide

association leadership

political actvities

tax issues

board nominating

board policies manual

nonprofit associations

organization staff