Category Archives: Legal issues

More on email voting

For me the two issues around email voting are these:

  • Did the actual director send the email? Or was it his wife? or somebody else with access to the  account?
  • And this thing I’ve done myself:  “Yes I agree but what about” this situation? or “I agree and do we know for sure that” X is really the situation?

Check out this article over at BlueAvacodo ( a great resource about not-for-profits) on just this topic: Can Nonprofit Boards Vote By Email? by Gene Takagi and Emily Nicole Chan

With an email without a signature, the consent could have been sent by anyone with access to the board member’s email account. Should we accept an email that simply states “Yes” in response to a complicated proposal without further verification? If the director later claims not to have sent the email, the action may be nullified and could result in all kinds of problems, including lawsuits against the nonprofit and individual directors. And what if the email says “Yes, as long as we . . . ” Is that an effective consent? Probably not.

Read more about voting by mail here

How do I find out what my state requires to form a nonprofit?

I know bylaws. But I don’t know the rules in every state. I just found this great book that has—among other great things—an appendix that lists, state by state, what is required to form a nonprofit organization.

It’s possible that some stuff may be slightly out of date, but at least it tells you where to look in your state.

Check out this book by Mark Warda, titled, simply enough, How to Form a Nonprofit Corporation

Tax exempt status vs. just not making money

So you go to the office supply store to buy paper for your nonprofit organization. You’ve heard that means you don’t have to pay sales tax.  The clerk asks for a copy of your letter from the IRS. And you’re stymied.  Your organization doesn’t make any money so it’s nonprofit, right?

Well, not exactly.

Only the IRS can decide whether your organization falls within their parameters for being a nonprofit organization. And that has to do with a whole lot more than whether or not you make money.

How does this affect your bylaws?

The purpose you list in your bylaws should match those in your Articles of Incorporation (or Charter) that is filed with you state when you incorporate. Assuming you choose to file with the IRS for tax-exempt status, consider carefully what you say in this section.

The IRS uses that information along with a lot more to classify your organization under Section 501(c), or  other Sections, of the Internal Revenue Code.

What people generally think of as nonprofit organizations fall under Section 501(c)(3) of the IRS code. These organizations are “charitable, religious, educational, scientific, literary, testing for public safety, fostering national or international amateur sports competition, and the preventing cruelty to children or animals.” You can find the exemption requirements for these organizations here.

However, there are other kinds of nonprofits like business leagues, fraternal organizations and veterans associations. For more information on these types of organizations, check the “Requirements for Exemptions” on the IRS website here.

In general, I support the notion that you can draft your bylaws with out a lawyer. BUT this is one of the places that a legal review by an attorney specializing in nonprofit organizations could be helpful in your process.

Good luck all.