July 2023

Nonprofit Organizations Digest

4 min

Venable's Nonprofit Organizations Practice is pleased to share recent articles, presentations, and video-recorded webinars by our attorneys. This digest brings together some of our most interesting and useful materials, available for your use in tackling the difficult legal challenges facing your organization.

Notable Articles and Publications

Regulating Conduct and Ethics While Minimizing Legal Risks

Venable partner George Constantine presented "Regulating Conduct and Ethics While Minimizing Legal Risks" at the ACCESSE23 Leadership Conference hosted by CESSE in Detroit on July 12. Organization leaders face a growing number of complaints about member conduct at meetings, on social media, and in their professional lives. Many societies have decided that enough is enough—rather than hide behind a policy of non-enforcement, they are now pursuing resolutions that may end with member suspension or expulsion. However, organizations need to take care to minimize legal risk while they enforce codes of ethics and conduct. Expulsion and suspension decisions that are arrived at hastily and are not pursuant to established procedures may be challenged in costly court actions as inconsistent with the organization’s internal documents and applicable law.

IRS Takes Skeptical View of NIL Collectives

In a recent memorandum issued by the Office of Chief Counsel, the Internal Revenue Service concluded that many "NIL Collectives" may not qualify as tax-exempt under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended. Specifically, the IRS suggested that such organizations are not organized and operated exclusively in furtherance of charitable or educational purposes. Rather, by virtue of their functions, they operate in furtherance of the private interests of student-athletes, a group that the IRS suggested does not, in and of itself, constitute a "charitable class."

Myths about Lobbying, Political Activity, and Tax-Exempt Status – Are You Limiting Opportunities to Advance Your Nonprofit Mission?

Many 501(c)(3) or 501(c)(6) organizations shy away from lobbying and election-related activities out of concern for their tax status. But by failing to employ lobbying and political tactics, nonprofit organizations and associations may be neglecting activities that may contribute to the success of their mission. This article explores and debunks some of the most common misconceptions in this area; the first section relates to 501(c)(3) organizations, and the second section relates to 501(c)(6) organizations.

Managing Nonprofit Affiliated Entities

Managing and working with affiliated entities—with different tax statuses and different missions—is seldom easy. How can entities share employees and resources when one entity wants to engage in issue advocacy, political activity, or other activities that may be restricted or prohibited if attributed to an affiliate? Executives and counsel must grapple with maintaining the requisite separateness among the related entities while maximizing the efficiencies that should go along with having multiple entities under one umbrella. Join our panelists as they share important tips on managing tax exemption, legal, and operational risks through appropriate policies, agreements, and training.

Corporate Sponsorship in the Age of Social Media

On June 9, 2023, at the Joint TE/GE Council Meeting, Cristina Vessels explored corporate sponsorship matters combined with social media challenges and risks compared to the potential benefits. Because many nonprofits and their corporate sponsors are active on a variety of social media platforms to engage in outreach and increase visibility, among other reasons, this session covers new challenges and risks for both tax-exempt organizations themselves and in their engagement with corporate sponsors.

New FCC Robocall Rules for Nonprofit and Political Calls Begin July 20, 2023

Effective July 20, 2023, nonprofit organizations and others making non-commercial calls using an artificial or prerecorded voice (known as robocalls) to residential lines may make no more than three such calls to a particular residential line within any consecutive 30-day period without prior express consent of the called party and must give the called party the ability to opt out of any future calls they do not wish to receive.

Playing the Long Game: Everything You Need to Know About Restricted Grants and Endowments

Restricted gifts and endowments play an important role in enabling nonprofits to address specific needs and provide for their short- and long-term financial health and stability. In a recent webinar, Yosef (Yossi) Ziffer, a partner in Venable's Transactional Tax and Nonprofits Practice Group, delved into restricted gifts, endowments, and some of the interesting opportunities, quandaries, and scenarios that these funds present for nonprofits.

SECURE 2.0 Act – New Retirement Plan Provisions

SECURE 2.0, major legislation impacting 403(b), 401(k), and other tax-favored plans containing over 90 provisions, was enacted on December 29, 2022. The legislation includes changes relating to catch-up contributions, required minimum distributions, required coverage of part-time employees, and many other important topics.