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Non-Sweet Allegations Against Hershey Trust

November 20, 2010

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Thumbnail for version as of 16:07, 15 October 2009   Milton S. Hershey, confectioner, philanthropist, and founder of The Hershey Chocolate Company.

A self-proclaimed watchdog group, Protect The Hersheys’ Children, Inc., recently sent two letters to Congress and the Pennsylvania Attorney General’s office alleging board compensation abuse and misuse of funds at the Milton Hershey School Trust (the “Trust”) and the Milton Hershey School, both Section 501(c)(3) organizations.  The alleged compensation abuses relate to the purported payment of excessive compensation to the Directors of the Hershey Trust Company, a wholly-owned for profit subsidiary of the Trust, reported to total $1,118,146 for the part time work of ten directors.  Among the allegations regarding the misuse of funds include the Trust’s purchase of an insolvent luxury golf course. 

The Trust is now forced to defend its decisions in the “court of public opinion.” 

IRS Webinar for New Charities

November 14, 2010

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IRS Webinar for New Charities

November 14, 2010

Authored by: Keith Kehrer

The IRS has announced a free webinar that will provide a fast-paced overview by two experienced IRS agents on what new tax-exempts need to do (and what they will want to avoid) to follow IRS rules and keep their tax status in good standing in years to come. This 45-minute session will be held November 18 at 2 p.m. EST.  If you are a newly formed 501(c)(3) organization or an organization that wants a refresher, you can register and start off right by clicking here.

IRS Revises Key Publication

November 6, 2010

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IRS Revises Key Publication

November 6, 2010

Authored by: Keith Kehrer

The IRS recently announced that it has revised IRS Publication 557, Tax-Exempt Status for Your Organization.  Publication 557 provides guidance regarding organizational issues, on-going filing obligations, and other tax rules impacting exempt organizations.  The Publication is an important resource for any tax-exempt organization and it is advisable that management review the Publication to help analyze whether the organization is complying with the tax law.

A Commitment to Charitable Giving and the Giving Pledge.

October 13, 2010

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Have you heard about the Giving Pledge? Forty U.S. billionaires have committed to give at least 50% of their wealth to charity. Here is the website to check it out as well as the billionaires’ personal pledge letters: givingpledge.org. The likely suspects are there: Buffett, Gates, Ellison, Turner. I’m seeing the same idea in my practice, just on a smaller scale.

I’m continually amazed at so many of our estate planning clients’ commitment to philanthropy, and these individuals aren’t necessarily the childless. Many have children, grandchildren, and actually have very strong relationships with them, not necessarily the dysfunction you might suspect when you find out a client wants to give substantially all of his or her wealth to charity, although there are occasionally those who are “disinheriting” the kids for various reasons.

A “Church” without Boundaries

September 17, 2010

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A “Church” without Boundaries

September 17, 2010

Authored by: Nathan Boyce

 

Recently, the Federal Circuit Court of Appeals upheld the revocation of church status for the Foundation for Human Understanding (106 AFTR 2d 2010-5862) because it did not satisfy the so-called associational test.  The associational test is a test used by courts to determine whether an organization constitutes a church for 501(c)(3) purposes and consists of asking whether the organization “includes a body of believers who assemble regularly for communal worship.”  The IRS and the courts generally avoid getting into the substance of the worship services of the various churches–as long as the believers associate with each other (and, in some churches, with venomous snakes).   

IRS Releases Form to Help Tax-Exempts Claim New Health Care Tax Credit

September 8, 2010

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The IRS today released a draft version of the form that tax-exempt organizations will use to calculate the small business health care tax credit when they file income tax returns next year. The IRS also announced how eligible tax-exempt organizations –– which do not generally file income tax returns –– will claim the credit during the 2011 filing season.   Tax-exempt organizations will claim the small business health care tax credit on a revised Form 990-T. The Form 990-T is currently used to report and pay the tax on unrelated business income. Form 990-T will be revised for the 2011 filing season to enable eligible tax-exempt organizations –– even those that owe no tax on unrelated business income –– also to claim the small business health care tax credit.  For more information, please click here.

Change Your Activities? Don’t Forget to Tell the IRS

August 27, 2010

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When a charity significantly expands or changes its activities, it must inform the IRS by disclosing the activities on its next filed Form 990.  The Form 990 includes questions regarding whether the filing charity has undertaken any significant activities not listed on a prior Form 990, whether the charity ceased conducting, or made significant changes in how it conducts any activities, and requires the charity to describe the changes in an attached schedule. The Form 990 also asks whether the charity made any significant changes to its articles or bylaws, and requires such documents be included with the Form 990.  Although disclosing the changes on the next Form 990 satisfies a charity’s obligation to update the IRS, it does not provide any comfort that the new activities do not jeopardize the charity’s exempt status because there is no guaranty any IRS agent will review (or approve) such changes.  

In addition to Form

IRS Offers Informational Workshops

IRS Offers Informational Workshops

August 15, 2010

Authored by: Nathan Boyce

The IRS Exempt Organizations Division is offering one-day workshops for small and mid-size section 501(c)(3) exempt organizations. Each workshop will explain what 501(c)(3) organizations must do to keep their tax-exempt status and comply with tax obligations. An introductory workshop is designed for administrators or volunteers who are responsible for an organization’s tax compliance. For additional information regarding these free IRS workshops, click here.  Similar virtual workshops are also available (click here). These are great opportunities for officers and directors of 501(c)(3) organizations.

Should your nonprofit organization obtain D&O Insurance?

July 28, 2010

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We frequently get asked by new and existing nonprofit organizations about directors and officers liability insurance (“D&O Insurance”). Should you obtain coverage? Is it worth the cost?

Yes, you should explore obtaining D&O Insurance. If you want to recruit high-quality directors, you may find that they will not serve on your board without seeing a copy of your policy. They want to know that they will be protected. In addition, their employers may not allow them to serve on your board unless you have D&O Insurance.

On a related note, you might also want to review your organizational documents for provisions that indemnify your directors and officers against certain acts. The same potential directors who want to see a copy of your D&O Insurance policy may also want to see your indemnification provisions.

There are a number of organizations, some of them nonprofit themselves, that provide affordable D&O Insurance to

Disaster Relief Programs for Company Foundations

A corporate sponsored charitable organization may conduct disaster relief and emergency hardship assistance programs for the benefit of its sponsoring corporation’s employees. With respect to a corporate sponsored “private foundation” (e.g., where the charitable organization receives substantially all of its support from the corporation), relief may be provided to employees who are victims of any Presidentially declared disaster, which may include an earthquake, flood, hurricane, or tornado. With respect to a corporate sponsored “public charity” (e.g., where the charitable organization receives support from the corporation and employees), relief may be provided to employees who are victims of any Presidentially declared disaster or any emergency hardship resulting from a severe personal crisis, such as a fire, accident, illness, death, or crime.

Relief must be provided based on an objective determination of need and the selection committee should be comprised of individuals who are not in a position to exercise substantial

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