Welcome to your daily briefing on nonprofit developments in Massachusetts. Today we're covering 4 key stories including updates on massachusetts nonprofit headlines, background & context. Let's dive in.
1 story
ProPublica has compiled IRS data from millions of nonprofit tax filings since 2013, allowing users to view details like executive compensation, revenue, and expenses, along with access to tax filings dating back to 2001.
This resource is invaluable for nonprofit professionals in MA seeking transparency and insights into the financial health of organizations in the sector.
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3 stories
Most states require charities soliciting donations from their residents to register before solicitation, regardless of where the charity is based. "Solicitation" includes web fundraising pages accessible to residents, not just direct mail. Compliance gaps surface during state attorney-general inquiries or unrelated litigation discovery.
Penalties range from civil fines to suspension of solicitation rights in the state. Larger consequences include negative coverage in donor research databases that fund foundation grants.
Unrelated business income tax applies when an activity is regularly carried on, is a trade or business, and is not substantially related to the exempt purpose. Common surprises: corporate-sponsored events with naming rights that look like advertising, affinity credit-card royalties that include co-marketing services, and gift-shop sales of items unrelated to the mission.
UBIT exposure can cost both tax and exempt status if the unrelated business becomes substantial. The line between sponsorship (excluded) and advertising (included) is narrow and case-specific.
The IRS-recommended COI policy requires (1) annual disclosure by all directors and key employees, (2) a process for review of any disclosed conflict, (3) recusal procedures, and (4) documentation in board minutes. Policies that have only the disclosure form without the review and recusal process do not satisfy the recommendation.
A weak COI policy is a Schedule L disclosure waiting to happen, and Schedule L disclosures correlate with future IRS examination selection.
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