CASE STUDY ASSIGNMENt

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CASE STUDY ASSIGNMENT

The lessons learned in this course, are first and foremost, practical tools for assessing the governance strength and stability of nonprofit organizations. For this assignment, I am asking you to conduct an assessment of a real nonprofit organization, using the attached checklist and your knowledge from this course. Specifically, you should:

1. Identify a nonprofit organization willing to allow you to conduct the assessment. I will provide you with a document to share that states you are not providing legal advice (an ethical requirement) and also indicates that the information provided by the organization is for educational purposes and will not be shared outside of this class. You may select a nonprofit you are familiar with or you can contact me and I will connect you with one. For this assignment, I would recommend choosing a small organization,

2. Use the checklist to guide the interview with your chosen organization. Take careful notes on what you learn, particularly where an organization appears to be out of compliance. Apply what you have learned in this course to apply each of the survey items. If the organization is willing to share its governance documents, take the time to review them as well.

3. Using the results of your review, draft a memo (directed to the board of directors of the organization) assessing the organization's "legal health." Note areas where there may be compliance issues and make recommendations on how to address. You may use your textbook as a resource.

Your memo will be graded on quality of composition, strength of your analysis and your mastery of the legal terms involved.

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Nonprofit Legal Checklist (Use this document to interview a nonprofit executive or board member. Record all information, write a memo explaining your results and any advice as to how to improve their governance structures and legal compliance.) 1. The organization maintains (in secured electronic or hard copy form) a corporate record book with current, legible copies of the following (available to the public): A. B. C. D. E. F. G. H. I. J. K. L. ___ Certificate of Incorporation from the Secretary of State ___ Articles of Incorporation, with all updated amendments ___ Current Bylaws ___ 501(c)(3) determination letter from the IRS ___ Application to IRS (Form 1023) for tax-exempt status ___ Annual reports to the Maryland Secretary of State ___ Names, addresses, and terms of office of all officers and directors ___ List of current members and their addresses (for membership orgs only) ___ Written copies of required insurance policies ___ Contracts or leases ___ Minutes of all meetings of the members, board and committees of the board ___ IRS Form 990 for the 3 most recent tax years 2. The Articles of Incorporation and By-Laws include all elements required by the IRS’ Organizational Test. The Articles and By-Laws accurately describe the organization’s current structure and procedures. The Board of Directors reviews these governing documents annually to ensure actual practice is consistent with these documents 3. The Organization has a Registered Agent, who still resides or works at the address on file with the State Department of Assessments and Taxation. 4. The Organization files an annual report with the Maryland Secretary of State and is authorized to fundraise in the state. A personal property tax is filed annually with the state to keep the corporate entity in good standing. 5. The Organization prepares and maintains financial statements. The Board regularly reviews these financial statements, and reviews and approves the annual IRS Form 990. 6. If the Organization receives more than $50,000 in gross receipts each year, it files an annual Form 990 or 990 EZ with the IRS. (If the organization does not receive more than $50,000 in annual gross receipts, it files a 990N (e-Postcard). 7. The Organization has Directors & Officers (D & O) insurance and the board has reviewed the policy and understands what it does and does not cover. 8. The Organization notifies the IRS of any material changes to its exempt purposes or activities, or amendments to the Articles of Incorporation or Bylaws since applying for 501(c)(3) status. 9. The Organization has a written conflict of interest policy that is followed and reviewed annually by board members. 10. Any transactions the Organization undertakes with insiders, known as “disqualified persons” (such as board members, senior executives, etc.), including setting executive salaries, is: (1) approved by the board or an independent committee, no members of which have a personal or financial interest in the transaction; (2) based on appropriate comparability data; and (3) concurrently documented by the board or committee which states the basis for its approval in writing, e.g., through minutes 11. The Organization does not endorse candidates for political office and does not participate in any political campaign for or against a candidate for public office. 12. Lobbying activities, if any, are an “insubstantial” part of the Organization’s overall activities. If participating in any lobbying activities, the board has made a 501(h) election with the IRS by filing Form 5768. 13. The Organization has a copy of its 501(c)(3) determination letter from the IRS, and understands its proper status as a “public charity” or a “private foundation.” 14. If the Organization receives funds from regularly conducted business activities that are unrelated to its exempt purpose, it correctly accounts for those funds, and understands how to report and pay taxes on this unrelated business income. 15. The Organization understands its obligation to pay any state sales, business and occupation, or property taxes, and understands whether it is entitled to any exemptions from these taxes. 16. If the Organization solicits charitable donations from the general public, it complies with Maryland’s Charitable Solicitations Act, including registration and annual reporting requirements. 17. The Organization has considered adopting a written whistleblower policy and if adopted, follows that policy (highly recommended). 18. The Organization has considered adopting a written document retention policy that ensures documents are retained and secured for the appropriate period of time, and if adopted, follows that policy (highly recommended).
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Explanation & Answer

Attached.

Nonprofit Legal Checklist
(Use this document to interview a nonprofit executive or board member. Record all
information, write a memo explaining your results and any advice as to how to
improve their governance structures and legal compliance.)
1. The organization maintains (in secured electronic or hard copy form) a corporate
record book with current, legible copies of the following (available to the public):
A.
B.
C.
D.
E.
F.
G.
H.
I.
J.
K.
L.

___ Certificate of Incorporation from the Secretary of State
___ Articles of Incorporation, with all updated amendments
___ Current Bylaws
___ 501(c)(3) determination letter from the IRS
___ Application to IRS (Form 1023) for tax-exempt status
___ Annual reports to the Maryland Secretary of State
___ Names, addresses, and terms of office of all officers and directors
___ List of current members and their addresses (for membership orgs only)
___ Written copies of required insurance policies
___ Contracts or leases
___ Minutes of all meetings of the members, board and committees of the board
___ IRS Form 990 for the 3 most recent tax years

2. The Articles of Incorporation and By-Laws include all elements required by the IRS’
Organizational Test. The Articles and By-Laws accurately describe the organization’s
current structure and procedures. The Board of Directors reviews these governing
documents annually to ensure actual practice is consistent with these documents
3. The Organization has a Registered Agent, who still resides or works at the address on
file with the Sta...