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Legal and Tax Issues for Nonprofit Associations George E. Constantine, III, Esq. Venable, LLP, Washington, DC (202) 344-4790

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Presentation on theme: "Legal and Tax Issues for Nonprofit Associations George E. Constantine, III, Esq. Venable, LLP, Washington, DC (202) 344-4790"— Presentation transcript:

1 Legal and Tax Issues for Nonprofit Associations George E. Constantine, III, Esq. Venable, LLP, Washington, DC (202) Legal and Tax Issues for Nonprofit Associations George E. Constantine, III, Esq. Venable, LLP, Washington, DC (202) Fall CAE Immersion 2006 The Center for Association Leadership

2 Presentation September 7, 2006 George E. Constantine, III, Esq. Counsel to tax-exempt trade associations, professional societies Former Staff Counsel for the American Society of Association Executives Concentrates practice on tax, contracts, intellectual property licensing, election law, corporate governance and other issues affecting tax-exempt, nonprofit corporations.

3 Presentation September 7, 2006 Today’s Program Introduction Legal Issues GovernanceContractsTax Intellectual Property AntitrustMarketing Application to Association Activities MeetingsPublications Board activities Contracting with Vendors Promoting events Other

4 Presentation September 7, 2006 Corporate Governance Hierarchy of Authority State Nonprofit Corporation Law (statute and common law) Articles of Incorporation Bylaws Board Policies and Procedures Unwritten Common Practices

5 Presentation September 7, 2006 Corporate Governance Governance Structure Board of directors Executive committee Other committees of the board (nominating, finance) Other committees Staff

6 Presentation September 7, 2006 Corporate Governance Fiduciary Duties CareLoyaltyObedience

7 Presentation September 7, 2006 Corporate Governance Roles of board members are defined by articles, bylaws, board policies manual, common practice. Board sets the policy and the mission of the organization; staff is charged with carrying out the policy and the mission. Boards are generally only allowed to act in a meeting. While members may have some powers, power of the board of directors is paramount.

8 Presentation September 7, 2006 Contracts What is a contract? OfferAcceptanceConsideration Memorandum of understanding Letter of intent Oral vs. written Who can bind your organization?

9 Presentation September 7, 2006 Contracts — Tips for Negotiating, Reviewing Start with the RFP Everything is Negotiable Warranty Liability Issues Payment Terms Intellectual Property Term and termination Read Everything Be Willing to Walk Away “Special” considerations

10 Presentation September 7, 2006 Taxation The Basics Associations are usually exempt from tax under Section 501(c)(6) or Section 501(c)(3). But that does not mean they are exempt from all taxes.

11 Presentation September 7, 2006 Taxation Basic requirements (c)(6) Not organized for profit Membership organization with meaningful membership support No “private inurement”

12 Presentation September 7, 2006 Taxation Basic requirements (c)(3) Religious, charitable, scientific, testing for public safety, literary or educational purposes (among others) No “private inurement” No “private benefit” No substantial part is “carrying on of propaganda” or other wise attempting to influence legislation No political actvities

13 Presentation September 7, 2006 Taxation Unrelated Business Income Tax Trade or business Regularly carried on Not substantially relatedExceptions Royalty Sponsorship Qualified conventions and trade shows Investment income

14 Presentation September 7, 2006 Intellectual Property Copyright: Generally protects original works of authorship, such as books, articles, songs, software, paintings Trademarks: Generally those items that readily identify the association or its projects/activities, such as names, logos, slogans

15 Presentation September 7, 2006 Intellectual Property Copyright Must be an original work (not copied) Must consist of “expression” (not just ideas) Must be fixed in a tangible form (when you put pen to paper)

16 Presentation September 7, 2006 Intellectual Property CopyrightRegistration Fair use Works for hire (association volunteers) Transfers and licenses

17 Presentation September 7, 2006 Antitrust Sherman Antitrust Act Federal Trade Commission Act Clayton Act Robinson-Patman Act

18 Presentation September 7, 2006 Antitrust Contract, combination or conspiracy unreasonably in restraint of trade Must be some form of agreement to unlawfully restrain trade — agreement need not be formal

19 Presentation September 7, 2006 Antitrust Association activities Membership restrictions StandardsCertificationMeetings Information reporting Cooperative buying and selling Lobbying

20 Presentation September 7, 2006 Marketing Laws promotion (CAN-SPAM) Fax promotion (new law enacted)

21 Presentation September 7, 2006 Application to Association Activities MeetingsPublications Board activities Contracting with Vendors Promoting events Other

22 Presentation September 7, 2006 Questions? ons ons

23 Presentation September 7, 2006 Contact Information George E. Constantine, III Attorney-at-Law Venable LLP 575 7th Street, NW Washington, DC Phone: Fax:


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