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 In General, Nonprofits, Social Capital, Startup Corner, Tax

The Various Models of Fiscal Sponsorship: How much do the differences matter?

Many social enterprises go through a developmental phase of fiscal sponsorship – being the recipient organization (fiscal sponsoree) relative to a sponsoring 501(c)(3) organization (fiscal sponsor). The fiscal sponsor typically provides additional support to a sponsoree – read on to better understand the subtle differences.

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Founders of Nonprofits Ask: Which Tax-Exemption Application Should I File?

The IRS provides two forms of its Form 1023: Application for Recognition of Tax-Exempt Status, and most organizations seeking tax-exemption under Section 501(c)(3) will need to file either the standard, “long form” Form 1023, or the much shorter, “streamlined” Form 1023-EZ (though a handful of organizations may qualify for tax-exempt 501(c)(3) status without filing either of these forms). Read on for a few FAQs from experienced nonprofit founders.

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IRS: “Impact Investment Advising is not a Charitable Activity”

In October 2020, the IRS released a private letter ruling (PLR 202041009) in which the IRS denied tax-exempt status to a nonprofit formed for the purpose of increasing social welfare, where the primary program activity consisted of serving as an investment advisor for impact-oriented investors and investment opportunities. Read on for how this may affect how you approach the IRS.

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Nonprofits owning for-profits: Recent IRS guidance on “excess business holdings”

Private foundations and donor-advised funds – or DAFs – are prohibited from holding more than 20 percent of a non-exempt business. This rule prevents affected organizations from purchasing such a prohibited interest, but it can also be problematic when affected organizations are gifted a prohibited business interest. Read on for information on how to navigate hybrid strategies.

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