Non-Profit & Foundation Law
Non-profit organizations are like for-profit organizations except...
…everything is more difficult once you gain your 501(c)(3) status and don’t have to pay any taxes on your real estate, or income which relates to your core mission. There are rules governing the operations of your non-profit and the duties of your board members. You have to file very extensive paperwork with the government each year which is fully available to the public. The New York State Attorney General has a charities bureau which is one of the most active in the nation, if not the most active, and audits/investigations of non-profits are common in their first few years.
Most of the time the people who run it did not intentionally do anything wrong, but they just had no idea what their duties and responsibilities were as officers, directors and managers. The saddest, maybe the most ridiculous part of the whole thing, is that the people who start the non-profit make all the rules and a lot of the time people get in trouble for breaking the rules that they themselves made!
The issue is that you make rules, and hypothetically the foundations or individual donors who give you money have done so because of your mission and your commitment to a set of rules which they believe in. So when you don’t follow them, you have broken the public trust and potentially the law. There are also many rules that are set by default unless you change them in your bylaws.
Point being, there are a lot of people who are happy to set up your non-profit for you. But are they really going to put in the time to help you answer the tough questions and plan an individualized structure that will work for you and your donors and enrich the causes you care about rather than crater your efforts just when you start to become successful?
Call us for a free consultation at 646-326-9971.