NOVEMBER 2016 • Volume 12 • Issue 11 13 Year-End Legal Considerations for Nonprofits By Elizabeth M. Guggenheimer Director of Institutional Advancement Lawyers Alliance During this holiday season, New York nonprofits are working hard to improve quality of life in New York City neighborhoods. At the same time, there are many legal issues that nonprofits should be aware of to help manage operational risk, especially as the year draws to a close. Lawyers Alliance for New York, the leading provider of pro bono business and transactional legal services for the City’s nonprofit sector, is pleased to offer suggestions. Working with a network of pro bono and staff lawyers, Lawyers Alliance provides expert corporate, tax, real estate, employment, intellectual property, and other legal services to community organizations. Dealing with Donors Acknowledging charitable contributions is a legal requirement for certain gifts and good donor relations for all gifts. While the Internal Revenue Service (IRS) permits donors to use their own bank records to document contributions under $250, donors must obtain a contemporaneous written acknowledgment from the charity to claim a deduction for contributions of $250 or more. If the payment is more than $75 and is partly a contribution and partly in exchange for goods or services, the charity is obliged to provide written documentation. IRS Guidance is available in Publication 1771, Charitable Contributions: Substantiation and Disclosure Requirements at https:// www.irs.gov/pub/irs-pdf/p1771.pdf. Giving Gifts While exchanging small food gifts or other tokens of appreciation may be appropriate, nonprofit managers should avoid accepting extravagant gifts from vendors and other for-profit entities that may create the appearance or reality of private inurement. Giving gifts to federal, state, and local officials should be avoided altogether, unless the government ethics rules are checked and followed. Charities Filings Public charities whose fiscal year ends on June 30 generally must file their completed Form 990 or Form 990-EZ with the IRS no later than November 15, unless an extension has been requested by filing Form 8868. These federal filings are necessary to maintain tax-exempt status. In addition, nonprofits registered or required to register with the Charities Bureau of the New York Attorney General’s Office generally must file their annual financial report, with form CHAR 500, within 4½ months of the close of the fiscal year, with similar rules about extensions. Prospective donors may check for compliance when making donation decisions. New Overtime Rules The U.S. Department of Labor has announced changes to the federal overtime rules that become effective on December 1, 2016. As a result, a large number of workers, including at nonprofits, will be newly eligible to receive overtime pay. However, employers do not have to pay overtime to employees that are referred to as “exempt” from the law. A significant change in the salary threshold for exempt employees is the focus of the new regulations. Read Lawyers Alliance’s practical guide for nonprofits on the new regulations, available at http:// lawyersalliance.org/pdfs/news_legal/ New_Overtime_Rules_Legal_Alert_ September_2016_FINAL.pdf. Pro Bono Legal Assistance for Queens Nonprofits Lawyers Alliance has worked with nonprofits in communities across Queens. For example, Lawyers Alliance and volunteer attorneys helped a multiservice community agency by reviewing a loan agreement and other draft loan documentation, allowing the organization to secure its future and help children, families, and older adults for years to come. Pro bono legal assistance to a local business improvement district, including review and negotiation of a plaza maintenance agreement with the Department of Transportation, helped in the creation of new pedestrian plazas. For more information on legal services for nonprofits, visit Lawyers Alliance’s website at www.lawyersalliance.org.
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