It’s been a long time since the Nonprofiteer practiced law, and she never specialized in writing bylaws for 501(c)(3) organizations, so it came as news to her this week that the IRS apparently now requires every such organization to include in its bylaws a series of statements pledging to abide by the law in very specific ways. Apparently the concern is that, without these statements, 501(c)(3)s would organize themselves for non-charitable purposes, distribute profits to their Board members, engage in electoral politics, conduct forbidden activities and fail to distribute their assets to other charities on dissolution.
The prescribed provisions that aren’t merely redundant to state law or the tax code itself verge on interfering with legitimate advocacy activities and/or on being absurd, e.g. most nonprofits HAVE no net earnings to distribute. But the Nonprofiteer is grateful to the client which educated her that, in fact, this nonsense has to be appear in the bylaws, because apparently having it merely appear in the law is insufficient.
Section 1. Said organization is organized exclusively for charitable, religious, educational, or scientific purposes, including, for such purposes, the making of distributions to organizations that qualify under section 501(c)(3) of the Internal Revenue Code, or the corresponding section of any future federal tax code.
Section 2. No part of the net earnings of the organization shall inure to the benefit of, or be distributable to its members, trustees, officers, or other private persons, except that the organization shall be authorized and empowered to pay reasonable compensation for services rendered and to make payments and distributions in furtherance of the purposes set forth in the purpose clause hereof.
Section 3. No substantial part of the activities of the organization shall be the carrying on of propaganda, or otherwise attempting to influence legislation, and the organization shall not participate in, or intervene in (including the publishing or distribution of statements) any political campaign on behalf of or in opposition to any candidate for public office.
Section 4. Notwithstanding any other provision of these articles, the organization shall not carry on any other activities not permitted to be carried on (a) by an organization exempt from federal income tax under section 501(c)(3) of the Internal Revenue Code, or the corresponding section of any future federal tax code, or (b) by an organization, contributions to which are deductible under section 170(c)(2) of the Internal Revenue Code, or the corresponding section of any future federal tax code.
Section 5. Upon the dissolution of the organization, assets shall be distributed for one or more exempt purposes within the meaning of section 501(c)(3) of the Internal Revenue Code, or the corresponding section of any future federal tax code, or shall be distributed to the federal government, or to a state or local government, for a public purpose. Any such assets not so disposed of shall be disposed of by a Court of Competent Jurisdiction of the county in which the principal office of the organization is then located, exclusively for such purposes or to such organization or organizations, as said Court shall determine, which are organized and operated exclusively for such purposes.