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Nonprofit Organizations and Independent Contractors

By: Erica Weintraub, Law Clerk

A common issue that arises at small nonprofit organization is how to classify the individuals who perform work for them. Nonprofit organizations have to determine whether individuals are independent contractors or common law employees. This blog post discusses how to distinguish the two types of workers, filing requirements for each type of worker and the potential consequences of misclassification.

The first factor to consider is the amount of control the employer has over the work being done by the individual.[i] Is the worker free to control the work he or she is submitting, and, if so, to what degree? In considering the control factor, the IRS looks at several types of control: behavioral control, financial control, and the type of relationship between the worker and organization.[ii]

Behavioral control concerns factors such as the instructions given by the organization to the worker.

  • Does the organization direct when and where the work will be completed?
  • Does the organization prescribe what instruments and materials to use?
  • Does the organization control who the worker hires to complete the projects? Does the organization dictate the order and sequence in which the work is completed?
  • Does the company control where the worker buys supplies from?

The more the organization seems to direct and control these types of details, the more likely it is that the worker is not an independent contractors.

Financial control considers how much direction and control the organization has over the business aspects of the worker’s job. Is the worker reimbursed for business expenses? Independent contractors are less likely to be reimbursed for business expenses than a common law employee. Another consideration is how the worker is paid. Employees tend to have set hourly wages or salaries. Independent contractors are typically paid either flat rates or for set time or materials. Another important consideration is that independent contractors are typically able to freely seek out business opportunities. If the worker is limited in this aspect, then the worker is likely an employee.

The type of relationship between the worker and organization is an important factor.[iii] Is the relationship permanent? If so, the worker is likely an employee. Is the worker getting benefits such as insurance? If so, then the worker is also likely an employee. Is the work being performed a key aspect of the organization’s regular business? If the work being performed is part of a key aspect of the organization’s regular business, the organization likely has more direction and control over such work. This would be indicative of a common law employee.

For employees, nonprofit organizations have to withhold income taxes, withhold and pay social security and Medicare taxes, and pay unemployment taxes on wages paid to employees.[iv] Generally, organizations do not have to withhold or pay any taxes on payments to independent contractors.[v] However, if four conditions are met, an employer must generally report a payment as nonemployee compensation.[vi] These conditions are: (1) payment was made to a non-employee, (2) for services in the course of the employer’s trade or business (which includes government agencies and nonprofit organizations), (3) with that payment being made to an individual, partnership, estate or—sometimes—a corporation and (4) these payments were at least $600 during the year.[vii] This is usually done by filing a 1099 for each contractor with the IRS. The idendpendent contractor is also given a copy and must report the total payments received as income on his or her tax filing.

The penalties for misclassification can be severe. If a misclassification occurs, the organization can not only be held liable for the taxes not paid on the wages, but the organization can also be held liable for interest on such wages and additional penalties for the misclassification.[viii]

If a nonprofit organization is having difficulties distinguishing between an independent contractor or a common law employee, a good starting point would be IRS.gov, which lays out all the factors mentioned above. Additionally, examples of the two types of relationships are described by the IRS here: https://www.irs.gov/pub/irs-pdf/p15a.pdf.[ix]

If you have questions about your nonprofit’s workers status please schedule an appointment with Side Project Managing Attorney Jeff Fromknecht today: http://sideprojectinc.org/legal-help/

References

[i] Internal Revenue Service, Employer’s Supplemental Tax Guide, Publication 15A (December 23, 2015), available at https://www.irs.gov/pub/irs-pdf/p15a.pdf.

[ii] Id.

[iii] Id.

[iv] Internal Revenue Service, Exempt Organizations: Independent Contractors vs. Employees (March 19, 2016), available at https://www.irs.gov/charities-&-non-profits/exempt-organizations:-independent-contractors-vs.-employees.

[v] Id.

[vi] Internal Revenue Service, Reporting Payments to Independent Contractors, (June 14, 2016), available at https://www.irs.gov/businesses/small-businesses-self-employed/reporting-payments-to-independent-contractors.

[vii] Id.

[viii] Internal Revenue Service, Exempt Organization: Independent Contractors vs. Employees, supra note 18.

[ix] Internal Revenue Service, Employer’s Supplemental Tax Guide, Publication 15A (December 23, 2015), available at https://www.irs.gov/pub/irs-pdf/p15a.pdf.

IRS Publication 557: A Resource for New and Start Up Nonprofits

By Mariana Muci

The IRS writes and publishes an informational booklet that gives taxpayers detailed guidance on tax issues. IRS Publication 557 deals specifically with non-profit organizations.[i] This publication discusses and provides explanations for the rules and procedures that organizations must adhere to in order to receive an appropriate tax-exempt status ruling or determination letter.[ii] Directors, officers, and other persons responsible for ensuring an organization’s compliance with tax laws and maintaining exempt status should always keep a copy and refer back to Publication 557 and be aware of any possible changes to it. The publication is divided into six chapters, which are summarized below.

Chapter 1: Application, Approval, and Appeal Procedures

The first chapter of this “guidebook” provides general information about the procedures for obtaining recognition of tax-exempt status.[iii] It discusses the application procedures that generally apply to all organizations discussed in this publication.[iv] This section helps the organization determine the appropriate form that must be filed and what information to include. This includes, Employer Identification Number (EIN), organizing documents, bylaws, description of activities, and financial data.[v] Additionally, this chapter explains in detail the rulings and determination letters, the appeals procedure if an adverse letter is proposed, and group exemption letters.[vi]

Chapter 2: Filing Requirements and Required Disclosures

Most exempt organizations, including private foundations, must file various returns and reports at some time during or following the close of their accounting period.[vii] This chapter contains detailed information about annual filing requirements and other matters that may affect your organization’s tax-exempt status.[viii] Additionally, this section explains what information relating to the activities of the organization must be disclosed for an exempt organization to maintain its exempt status.[ix] Therefore, this is a very important chapter for exempt organizations to have handy.

Chapter 3: Section 501(c)(3) Organizations

An organization may qualify for exemption under Section 501(c)(3) from federal income tax if it is organized and operated exclusively for religious, charitable, scientific, public safety testing, literary, educational, fostering national or international amateur sports, or the prevention of cruelty to children or animals.[x]

This chapter is important because it contains detailed information on various matters affecting section 501(c)(3) organizations, including contributions to 501(c)(3) organizations, applications for recognition of exemption, articles of organization, educational organizations and private schools, organizations providing insurance, private foundations and public charities, and lobbying expenditures.[xi]

Chapter 4: Other Section 501(c) Organizations

The IRS recognizes 32 different Section 501 categories.[xii] This chapter provides specific information for each organization described in section 501(c), other than those organizations that are described in section 501(c)(3).[xiii] To qualify for exempt status, an organization under 501(c) must meet specific tests outlined in this chapter.[xiv]

Chapter 5: Excise Taxes

An excise tax may be imposed on certain tax-exempt organizations.[xv] This chapter provides information on when excise taxes may be imposed.[xvi] It also discusses prohibited tax shelter transactions, excess benefit transactions, excess business holdings, taxable distributions of sponsoring organizations, taxes on prohibited benefits distributed from donor-advised funds, excise taxes on private foundations, excise taxes on 501(c)(21) black lung benefit trusts, and excise tax on failure to meet the community health needs assessment requirements of hospitals.[xvii]

IRS Publication 557 provides necessary guidance to filing a well-articulated form 1023 and 1024. If your organization is one of the organizations described in this publication and is seeking recognition of tax-exempt status from the IRS, you should begin by downloading the full version found here on the IRS’ website.

[i] See Internal Revenue Service, Publication 557: Tax Exempt Status for Your Organization, Department of the Treasury: Internal Revenue Service (05/27/2016), https://www.irs.gov/pub/irs-pdf/p557.pdf.
[ii] Id.
[iii] Id.
[iv] Id.
[v] Id.
[vi] Id.
[vii] Id.
[viii] Id.
[ix] Id.
[x] I.R.C. § 501(c)(3) (2016).
[xi] Internal Revenue Service, supra note 1.
[xii] Id.
[xiii] Id.
[xiv] Id.
[xv] Id.
[xvi] Id.
[xvii] Id.

Political Activity at your 501(c)(3) Nonprofit Organization

Election season is almost in full swing. Every year we are asked by nonprofit executive directors about policity actitivity at nonprofits. Americans will be electing a new President in 2016. There are many important issues at stake and without a doubt issues that impact the work of your nonprofit organization and your stakeholders. Despite recently court ruling holding corporations to have certain rights under the Bill of Rights, the IRS has long-standing restrictions on the advocacy and political activity of 501(c)(3) nonprofit corporations. This is the first of a series of blog posts that will explore these rules and regulations. This post focuses on 501(c)(3) nonprofit organizations and political advocacy and activity.

This blog is presented for informational purposes only. Please contact a licensed attorney if you have any specific questions or concerns about the political activity at your nonprofit organizations.

NO PARTISAN POLITICAL ACTIVITY

The IRS completely prohibits all partisan political activity. This means that 501(c)(3) nonprofit organizations cannot “directly, or indirectly, participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of or in opposition to any candidate for public office.”[1] Doing so could result in loss of the organization’s tax-exempt status, resulting in taxes being imposed on both the organization and its Board of Directors and officers.[2]

NONPARTISAN POLITICAL ACTIVITY IS USALLY OK

Organizations can engage in a variety of non-partisan political activities. This includes voter education, registration and ‘get out and vote drives’.[3]  The most important factor is that these activities are not biased or favor one party or candidate over another.[4]  501(c)(3) organizations can engage in non-partisan activity designed to educate voters, such as public forums and the publication (print or electronic) of voter education guides.[5]  It is also permissible to conduct voter education (where and how to vote) and registration.[6]

501(c)(3) organizations can also host candidates or have a legislative breakfast in which politicians come to discuss pertinent policy issues with key agency stakeholders. These candidate appearances are permitted as long as the organization provides equal opportunity to all political candidates seeking office and provides a fair, non-partisan forum.[8]  Whether this activity constitutes political intervention will be determined by the surrounding facts and circumstances. Generally speaking, organizations should extend invitations to all candidates seeking the same office.

At the actual event, all candidates must be given an equal opportunity to participate. This includes both “the nature of the event” and the “manner of the presentation.”[9]

The IRS will consider all of the facts and circumstance surrounding these types of events when deciding whether the activity is non-partisan and permitted, or partisan and in violation of the political intervention ban.[10]  Generally speaking, fairness and equal opportunity are the gravamen of this inquiry. Questions asked to the candidates must give both sides an opportunity to present his or her views on the topics being discussed.[11]  The organization must also allow all candidates an equal chance to discuss and debate issues, and to present both sides of the issue.

Our post next week will examine issue advocacy at 501(c)(3) nonprofit organizations.

Jeff Fromknecht, MSW, Esq, Side Project Inc. 


 

References:
[1] 26 C.F.R. § 1.501(c)(3)-(1)(b)(3)(i) and (ii).
[2] G. Lavarda, NONPROFITS: ARE YOU AT RISK OF LOSING YOUR TAX-EXEMPT STATUS?, 94 Iowa L. Rev 1473 (2009).
[3] IRS Rev. Rul. 2007-41 (2007).
[4] IRS Rev. Rul. 2007-41 (2007). “[V]oter education or registration activities conducted in a biased manner that favors (or opposes) one or more candidates is prohibited.” Id.
[5]  N. Dacunha, SAFE LINKING FOR SECTION 501(C)(3) ORGANIZATIONS, 20 Taxation of Exempts 26 (2009).
[6] E. Kingsley, THE IRS EXPANDS ITS GUIDANCE ON CAMPAIGN ADVOCACY, 19 Taxation of Exempts 45 (2008).
[7]  IRS Rev. Rul. 2007-41 (2007).
[8]  IRS Rev. Rul. 2007-41 (2007). The IRS points out that the relevant facts and circumstances to be considered include: [1] “Whether the organization provides an equal opportunity to participate to political candidates seeking the same office; [2] Whether the organization indicates any support for or opposition to the candidate (including candidate introductions and communications concerning the candidate’s attendance); and [3] Whether any political fundraising occurs.” Id.
[9]IRS Rev. Rul. 2007-41 (2007).
[10] IRS Rev. Rul. 2007-41 (2007). The following factors are identified by the IRS as important in this inquiry: 1. Whether questions for the candidates are prepared and presented by an independent nonpartisan panel 2. Whether the topics discussed by the candidates cover a broad range of issues that the candidates would address if elected to the office sought and are of interest to the public, 3. Whether each candidate is given an equal opportunity to present his or her view on each of the issues discussed, 4. Whether the candidates are asked to agree or disagree with positions, agendas, platforms or statements of the organization, and 5. Whether a moderator comments on the questions or otherwise implies approval or disapproval of the candidates.
[11] IRS Rev. Rul. 2007-41 (2007).

Pro Bono Work Outside the Courtroom: Helping with the Legal Needs of Nonprofit Organizations

Most lawyers are familiar with the Public Service rules of Professional Conduct. Lawyers often take individuals on as pro bono clients, assisting them with pending civil or criminal legal issues. Pro bono service can be, and is often, provided outside of a courtroom, to organizations rather than individuals. Lawyers with skills in corporate, transactional and regulatory legal matters can play an important role in social change efforts by supporting charitable nonprofit organizations.

The Florida Bar’s Professional Rules of Conduct Rule 4-6.1 Pro Bono Public Service describes, among other issues, community service suggestions and mandatory reporting requirements. The Rule encourage all lawyers in Florida to:

  1. Render pro bono legal services to the poor and
  2. Participate, to the extent possible, in other pro bono service activities that directly relate to the legal needs of the poor.

The rules provide two examples of how to satisfy these requirements:

  1. Annually providing at least 20 hours of pro bono legal service to the poor; or
  2. Making an annual contribution of at least $350 to a legal aid organization.

These rules have always been aspirational, rather than mandatory. A lawyer cannot be sanctioned by the Bar for failure to comply, nor is there any reward for compliance.[i] This is similar to the ABA Model Rule of Professional Conduct 6.1 and in-line with other state bars. Under the ABA Model Rule, every lawyer has a professional responsibility to provide legal services to those unable to pay. However, the suggested requirement is 50 hours of pro bono public legal services per year. The Model rule is also only suggestive, providing encouragement to volunteer, but with teeth to enforce the suggestion.

While the community service requirement is optional, reporting one’s pro bono service is mandatory. Florida joins Hawaii, Maryland, Illinois, Indiana, Mississippi, Nevada, New Mexico and New York as the only nine states to have mandatory reporting requirements. New York and California are the closet to implementing mandatory requirements. So far, these two states require prospective attorneys to register at least 50 hours of pro bono service in order to be eligible for admission to the state bar. This rule does not apply to current members of the state bar, and no state mandates its’ attorneys to provide pro bono hours.

Given the current access to justice issues, especially for civil legal matters, an argument for mandatory pro bono requirements could be made. In practice, any benefits associated this type of requirement would likely be over shadowed by the administrative difficulty in implementing it. Forced volunteerism undermines the spirit of giving back. In Positional Conflicts and Pro Bono Publico[ii] the authors hypothesize that “in most cases, the factor that moves lawyers to this service is not an oath or rules, but rather, a call from the heart.” Over the past twenty years, the pro bono activity of Florida lawyers has been increasing steadily each year; July 1st 2013 through June 30th, 2014 saw the most hours, lawyers in Florida registered 1,881,396 hours of pro bono service and donated $4,891,433 to legal aid organizations.[iii]

Many attorneys give back by providing pro bono services that involve “civil proceedings given that government must provide indigent representation in most criminal matters.”[iv] However, there are a number of practice areas that are not involved in litigation on a regular basis. What are transactional attorneys with a call from the heart supposed to do? Is courtroom representation the only option? “Lawyers are often driven to use their talents for not just gain, but good…[t]he lawyer may seek out charity work within”[v] his comfort level and practice area. The Comments to the Rules suggest that lawyers may also provide:

Legal services to charitable, religious, or educational organizations whose overall mission and activities are designed predominately to address the needs of the poor.[vi]

This comment explains that lawyers may volunteer their time to support nonprofit, charitable, religious, and educational organizations. While many large nonprofits have legal departments, small and medium size organizations often have a variety of unmet legal needs and issues. Many of these organizations have similar legal issues as for profit businesses including routine compliance and regulatory issues, employment law issues, and negotiating contracts and intellectual property rights.

Volunteering your pro bono hours to an organization creates a ripple effect in the community. It allows that organization to dedicate more time, talent and treasure to its mission and the people it is supporting. It also instills confidence in the organization’s Board of Directors, staff, and stakeholders that the organization is operating in compliance with all of the rules and regulations governing its work. This helps the organization secure more donations and resources, which allows the organization to help even more people.

Interpreting statutory and regulatory compliance issues is second nature to many lawyers, and their skills sets will easily transfer to supporting a nonprofit organization.

 

Jeffrey Fromknecht, Managing Attorney at Side Project Inc.

Leighton Regis, Juris Doctor Candidate at St. Thomas University School of Law


[i] A review of the history of this rule can be found at The Florida Bar’s floridaprobono.org website: http://www.floridaprobono.org/about/item.3304-History_of_Pro_Bono_Legal_Assistance_in_Florida

[ii] Yochum, M. and Fromknecht, J., Positional Conflicts and Pro Bono Publico, 16(2) Florida Coastal Law Review 233 (2015).

[iii] Pro Bono Publico: Facts and Statistics, The Florida Bar. (Revised Jul. 15th 2014),https://www.floridabar.org/DIVCOM/PI/BIPS2001.nsf/1119bd38ae090a748525676f0053b606/a8e811c59073e9f68525669e004d21f6?OpenDocument

[iv] Rule 4-6.1 Pro Bono Public Service, Comment (accessed at: http://www.floridabar.org/divexe/rrtfb.nsf/FV/BF60AF4C185D99D085256BBC00533761)

[v] Yochum, M. and Fromknecht, J., Positional Conflicts and Pro Bono Publico, 16(2) Florida Coastal Law Review 234 (2015).

[vi] Rule 4-6.1 Pro Bono Public Service, Comment (accessed at: http://www.floridabar.org/divexe/rrtfb.nsf/FV/BF60AF4C185D99D085256BBC00533761)

How can I get a copy of my nonprofit organization’s tax exemption letter?

You may request an affirmation letter.  The affirmation  letter serves the same purpose for grantors and contributors as the original determination letter.

If the affirmation  letter will not meet your needs and you wish to obtain a copy of the original determination letter, you must send a written request to the EO Determinations office in Cincinnati.  The request should be submitted using Form 4506-A, or in a letter containing the name and employer identification number of the organization along with the name, address, and phone number of the requester.  Securing a copy of the original determination letter to send to you may take up to 60 days or longer.

As discussed in Publication 4573, Group Exemptions, subordinate organizations under group exemption rulings should contact the central organization that holds the group ruling to obtain confirmation of their status as members of the group.

Additional information

Form 4506-A instructions

Can I transfer my organization’s tax exempt status to another organization?

Each month, I field dozens of calls from individuals and groups looking to start nonprofit, tax-exempt organizations.  Recently, a potential client called with a unique question:

Can we transfer the tax-exempt status of Entity A to unrelated Entity B?

My clients thought this may be less complicated (and less expensive) way of obtaining tax-exempt status, rather than completing a 1023 Application for Entity B.

As I did some research into the issue, I quickly learned these assumptions were wrong in both respects.  The IRS treats tax-exempt status as entity specific, and a change in the entity would be a significant enough event to require completing a new 1023.

A recent IRS Private Letter Ruling confirms my position in its discussion of a similar set of facts. Recently, a tax-exempt business league that was incorporated in State C, re-incorporated in State D. The original organization was dissolved and the assets of the old organization transferred to the new entity. The new organization assumed the tax ID of the former organization and carried on similar activities. The organization did not file a new application for recognition of tax exempt status and assumed the tax-exempt status of the former organization.

The IRS, relying on Rev. Ruling 67-390 (Requirements for new applications for exemption from Federal income tax in case of a change in the corporate structure) held that a new entity was formed and that the “New Entity must establish its exemption to establish that the new entity qualifies for exemption under the Code…”

 

-Jeff Fromknecht, Managing Attorney
Nonprofit Legal Services Division
Side Project Inc.

IRS Form 990PF: The First Step in Securing Private Foundation Grants for your Nonprofit Organization

Form 990 is an annual tax return that is required to be filed by most federally tax-exempt organizations. There are different versions of this form, depending on the size and type of the tax-exempt organization. In general, this form asks organizations to report on their mission, programs and activities, and financial information.  Churches are usually not required to file a form 990. Also, nonprofits that do not have a tax-exempt status from the IRS are not required to file.

Nonprofits that are looking for private foundation grants should take note of this this very practical and free tool. How you might be asking? Private foundations, which are required by law to distribute a percentage of their assets to 501(c)(3) public charities, must file a 990-PF. By reviewing form 990-PF, anyone can see what kinds of organizations and causes the private foundations support. Yours might be one of them. It also tells you what process the private foundation uses to give grants. Some have preselected organizations; others will take letters of inquiry or applications. Private Foundations that accept letters of inquiry and applications will have the information needed to apply right on the form.

The next important question is Where do you find these 990 forms? Guidestar.com is a very useful resource for 990 research. Guidestar provides 990 forms from organizations and it is free. Guidestar’s information comes from the IRS database, and organizations can also upload information to Guidestar.

Lastly, and perhaps most important, the 990-PF lists the names of the Board of Directors and Officers. Lists of private foundations, and their Board of Directors, that support your type of project should be circulated at regular intervals to your Board of Directors and advisory council. As with any type of fundraising, relationships and connections are the most important part of the development process.

-Larissa Nooni, Law Clerk at Side Project Inc & 2nd Year Law Student, NOVA Southeastern School of Law

Benefit Corporations 101

Henry Ford, the well-known industrialist and businessman, once sought to benefit his fellow man by distributing profits from his vastly successful company among his community and employees.[i] Learning that they were about to be deprived of a portion of the company’s profits, the Ford Company shareholders sued Ford.[ii] The Michigan Supreme Court ruled in favor of the shareholders, holding that Henry Ford, as the company’s president, owed a duty to maximize shareholder profits.[iii] Since 1919, society has changed and today the business owner seeking to make a profit while at the same time benefitting his or her community can do so. There are several different business entities available to achieve this goal, but one entity in particular offers business owners more flexibility in their public-benefit decision making. This entity is called a “benefit corporation.”

Benefit corporations allow directors of corporations to consider both social or environmental goals and shareholder profits in carrying out their obligations.[iv] These corporations are advantageous to corporate directors who envision their for-profit corporation making a social or environmental impact in their society. Benefit corporations are very similar to standard corporations, but they differ in four major aspects.

  1. The benefit corporation’s articles of incorporation must include that the corporation’s purpose involves a general public benefit to society or to the environment.[v] Benefit corporations may also elect to serve a more specific public benefit[vi] such as providing low-income housing or reducing carbon emissions. This public benefit requirement is not featured in standard corporation purpose sections.
  2. The Articles of Incorporation for benefit corporations are mandated by statute to provide a degree of accountability to stakeholders.[vii] Typical benefit corporation statutes require directors to consider the corporation’s shareholders, employees, and customers as well as the environmental and societal factors in making decisions for the corporation.[viii] Standard corporations do not require this consideration beyond its shareholders.
  3. Benefit corporations have transparency requirements not included in traditional corporate models.[ix] Benefit corporations are required to make public benefit reports throughout the year detailing the corporation’s successes, failures, and efforts made toward achieving its social or environmental goals.[x]
  4. Specific, legal causes of action are provided to certain stakeholders based on the benefit corporation’s breach in seeking to achieve its public benefit goals.[xi] The benefit corporation may grant a legal cause of action to specific individuals by expressly stating so in the corporation’s charter.[xii] Further, causes of action may be granted to certain stakeholders impacted by the corporation even without being mentioned in the charter.[xiii]

Benefit corporations may be formed from scratch prior to the existence of a corporation or from an already-existing corporation. After choosing to form a benefit corporation without an already-existing corporation, it is necessary to incorporate the benefit corporation in a state that permits benefit corporations.[xiv] Currently, benefit corporations are permitted in Arizona; Arkansas; California; Colorado; Connecticut; Delaware; Florida; Hawaii; Idaho; Illinois; Indiana; Louisiana; Maryland; Massachusetts; Minnesota; Montana; Nebraska; Nevada; New Hampshire; New Jersey; New York; Oregon; Pennsylvania; Rhode Island; South Carolina; Tennessee; Utah; Vermont; Virginia; Washington, D.C.; and West Virginia.[xv] Benefit corporation statutes have been introduced in nine other states.[xvi]

An already-existing corporation incorporated in a state that does not allow benefit corporations must undergo either a merger or a domestication in a state where benefit corporations are allowed.[xvii] Following the incorporation of the corporation in a state permitting benefit corporations, it is necessary to draft articles of incorporation (or amend already-existing articles of incorporation) stating that the corporation is to be deemed a benefit corporation and providing for the nature of the corporation’s public benefit goals, accountability, transparency to the public, and legal causes of action granted to stakeholders.[xviii] Finally, the articles of incorporation must be filed with the appropriate state agency, typically the Secretary of State.[xix] Special considerations apply to already-existing entities that are not corporations but are seeking to become benefit corporations.[xx]

The changing landscape of corporate law will likely result in benefit corporations being formed throughout the country. For the business owner seeking profit and public purpose, the benefit corporation may be the proper vehicle toward achieving his or her goals.

For more information on benefit corporations schedule an appointment with a Side Project attorney today: http://sideprojectinc.org/legal-help/

-Henry Norwood, Side Project Law Clerk & 2nd Year Law Student, NOVA Southeastern School of Law

Sources:

[i] Dodge v. Ford Motor Co., 170 N.W. 668, 671 (1919).

[ii] Id.

[iii] Id at 678.

[iv] Joseph Karl Grant, When Making Money and Making a Sustainable Societal Difference Collide: Will Benefit Corporations Succeed or Fail?, 46 Ind.L.Rev.581 (2013).

[v] Id at 583.

[vi] Id at 584.

[vii] Id at 583.

[viii] Id at 585.

[ix] Id at 583.

[x] Id at 586.

[xi] Id at 583.

[xii] Id at 588.

[xiii] Id.

[xiv] William H. Clark, Jr., How to Switch to Being a Benefit Corporation, DrinkerBiddle, 3 (June 2, 2015, 9:00 AM), http://benefitcorp.net/storage/documents/How_to_Switch_to_Being_a_Benefit_Corporation.pdf.

[xv] B Lab, State by State Legislative Status, Benefit Corp Information Center (May 28, 2015, 12:31), http://benefitcorp.net/state-by-state-legislative-status.

[xvi] Id.

[xvii] William H. Clark, Jr., How to Switch to Being a Benefit Corporation, DrinkerBiddle, 4 (June 2, 2015, 9:00 AM), http://benefitcorp.net/storage/documents/How_to_Switch_to_Being_a_Benefit_Corporation.pdf.

[xviii] Id.

[xix] Id at 5.

[xx] Id at 6.

Side Project raises $2000 for Erie Charities!

ERIE, PA – On June 6, 2015, Side Project, Inc. brought their annual Summer gathering and fundraiser to Erie, the tenth annual TailGREAT. More than 160 guests gathered at the Neighborhood Art House for food and drink before attending a Seawolves game. 

Guests were treated to a unique tailgate party and the opportunity to raise money for several worthwhile organizations! The event raised more than $2000.00 for the Neighborhood Art House, Linked by Pink, Emmaus Soup Kitchen’s Kids Café and Side Project Inc.

A big thanks to our event Co-Chars Steve Zoni and Sean Causgrove. And a shout out to all of the event sponsors:
1. Russell C. Schmidt & Son Funeral Home Inc
2. Sid’s Place
3. Matthew Barczyk AllState Agent
4. The Erie SeaWolves
5. The Que Abides
6. Builders Hardware.

Side Project's Erie Tailgreat! Side Project's Erie Tailgreat! Side Project's Erie Tailgreat! Side Project's Erie Tailgreat! Side Project's Erie Tailgreat!

Erie Tail-GREAT Winter Classic – February 14, 2015

What are you doing for VTail-GREAT Winter Classicalentines Day? Why not tail gate for a great cause. Ticket price gets you food catered by Calimari’s , all the beer you can drink, and a ticket to the woman’s hockey home game at Mercyhurst. The game begins at 2 pm on February 14, 2015 as the lady Lakers will host the Nittany Lions of Penn State University. 

Tickets are $40/Couple and $25/individual. Get your tickets today! Must be 21+ to purchase tickets. 

The event will be in the parking lot adjacent to the Mercyhurst ice arenaWe will have a tent set up with heaters to warm up with, so don’t worry about that pesky Erie weather!

All proceeds from the event benefit Linked by Pink, The A.N.N.A Shelter, & Side Project Inc.

Come support two great schools and three great organizations!

BUY TICKETS!