Daniel R. Alcott, Esq.
Partner & Chair Not-for-Profit Dept
Dorf & Nelson LLP
Board Members, staff members, donors, church/synagogue/mosque members are all a part of Not-for-Profit Organizations. Because of the pandemic, not-for-profits are struggling with various areas simultaneously-headcount reductions, work-from-home challenges, donor relations, and long-term strategic initiatives. What is the best way to process the new reality and move forward?
Here are the answers to some of the most frequently asked questions we’ve recently received from our nonprofit and religious organization clients.
This FAQ is the first advisory of a series that we will be bringing to you over the next few weeks. Please feel free to reach out to me with any legal questions you may have.
1. How can we keep our term-limited President during the crisis?
We are about to lose our President because of term limits. Our bylaws do not limit the number of years she can serve as President, but they state that she can only serve as an officer so long as she is a member of the Board. Her limit on the Board expires at the annual meeting. The Board believes that she is the most qualified person to lead us during this crisis and the transition out of it. What can we do to ensure she continues in office?
One way to keep your President in office would be to delay your annual meeting temporarily. Most bylaws (or state nonprofit corporation law if the bylaws are silent) provide that officers and directors hold their office for the indicated term “and until their successors are elected.” Therefore, if you delay the annual meeting, the directors whose terms are up continue in office until a new election selects their successors. Most nonprofit corporation laws provide that failure to hold the annual meeting does not cause the corporation to be dissolved or otherwise unable to function.
For a more permanent solution, you can amend your Bylaws to provide that in an emergency declared by the Board, the Board has the power to extend the term limits of Board members and officers for a stated time. Although you could eliminate term limits, that is not considered to be a “best practice” because it wouldn’t give the organization the flexibility to review a person’s performance and leaves the Board with only one remedy to bring in a new President: removal of the incumbent President.
2. Can my organization get an extension from the IRS to extend the filing date of our 990’s?
Yes. The IRS under Notice 2020-23 posted on April 9, 2020, extended the filing deadline for 990 reports until July 15, 2020. Any tax return or payment due on or after April 1, 2020, and before July 15, 2020, is now automatically postponed to July 15, 2020—no extension forms, letters, or other forms of documentation or communication are required to make use of this relief. This includes exempt organization filings. If your organization needs additional time beyond July 15 to file the 990 reports, it can file the automatic 6-month extension on IRS Form 8868.
If you want to discuss further any information in this Newsletter please feel free to reach out to:
Daniel R. Alcott, Esq. dalcott@dorflaw.com
All material presented in this newsletter, is for general informational purposes only, and does not constitute legal advice. Receiving this written material does not create a lawyer-client relationship. All responsibility and liability for any actions taken or not taken on the basis of any of the information offered in this newsletter is expressly disclaimed.
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