discussion over table with laptop

Imagine I’m working with a great new client named Daphne. She wants to found a nonprofit organization to assist at-risk youth in her local community and across Iowa. This is a hypothetical memo I would send to Daphne outlining the steps of what it takes to form a nonprofit in the state of Iowa. (Note, if you’re looking to form a 501(c)(3) it’s best work with a qualified attorney for advice and counsel specific to your situation and goals.)

To:                  Daphne Downright – SENT VIA EMAIL
From:             Gordon Fischer (gordon@gordonfischerlawfirm.com)
Subject:         How to Form a 501(c)(3) Nonprofit
Date:              April 13, 2019

Dear Daphne:

Good afternoon! I very much enjoyed our phone conversation of this morning, where we discussed your intent to begin a nonprofit to assist at-risk youth. Certainly this is an noble mission and I have no doubt that you could make a big impact. I also acknowledge you are very busy and don’t have the time to allocate to dealing with all of the documentation. So, I’m here to take this stress off of your plate!

Let’s recap some details regarding the process for founding a nonprofit organization. These steps will set your public charity up for the best possible success.

Main Steps to a 501(c)(3)

To recap what we talked over, forming a 501(c)(3) involves four steps:

  1. drafting, editing, and filing articles of incorporation;
  2. drafting and editing bylaws, with new board members then voting in favor of the bylaws in a duly authorized meeting;
  3. applying for an Employer Identification Number (EIN); and
  4. drafting, reviewing, and editing the IRS non-exempt status application, known as IRS Form 1023, as well as all the supporting materials IRS Form 1023 requires.

By far, the most difficult and time-consuming of the four steps is the IRS Form 1023. You should definitely review the form immediately, so you can gain a sense of the level of detail and involvement it requires.

How much does it cost?

While my regular hourly rate can go up to $300 per hour, I often have agreed with clients to perform all the legal work required to successfully begin a nonprofit for a flat fee of $4,800. I typically bill this over the span of five months, i.e., five easy payments of $980, due on, say, the first of each of the months.

Additionally, as you would expect, this matter will necessitate payment of filing fees to governmental agencies, such as the Iowa Secretary of State’s Office and the IRS. (The Iowa Secretary of State has a $20 filing fee, and the IRS 1023 Form has a $850 or $400 filing fee depending on the amount of gross revenue expectations). Of course, clients are solely responsible for payment of all such governmental fees.

How long does this take?

It usually takes a few months to pull all the paperwork together, including and especially Form 1023. I’ve had, however, ambitious clients who wanted to do it much faster, and I was able to accommodate. The flat fee includes as many conferences with me as you reasonably need for us to complete steps 1-4, above.

Benefits of Nonprofit Formation

Daphne, the benefits of a 501(c)(3) are many and include:

Tax exemption/deduction

Organizations that qualify as public charities under Internal Revenue Code 501(c)(3) are eligible to be completely exempt from payment of corporate income tax. Once exempt from this tax, the nonprofit will usually be exempt from similar state and local taxes.

Even better: if an organization has obtained 501(c)(3) tax exempt status, an individual’s or company’s charitable contributions to this entity are tax-deductible.

Eligibility for public and private grants

Nonprofit organizations can solicit charitable donations from the public. Many foundations and government agencies limit their grants to public charities.

Being able to offer donors income tax charitable deductions for donations, as well as eligibility for public and private grants, are probably the two major reasons folks want to obtain 501(c)(3) status.

Formal structure

A nonprofit organization exists as a legal entity and separate from its founder(s). Incorporation puts the nonprofit’s mission and structure above the personal interests of individuals associated with it.

Limited liability

Under the law, creditors and courts are limited to the assets of the nonprofit organization. The founders, directors, members, and employees are not personally liable for the nonprofit’s debts. There are exceptions. A person cannot use the corporation to shield illegal or irresponsible acts on his/her part. Also, directors have a fiduciary responsibility; if they do not perform their jobs in the nonprofit’s best interests, and the nonprofit is harmed, they can be held liable.

Focus your giving

With charitable giving flowing through a central nonprofit organization, and not through, say, a for-profit business, it’s easier to focus the giving on a singular mission. A for-profit business may be easily pulled away from a charitable mission by the pet causes of lots of different customers, clients, vendors, and employees. A nonprofit should be much less susceptible to such pressure.

Responsibilities of Forming & Managing a  Nonprofit

Of course, there are serious responsibilities that come along with creating and running a nonprofit. These can’t be overstated, and include:

Cost

Creating a nonprofit organization takes time, effort, and money. Plus, keeping a nonprofit on track, compliant, and successful also requires great care.

Paperwork

A nonprofit is required to keep detailed records and submit annual filings to the state and IRS by stated deadlines to keep its active and exempt status. 

Shared control

Although one who creates a nonprofit may want to shape his/her creation, personal control is limited. A nonprofit organization is subject to laws and regulations, including its own articles of incorporation and bylaws. A nonprofit is required to have a Board of Directors, who in turn determine policies. 

Scrutiny by the public

A nonprofit is dedicated to the public interest, therefore its finances are open to public inspection. The public may obtain copies of a nonprofit organization’s state and federal filings to learn about salaries and other expenditures. Nonprofits must be transparent in nearly all their actions and dealings.

Continue the discussion

I hope this information is helpful to you as you begin this journey. It won’t always be easy (although I will attempt to make it as simple as possible for you!), but it will be worthwhile.

I would enjoy the opportunity to be of service to you. Thank you for your time and attention. If you have any questions or concerns, please contact me. As I told you this morning, I offer anyone/everyone a free one-hour consultation. Simply reach out to me anytime via my cell, 515-371-6077, or my email, gordon@gordonfischerlawfirm.com.

Warmest regards,

Gordon Fischer

Gordon Fischer Law Firm, P.C.

pen on desk

You’ve probably heard it before on your favorite law show or movie court case, but do you know what “quid pro quo” actually means?

Quid pro quo (“something for something” in Latin) means an exchange of goods or services, where one transfer is contingent upon the other.

Quid pro quo can have different meanings in different areas of the law. For instance, we typically hear this phrase in relation to employment law. So, in the arena of philanthropy and nonprofits, what does quid pro quo mean?

A charitable donation is deductible to the extent the donation exceeds the value of any goods or services received in exchange. So what happens when you donate to your favorite charity and receive something tangible in return? This is the issue of “quid pro quo” in charitable gift law.

giving gift

Quid Pro Quo Example

If a donor gives a charity $100 and receives an opera ticket valued at $40, the donor has made a quid pro quo contribution. In this example, the charitable contribution part of the payment is $60. The donor is entitled to a charitable deduction for $60, but not the entire $100.

Both the donor and donee have a responsibility here. The donor, of course, can only deduct the cost of the donation less the value of the goods/services received. The charitable organization must provide their donors clear, written documentation of the value of donations.

In fact, in these quid pro quo situations, under IRS rules, the nonprofit must provide a written disclosure statement. This required written disclosure statement must both:

• Inform the donor that the amount of the contribution that is deductible for federal income tax purposes is limited to the excess of any money (and the value of any property other than money) contributed by the donor over the value of goods or services provided by the charity.

• Provide the donor with a good faith estimate of the value of the goods or services that the donor received.

Free Consultation

Thinking about making a donation or looking for guidance regarding gift acceptance at your nonprofit, no quid pro quo is required! I offer a free one-hour consultation, with absolutely no obligation. I can always be reached by email at Gordon@gordonfischerlawfirm.com, and by phone at 515-371-6077.

i voted stickers

For most of us, the right to vote has been a part of our adult lives. It seems weird to think about not having the ability to cast a ballot. But, imagine if you lost your right to vote and had to take even extra steps to get it back? This is the reality for more than 50,000 Iowans, according to a 2016 report from The Sentencing Project. Indeed, Iowa is one of two states (the other is Kentucky) in the country that imposes permanent disenfranchisement for people, even after they’ve served their sentence and completed all probation requirements. (You may have seen the recent news when Florida passed an amendment giving Floridians who were previously denied voting rights the ability to register to vote.) I believe it’s incredibly important for all people to exercise their right to vote and thus want to draw attention to an upcoming opportunity at The University of Iowa for those who have had their voting rights revoked due to a felony conviction. (While I’m not personally involved, I know people who are!)

i voted sticker red

Iowans who have lost their voting rights can restore them only through submitting a “Right to Vote and Hold Public Office” application to the Office of the Governor. The Governor then has the discretion to restore voting rights. (Governor Reynolds has restored the voting rights for 88 people since taking office in 2017.) While certainly a hurdle, the good news is that the state has recently streamlined the application to make it easier to complete. Additionally, Governor Reynolds has made public statements calling for a constitutional amendment to do away with the state’s lifetime ban on voting for felons, but that would take at least a couple legislative sessions for actual adoption per the state’s amendment process.

Voting Rights Restoration Clinic Info

In the meantime, the application is still essential for people looking to restore their voting and ability to hold public office rights. The University of Iowa Legal Clinic is hosting an opportunity for application assistance and advice for anyone interested. See the image below for more information and contact the Clinic at 319-335-9023 to reserve a spot. (Note: if you’re not able to participate on March 2, 2019, there are other opportunities for the Clinic to offer assistance, so don’t hesitate to call.)

voter rights restoration clinic

 

charitable giving presentation

If you’re a professional advisor (such as a financial advisor, insurance agent, attorney, or accountant, among others) looking for more information on how to advise your clients on smart charitable giving strategies, I’d love to speak with you and your colleagues. At every chance, I’m happy to share my firm’s mission to “maximize charitable giving in Iowa” with groups of any size!

rows of brown chairs

In terms of topics, there is actually very little in the area of charitable giving that I do not feel comfortable presenting about. So, if you have a specific subject in mind, do not hesitate to propose it. The following is a sampling of topics I’ve spoken about previously. I can easily combine multiple topics to best fit the presentation to the group’s objectives.

Planned Giving 101

  1. What is “planned giving?”
  2. Gifting during lifetime versus gifting at death
    • Advantages and disadvantages of each
    • Meet clients/donors “where they’re at”
  3. What 2017 federal tax legislation changed for charitable giving
    • Two huge challenges: charitable deduction & estate tax
  4. The seven basic estate planning documents everyone needs (and how charitable giving fits in)
  5. IRA Charitable Rollover & other gifting opportunities through retirement benefit plans
  6. The numerous benefits of the Endow Iowa Tax Credit
  7. Ins and outs of donor-advised funds
  8. Highly appreciated stock and other non-cash assets

Planned Giving 201 (Advanced Gift Types)

When I give presentations on advanced gift types, I also include a short summary of Planned Giving 101 topics.

  1. Charitable gift annuity (CGA)
  2. Charitable remainder trust (CRT)
  3. Charitable remainder annuity trust (CRAT)
  4. Charitable remainder uni-trust (CRUT)
  5. Flip CRUT
  6. Charitable lead trust (CLT)
  7. Retained life estate

Working Together is Better

I can also speak to how nonprofit staff (most especially development officers) and professional advisors can best work together for mutual benefit and for the betterment of clients.

four people around a computer

Fundraising Ethics

Another topic I’ve also discussed in the past is the ethics of fundraising: how to spot warning signs of an impending ethical dilemma; the best ways to handle common ethics concerns; what actions to avoid; etc.

Exceed Client Expectations

If you present me with a list of your most top learning objectives, I would be happy to tailor a high-quality presentation to the group targeting those specific points. Really, any presentation related to charitable giving should be about what can make an impact in the lives and decisions of your clients. Let’s work together to help you and your team exceed client expectations and make an actionable impact on charitable giving in Iowa.

Contact me via email or phone (515-371-6077) to get your learning session planned and scheduled!

 

Marting Luther King Jr. and American Flag

On Martin Luther King Jr. Day, I think it’s important to pay tribute to a man who truly championed ideals of equity, freedom, peace, and justice. Among his many accomplishments, Dr. King tirelessly pushed for nonviolent activism and peaceful resolution to human rights issues. He reportedly wrote five books and gave hundreds of speeches in a single year…more than most of us could produce in a lifetime. And, there’s no doubt that he was a key player and influencer in the passage of the U.S. Civil Rights Act of 1964. Dr. King was subsequently was awarded one of the highest honors in the world in 1964—the Nobel Peace Prize—for “his dynamic leadership of the Civil Rights movement and steadfast commitment to achieving racial justice through nonviolent action.” (He donated the prize money, $54,123, back to the civil rights movement.)

Dr. King and his lasting legacy can undoubtedly serve as an inspiration to us all. I see his dream of a better world—a better future for all—exemplified in action by the hardworking Iowa-based nonprofit organizations. I also see his lessons being practiced by the wonderful donors who support these organizations and advance their missions.

So, yes, it’s nice to have a day off of work, but make certain the day doesn’t pass you by without setting a plan in place to perform some form of service for others. Dr. King tirelessly pursued the advancement of human rights for the greater good and we can honor him by practicing forms of charitable giving as a way to advance the greater good for our communities. Be it through volunteering time to an organization that speaks to your heart (remember, certain costs associated with volunteer can be tax deductible), setting up a donor-advised fund, or simply writing a list of the nonprofits you would like to include as beneficiaries in your will, you too can set out on an honorable service-oriented path and inspire your friends, family, and colleagues to follow suit.

MLK Jr. Day Quote

Dr. King’s lessons resonate with our hearts and heads because we too have dreams of making our corners of the world a better place to learn, live, and grow through service. Maybe Dr. King’s commitment to “practice what you preach” mentality has inspired you this year to give charitably more and more often. Maybe you considered his question, “What’s your life’s blueprint?” and decided to form the charity you’ve wanted to establish for a long time. Either way, don’t hesitate to contact me for a free consult. As Dr. King said: “The time is always right to do what is right.”

25 days of giving - decemer 2018

It’s not a cheese, wine, or bath products advent calendar…but beginning December 1 through Christmas Day the GoFisch blog will feature a new piece related to giving. ‘Tis the season for giving and the “25 Days” posts will feature information important for both nonprofit executives and donors.

What I want to know is: what questions about charitable giving do you have? From specific to general, email them to me at Gordon@gordonfischerlawfirm.com.

Remember, no matter what winter holiday you celebrate, all have the power to make a positive impact through charitable giving!

 

thanksgiving thankful

I would like to wish you a very happy Thanksgiving. I hope that you have the opportunity to spend quality time with your loved ones. I’ve taken a much needed moment this holiday to take a step back and think about all GFLF has to be thankful for. I owe so much to my clients, friends, and family who have helped make this year a successful one.

grateful quote

Here are just a few of the things GFLF has to be exceedingly grateful for:

But, really, this is a short list—the tip of the turkey, if you will—of what GFLF is perpetually thankful for.

Wishing you full bellies and hearts today,

Gordon Fischer

Flag in field with sun

“True heroism is remarkably sober, very undramatic. It is not the urge to surpass all others at whatever cost, but the urge to serve others at whatever cost.” -Arthur Ashe

On Veterans Day and every day, we at Gordon Fischer Law Firm want to say a heartfelt thanks for our veterans’ sacrifice and service. We work with many veterans on estate planning and in nonprofit-related work, and it’s always an honor. There are not enough “thank you’s” in the world to express our gratitude for what you have done for our country. We would also like to extend this sentiment to first responders as well—police, fire, and EMS personnel.

 

Veterans Day flags

As a veteran your story is important. Your legacy is important. To preserve that legacy of strength and service, you need an estate plan to ensure your property and assets are distributed to your loved ones and favorite charities in accordance with your wishes.

So, in an attempt to express our gratitude we would like to offer 25% off the cost of an estate plan package to all Iowan active duty or retired service members and first responders. The discount will be honored through 11/30/2018. Contact GFLF via email or by phone (515-371-6077) to discuss your estate planning needs.

What does an Estate Plan include?

There are six documents that should be part of most everyone’s estate plan.

  1. Estate planning questionnaire
  2. Will
  3. Power of attorney for health care
  4. Power of attorney for finances
  5. Disposition of personal property
  6. Disposition of final remains

You should keep these documents updated and current. (Here are a few common “big” events that necessitate estate plan revisions.) Also, don’t forget about assets with your beneficiary designations. For most Iowans, that’s good – six documents, keeping them current, and also remembering about those assets with beneficiary designations.

 

American flag on chair

Cost of an Estate Plan

Because I want every Iowan to have an up-to-date estate plan I’m very transparent with the cost of an estate plan that that takes into full consideration YOUR situation. (This is why you need an experienced estate planner to draft your documents.) Speaking very generally, an estate plan from my Firm usually costs a single person about $790, and a family about $990. So, with this Veterans Day discount, that’s a saving of about $197.50 for singletons to $247.50 for a family.

Estate Planning Process

I write about my process at length, but it’s just five steps! Seriously, it’s not that painful. My clients report back to me that they have such relief and peace of mind when it’s completed.

Contact

If you’ve been making excuses or have an extremely outdated estate plan now’s the time to check it off your list (and get a discount while doing so!).

How to get started? Contact me by the end of the month (11/30) via email (gordon@gordonfischerlawfirm.com) or phone (515-371-6077) and fill out my free Estate Plan Questionnaire.


DISCLAIMERS

The “Veterans Day discount” is only applicable for estate plans created by active or retired veterans and first responders (and their spouses). Availability of the discount ends after November 30, 2018 at which point prospective client must have contacted Gordon Fischer Law Firm and indicated an intention to make an estate plan.
Veterans Day discount merely relates to pricing and in no way creates an attorney-client relationship, nor any other kind of professional relationship. The Veterans Day discount does not create a contract or agreement of any kind.
Gordon Fischer Law Firm, P.C. retains full and total discretion as to who it chooses to serve as clients and why. Gordon Fischer Law Firm, P.C. retains the right to refuse service to anyone it so chooses.
The Veterans Day discount may not apply to individuals or families with a net worth of more than $1 million dollars. (You still need an estate plan, very much so, but it necessarily needs to be more “complex” to adequately account for all assets.).
happy halloween

The December holidays don’t need to be the only time of the year that you give charitably! Halloween is the perfect excuse to do something sweet in the spirit of the spooky. Let’s be honest, most years you have way too much leftover candy. You never want to leave any trick-or-treaters empty bucketed. Combine that with the haul the kiddos heave home and it’s a recipe for a cavity (and some extra pounds). Satisfy your sweet tooth and then do something good with your candy!

Halloween pumpkin

This Halloween, I challenge you to make a simple, but significant donation of un-opened, wrapped candy in lieu of an unnecessary sugar rush. Here are a few ideas to get you started:

Treats for Troops

Treats for Troops, run by 501(c)(3) Soldiers’ Angels, collaborates with businesses (like dentist offices!) to be candy collection centers. The treats are then collected and distributed to soldiers stationed overseas, wounded service personnel, and veterans. By searching for a drop-off site near me, I found two within a reasonable distance.

Ronald McDonald House

The Ronald McDonald House does amazing work assisting families of sick children by providing a comfortable, affordable place to stay during treatment as well as good food (anything is better than hospital food!). There’s a local Ronald McDonald House here in Iowa City; contact them about dropping off your Halloween candy to make some kiddos (who may not have been able to trick-or-treat) very happy.

Operation Gratitude

Similar to Treats for Troops, Operation Gratitude compiles and sends care packages to first responders in the U.S. and service personnel stationed overseas. The organization’s mission is simple, but significant: to put a smile on soldiers’ faces. Along with donations of leftover candy, you can send encouraging letters, postcards, and pictures. Drop-off locations can be located on their map.

Pay attention to their do’s and don’ts, including the instruction to “fill out and submit an online Donation Form with the total pounds of candy and any additional donated items. You will receive an email confirmation with a printable barcode to include in your package, along with shipping instructions.” The organization needs your candy shipped by 11/9!

buckets with candy

What other ideas do you have for donating leftover, extra candy? Share in the comments or let us know on Facebook, Instagram, or Twitter!

radio studio

On Halloween (10/31) my voice will be making a radio appearance on KCJJ 1630 AM‘s “Senior Talk” program hosted by Rex Brandstatter! We’ll be talking on the importance of estate planning for seniors, as well as the need-to-know information that ALL Iowans should know about creating a successful, quality plan for the future.

The program starts at 12:10 p.m. and will last for about 30 minutes. If you won’t be around a radio over the noon hour on 10/31, don’t worry as you can listen live via KCJJ’s YouTube channel. Plus, the program will be archived on YouTube after the show!

Hopefully my conversation will Rex will inspire you (and all of your family members and friends) to send those estate planning excuses to the graveyard. (Sorry, I had to get at least one spooky pun in there!) One of the best ways to get started on my five-step estate planning process is with the easy, free Estate Planning Questionnaire.