Why Nonprofit Organizations Need to Understand Business Law

When people think about business law, they often consider it only useful for companies that need to protect themselves from stepping outside of the law. While this is often the case, any type of business or organization can benefit from an understanding of their rights and limitations under federal business regulations. In particular, business law affects nonprofit organizations in a number of ways, and those who know the law can operate more efficiently within it.

Does My Organization Qualify as a Nonprofit?

Some believe that to attain nonprofit status, an organization must make a limited amount of money. This is a misconception – nonprofits may earn unlimited funds as long as they keep the funds within the organization, and use it to support a specific mission. Nonprofit organizations have no owners that collect profits. These organizations may have a board of directors, members and officers, but none of these groups should own the organization.

How Can Nonprofit Organizations Benefit from Business Law?

Many different facets of business law can significantly affect a nonprofit organization. A business lawyer can help you answer the following questions and more about a nonprofit organization’s legal rights regarding:

• Tax Status – Many different tax-exempt statuses exist for nonprofits, and many people do not know how tax exemptions operate. The government has several different categories of organizations exempted from federal income taxes, including charitable, educational, religious, social welfare and agricultural organizations, trade associations as well as professional societies. Additionally, tax-exempt status does not mean an organization does not pay taxes or that “unrelated business income” is taxable. The tax status for a nonprofit organization is far more complex than many are led to believe, which is why a business lawyer can assist these organizations with determining their exemptions and other tax-related issues.
• Employees and Volunteers – Nonprofit organizations often rely on the efforts of their volunteers. The law considers volunteers to be individuals who perform services for a nonprofit entity and do not receive compensation or anything of value worth more than $500 per year. Both employees and volunteers are subject to a number of laws protecting their rights as well as the rights of the organization that utilizes their services.
• Copyright and Other Legal Issues – Nonprofits often unknowingly violate copyright law, but understanding what is fair use of a copyrighted material can prevent legal issues from arising. Other matters that commonly affect nonprofits include antitrust violations and fundraising issues. Consulting with a business attorney can allow any organization avoid these missteps.

Where Can I Find a Business Lawyer for My Nonprofit Organization?

Running a nonprofit organization can be just as difficult as operating any other type of business. Our Hoffman Estates attorneys can give nonprofit organizations the advice and guidance they need to operate effectively and legally. Call MacDonald, Lee & Senechalle, LTD. to get legal support and representation for your business or nonprofit organization.