5 Legal Tips Every Nonprofit Should Know

Nonprofits require a lot of work and aren’t for the unorganized. If you’re planning on starting your own, there are a couple of things to consider. Here are five legal tips every nonprofit should know:

1. Protect your brand

You might be surprised to find that you already have “common law” rights to your copyright(s) and trademark(s), but in order to fully protect your brand you should register them with the US copyright and trademark offices. Remember to ask permission and enter into licensing agreements when you use the intellectual property (like copyrights and trademarks) of other organizations and individuals. This is important, not only legally, but to protect the integrity of your brand. More on protecting your brand here: Trademark 101: Protect Your Brand.

2. Avoid entering into employment contracts

As a general rule of thumb, avoid entering into contracts with your employees. Instead, issue a non-binding offer letter with an attached job description. This puts the employee in the “at-will” category, which allows you or the employee to part ways at any time without legal repercussions. Learn more about the benefits of offer letters by reading our article Why Every Employer Should Use Employee Job Descriptions.

3. Don’t forget your state and federal requirements

Nonprofit corporations must abide by the laws of the state in which they are incorporated. In California, this means having an active board of directors, maintaining meeting minutes, adopting certain policies, and keeping up with state filings. Additionally, to maintain your nonprofit’s 501(c)(3) (tax-exempt) status with the federal government, it must be operated exclusively for tax-exempt purposes and none of its earnings should benefit a private individual. Also, your 501(c)(3) nonprofit should minimize political lobbying activities and avoid participating in political campaigns altogether – other 501(c) structures are more suitable for politically active organizations. More here: How to Keep your Tax Exempt Status: Pt. 1 & How to Keep your Tax Exempt Status: Pt. 2.

4. Create an advisory council as a stepping-stone to your dream board

The task of building a board of directors can seem overwhelming. At Invisible Children, when we set out to double the size of IC’s Board, we created an advisory council first. It was a no-brainer for IC’s most influential supporters to join the advisory council because it was ambassadorial in nature, a great networking opportunity, and less of a commitment. By sitting on the council, our top supporters got to know the organization and as a result, it became a no-brainer for them to eventually join our board. More on building your advisory council here: How to Build An Advisory Council in 5 Steps.

5. Take calculated risks

Worrying about the risks associated with running an innovative nonprofit can distract you from the mission. Obtain help from attorneys who can advocate on your behalf, shield you from a lot of headaches, and save you money in the long run.

 

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Photo Credit: Phillip Harder.