Running a charity can be an enriching experience, but it also comes with many legal obligations and responsibilities. As a charity, you are subject to several laws and regulations designed to ensure that you operate ethically, transparently, and in the best interests of your beneficiaries. Let's discuss some of your legal obligations in running a charity. As always, be aware that each state has its own rules and you should always consult with a lawyer to determine your obligations. Click here for an essential guide to Minnesota’s charities laws. Click here for more information about running a non-profit organization in Texas. If you would like assistance, contact the Dohrwardt Law Firm for more information.

Incorporation and Registration

One of the first legal obligations when starting a charity is incorporation and registration with the appropriate regulatory body. The United States has two main types of charities: public charities and private foundations. Public charities are more common and are usually focused on providing services to the public. Private foundations, on the other hand, are typically established by families or individuals and are focused on giving grants to different organizations. See the IRS website for more information about types of charities and how to register.  Registering as a charity is crucial for organizations that operate for the public benefit. It allows you to access funding, tax exemptions, and other benefits to help you accomplish your mission. If you are planning to register your organization as a charity, there are several steps you need to take.

It's important to note that charity registration is not a one-time event. Charities must file annual reports with the state attorney general's office and the IRS and comply with all relevant laws and regulations. Failure to do so can result in penalties, fines, or even the revocation of your charitable status.

Tax Laws

Charities are generally exempt from paying income and corporation taxes but are subject to various tax laws. Charities are usually exempt from federal income tax but must file an annual return with the IRS. Depending on the state laws in which you operate, charities may also be subject to state and local taxes. It is essential to discuss your obligations with legal and tax professionals to ensure you understand them.

Fundraising Regulations

Charities are also subject to a range of fundraising regulations. These include rules regarding the solicitation of donations, use of funds, and transparency in reporting. The Federal Trade Commission (FTC) and state attorneys general enforce these regulations in the United States.

Reporting and Transparency

Charities must be transparent about their finances and operations and regularly report their activities to the relevant regulatory body. This includes providing annual reports, financial statements, and details of governance structures and decision-making processes. Failure to comply with reporting and transparency requirements can result in penalties or revocation of charitable status.

Employment Law

Charities that employ staff must comply with employment laws, including minimum wage, overtime pay, workplace safety laws, anti-discrimination laws, and reasonable accommodations for employees with disabilities.

Privacy Law

Charities must also comply with privacy laws regarding collecting and using personal information. They must obtain consent before collecting personal information and take steps to protect that information from unauthorized access or disclosure.

Duty of Care and Fiduciary Responsibility

Finally, charities are responsible to their beneficiaries, donors, and other stakeholders and must always act in their best interests. This includes ensuring that the charity's activities are legal, ethical, and aligned with its stated mission and managing its finances responsibly and transparently.

In conclusion, running a charity involves a range of legal obligations and responsibilities. By complying with these obligations, charities can ensure that they operate ethically, transparently, and in the best interests of their beneficiaries. If you are considering starting a charity, seeking professional advice is crucial to ensure you know your legal obligations and responsibilities. Contact the Dohrwardt Law Firm to discuss your organization and how the firm can help you.

The information provided is only for general information and is not meant to be legal advice.  Information on this website, including third-party links, may not include the most up-to-date information, so you should contact your attorney to discuss your particular matter. Third-party links are provided for convenience only and are not an endorsement by the Dohrwardt Law Firm.