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Chapter Nine

This chapter offers practical information about charity registration and taxes, the fiscal sponsorship option, financial controls, insurance, legal support, and human resources and employment issues.

INN Executive Director and CEO Sue Cross offers this advice.

If you are actively seeking donations in any way in a state, you need to make sure you meet its charity registration requirements. Whether through Twitter, an online donation button, events, phone or mail outreach, if you are soliciting gifts, 41 of the 50 states require you to be registered.

For more information:

Guidestar on State Charity Registration

National Council of Nonprofits has a terrific section to walk you through this.

State by state links are available from the National Association of State Charity Officials and a Harbor Compliance state requirements grid

If you are fiscally sponsored, your registration probably is covered by your fiscal sponsor. Check where your sponsor is registered.

Many nonprofit news organizations depend upon receiving a federal tax exemption through fiscal sponsorship or directly from the Internal Revenue Service under Section 501(c)(3) of the Internal Revenue Code. Because the IRS does not recognize journalism itself as a purpose for tax exemption, a newsroom seeking 501(c)(3) status should seek help from an attorney familiar with IRS rules.

The IRS Form 990, which nonprofits must file annually if they raise over $25,000, asks two questions about your compliance with registration laws in states where you solicit. The 990 is signed by an officer under penalty of perjury. CPAs filing your state 990 often file your own state registration as well, for the state where you’re based. Check if that is part of their service.

If you are national and accept gifts from the public, INN strongly recommends registration in all states that require it. If you are specific to one state or location and don’t actively seek donors in other states, you should consult with your attorney specializing in nonprofit law. Even passive solicitation in some states can require registration. And if your aunt six states away hits your DONATE button, you should be registered in her state. Again, consult with your attorney specializing in nonprofit law.

Charity registration costs vary, but they can be a significant budget item.

For many nonprofits, it is most cost-effective to outsource this to a specialized service because each state has slightly different forms and deadlines for both registration and then annual reporting. Outsourcing firms charge several thousand dollars a year on top of the actual registration fees, but that outsourcing cost may well be cheaper than the salary you’d burn doing it yourself, and it is a major bureaucratic headache to track various state deadlines and forms. There are a number of online do-it-yourself services. However, for multistate registrations, you risk costly fees if you miss deadlines, so DIYers should make sure they have someone clearly assigned to track and handle this who has the bandwidth to stay on top of it year-round.

Some firms and links:

Labyrinth. Established firm. INN has used them and found them reliable, but it pays to cost-compare and shop.

Charity Compliance Solutions. Competitive, good client service. INN recommends CCS, and the INN Services web page explains how to get a group discount.

Affinity. This offers several levels of help. Have heard their service levels can help control costs, but INN has no direct experience with the company.

Harbor Compliance. Large firm with informative marketing materials.

For DIYers:

NOLO, the online legal resource, offers a $125 annual subscription product for DIYers. We haven’t seen any reviews of it.

In order to start up programs more quickly, many nonprofits – both startups and commercial companies converting to nonprofit-status – seek a “fiscal sponsor.”  A fiscal sponsor is an established 501(c)(3)-certified organization that accepts funds on behalf of the sponsored program and ensures the funds are spent to advance the program’s mission. This allows new nonprofits to receive tax-deductible donations while they are ramping up or their status is pending with the IRS. Some nonprofits may be sponsored for a short time. Others stay under sponsorship for years as an efficient way to operate.

For information about INN’s fiscal sponsorships of news organizations go here.

Resource:
5 Tips for Choosing a Fiscal Sponsor for Your Newsroom (LION Publishers, 2021)

 

Financial controls will be needed to account for your revenue and expenses. To help you understand what financial controls may entail, here is a sample from another organization.

Tax-exempt nonprofits face certain public disclosure requirements by law. They must provide copies, upon request, of their three most recently filed IRS Form 990s and their application for tax-exemption. The National Council of Nonprofits provides further explanation and resources.

Nonprofit newsrooms that are members of INN pledge to be transparent about the funding of their news operations and maintain editorial independence from all revenue sources to ensure news judgments are made in the interest of the communities they serve as journalists. They may post their 990s online and make public a list of their donors as part of a donor transparency policy (example).

Three types of insurance coverage are highly recommended for independent news organizations:

  • Media liability insurance protects companies and individuals against claims made by clients for inadequate work or negligent actions, often covering both court costs and any settlements up to the policy limit.
  • Directors and officers insurance provides necessary coverage to your officers and board who are assuming personal liabilities in order to serve your organization.
  • General liability insurance protects against injuries or accidents that may occur on your company’s property.

INN has established relationships with multiple leading providers of insurance for media and nonprofit organizations, leveraging the size of our network to obtain preferred policies for our members and allied journalism organizations.

INN’s how-to guide to Buying Media Insurance is available to INN members; email info@inn.org to get a copy. See also:  Buying media insurance – webinar.

Seeking legal assistance to ensure that you are safeguarding your organization is always a good idea. For those who do not have a lawyer on staff or on your board, INN has resources for its members to find pro-bono or low-cost counsel. Please see the Legal page in the Resources section of our website.

More general information about legal best practices, working with lawyers and reducing legal liability is available here under Operations Resources.

RESOURCES: How to Work with a Media Lawyer

Many resources are available to help you decide whether to hire staff, outsource work or use volunteers.

Advice about the many issues surrounding employment is available from the National Council of Nonprofits.

It’s important to know the legal difference between employees and volunteers and why it matters. The Nonprofit Risk Management Center has a detailed explanation.

For startups planning to hire a staff, INN offers a sample organizational chart. We also can provide you sample job descriptions that have been posted by our members. This Sample Development Director Job Description comes from MinnPost.

For supporting and managing staff, INN provides this sample employee handbook. Additional advice that’s useful for online newsrooms is in this Sample e-Workplace HR Policy from the Nonprofits Insurance Alliance Group.

Startups that become members or are provisional members of INN (defined as organizations launched in the past 18 months) can obtain low-cost access to our Compensation Study. It’s a survey of compensation and benefits data for specific job roles at newsrooms across the INN network.

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