Here are some answers to question I received at a recent training. Many of the questions in this batch came from folks involved with religious organizations, synagogues and churches.
Why are religious organization tax exempt?
The best answer I have is the First Amendment of the Constitution of the United States which states, “Congress shall make no law respecting an establishment of religion, nor prohibiting the free exercise thereof.” Taxing a religious organization might interfere with the free exercise of religion. For the IRS take on churches and religious organization exemptions please read this.
Is a board member protected from legal action if it relies on outside advice?
If the board member is not paid and is acting in good faith they are most likely protected if they are involved in making what turn out to be bad decisions, even decisions that result in harm to the nonprofit. More protection may be had in the organization Directors and Officers Liability insurance policies. A great source of info on this topic is here, and for an organization that specializes in nonprofit insurances click here.
Where can I find some good investment policies for our charity?
Try this one for starters.
Do religious organizations have to register with the state of California if they want to hold a raffle?
Yes they do. Please check out the California Attorney General’s office to find out more, try here and here and also here.
Do religious organizations in California have to file the RRF-1, the Attorney General’s annual report?
Probably not, check the instructions to the form on this page.
Donation to foreign based nonprofits are not tax deductible for Americans, but are there special rules for Israel?
None that I could find. Donations to organizations that operate internationally but are registered with the IRS as a charity are tax deductible.
Can a religious organization form a for-profit subsidiary?
Yes
Alan,
I was just pointed to your blog by Sandra Sims of Step by Step Fundraising blog.
I will spend some more time looking at your site and all its helpful information after tax season! I really enjoy working with nonprofits, but tax returns help increase my dd’s college fund! I did add you to my feedreader.
I really like how you answer questions so briefly. I get asked similar questions, but my answers are much longer, probably because I try to anticipate what the reader may ask next or what they are also thinking.
Carol Topp, CPA
Thanks Carol, you have a great site too. I have passed it on to folks I know who are doing homeshcools.
Alan
If a foreign religious organization wants to maintain a bank account in the United Sates to receive donations from US residents and Non US residents does it need to register with the US IRS and does it have to file a US annual report in connection with the donations received in such US bank account?
Thank you _ marcelo thiollier
reply to: marcelo@thiollier.com
If you want to accept donations from the US and allow them to treat it as a charitable contribution and be able to get the tax deduction, then you probably will need to register as a tax exempt organization in the US. You will also need to register in the individual states you are soliciting in.
Good luck.
Thank you once again — Marcelo