Hopkins' Nonprofit Law Dictionary

483 Pages·2015·3.742 MB·English

by  Bruce R. Hopkins

BRUCE R. HOPKINS’
NONPROFIT LAW
DICTIONARY
BRUCE R. HOPKINS
Coverdesign:Wiley
Copyright©2015byBruceR.Hopkins.Allrightsreserved.
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LibraryofCongressCataloging-in-PublicationData:
Hopkins,BruceR.,author.
BruceR.Hopkins’nonprofitlawdictionary/BruceR.Hopkins.–1
pagescm.–(Wileynonprofitlaw,financeandmanagementseries)
ISBN978-1-118-99608-9(hardback)
ISBN9781119057079(ePDF)
ISBN9781119057116(ePub)
1.Nonprofitorganizations–Lawandlegislation–UnitedStates–Dictionaries.
2.Nonprofitorganizations–Taxation–Lawandlegislation–UnitedStates–Dictionaries.
3.Law–UnitedStates–Dictionaries. I.Title. II.Title:Nonprofitlawdictionary.
KF1388.A68H6652015
346.73′06403–dc23 2015005233
PrintedintheUnitedStatesofAmerica
10 9 8 7 6 5 4 3 2 1
ThisDictionaryisdedicatedtomyyoungestgranddaughter,SadieMarieAsh,
whowillbenearlytwelveyearsofagewhenitispublished.Thebookisdedicated
toherbecausesheisalogophile.(Whenshefirstlearnedofthisproject,she
offeredtohelpmewritetheDictionarybutwaschagrinedtolearnitwould
containonlylawwordsandphrases,which,sheruefullyadmits,sheisnotquite
(oryet)readytoabsorb.)WhenIrealizedSadiewasinterestedinwords,
beginningaroundfourorfive,Isetabouttoteachhersomepolysyllabicdoozies.
Isucceededinsomeinstances,althoughIstillcannotdeterminewhatapproach
leadstosuccess.Somewordssheretainsandsometimeuses;somedriftaway.She
reportsherfavoritewordatthistimeisincognitobutcannotexplainwhy.
Anotherissommelier,whichisabyproductofmyeffortstogethertosay“Opus
One”whenarestaurantwaitpersonwouldaskherwhatshewantedtodrink.
Otherwordsthathavemanagedtostickareambiguous,imperative,loquacious,
metaphor,micturate,andpalindrome.TheDictionarywillgivehermuchmore
toworkon.Imustclosethisdedicationnowandreturntomycurrenttask,
whichistoinsertzeitgeistintoSadie’syoungbrain.

CONTENTS
Preface vii
HowtoUseThisDictionary ix
A.................................... 1 N ................................. 270
B................................... 41 O................................. 284
C................................... 56 P.................................. 294
D ................................. 101 Q................................. 338
E.................................. 127 R.................................. 349
F.................................. 148 S.................................. 374
G ................................. 186 T.................................. 418
H................................. 199 U ................................. 441
I.................................. 206 V.................................. 450
J.................................. 233 W................................. 457
K.................................. 237 X.................................. 464
L.................................. 238 Y.................................. 465
M................................. 256 Z.................................. 467
AbouttheAuthor 469

PREFACE
AnyonefamiliarwiththeWileyseriesofpublicationsonlaw,accounting,management,and
fundraisingfornonprofitorganizationsknowsthatyourauthorhasapassionforwritingabout
thefederalandstatelawsapplicabletocharitableandothertypesofnonprofitorganizations.
One of the reasons for this compulsion is the challenge of capturing—and then keeping up
with—thisvastbodyofcomplexandintricaterules,particularlyinthefederaltaxarea.Thanks
to Congress and the state legislatures, the Internal Revenue Service, and other government
agencies,thereisalwaysawiderangeanddeepflowoftopicstowriteabout.
Thereisanotherchallengeunderlyingthezealforthistypeofwriting.ItiswhatIcallthe
“interpretive”function.Thatis,itisnotenoughtosimplywritesummariesofthelawandkeep
thosesummariescurrent—thechallengeistowriteinawaythatthenontechnicalreader(as
wellasmanylawyersandaccountantswhodonotoftendwellonthesubjects)canunderstand.
This observation is not meant to be denigrating to someone who is not a tax lawyer or an
accountant;itissimplyrecognitionofthefactthatthelawissoconvolutedandmangled,and
sofilledwithcross-referencesandunintelligiblephraseology,thattheaveragepersonneedsan
interpretertowadethroughit.Tostatethematterlessdelicately,someoftheselawsarenot
readilyunderstandableatfirstreading.
SomequotationsfromtheInternalRevenueCodeillustratethepoint.Hereisthelanguage
Congressselectedwhenitamendedtheincomeexpenditurerequirementsforprivateoperating
foundations:
Notwithstandingtheprovisionsofsubparagraph(A),ifthequalifyingdistributions(within
themeaningofparagraph(1)or(2)ofsubsection(g))ofanorganizationforthetaxableyear
exceedtheminimuminvestmentreturnforthetaxableyear,clause(ii)ofsubparagraph(A)
shallnotapplyunlesssubstantiallyallofsuchqualifyingdistributionsaremadedirectlyforthe
activeconductoftheactivitiesconstitutingthepurposeorfunctionforwhichitisorganized
andoperated.
ThisisthelastsentenceofIRC§4942(j)(3).
NextisCongress’descriptionofthecriteriathataprivatefoundationmustmeettopaya1
percentexcisetax(ratherthanthegeneral2percent)basedoninvestmentincome:
Aprivatefoundationmeetstherequirementsofthisparagraphforanytaxableyearif(A)the
amountofthequalifyingdistributionsmadebytheprivatefoundationduringsuchtaxable
yearequalsorexceedsthesumof(i)anamountequaltotheassetsofsuchfoundationfor
suchtaxableyearmultipliedbytheaveragepercentagepayoutforthebaseperiod,plus(ii)1
percentofthenetinvestmentincomeofsuchfoundationforsuchtaxableyear,and(B)such
privatefoundationwasnotliablefortaxundersection4942withrespecttoanyyearinthe
baseperiod.
viii PREFACE
Thisissection4940(e)(2)oftheInternalRevenueCode.
Hereismyfavoriteexampleofthepoint,andIwillevenprovideaclueinadvance,whichis
thatthispassage“describes”aqualificationthatacharitableorganizationmustmeetifitwishes
tobeclassifiedasasupportingorganizationwithrespecttoasocialwelfareorganization,alabor
organization,oratradeorprofessionalorganization:
Forpurposesofparagraph(3),anorganizationdescribedinparagraph(2)shallbedeemedto
includeanorganizationdescribedinsection501(c)(4),(5),or(6)whichwouldbedescribed
inparagraph(2)ifitwereanorganizationdescribedinsection501(c)(3).
Thissentence(whichisthelastoneinsection509(a)(3)oftheInternalRevenueCode)and
otherwordsandphrasesareexplainedmoreclearlyinthisbook.Theseitemscovercorporate
andtaxterms(andmanyothers)thatapplyspecificallyintherealmoftax-exemptandother
nonprofitorganizations.
Thepurposeofthesebooksandthemonthlynewsletteristomeetthesethreechallenges:
tocaptureallofthepertinentlaw,writesummariesofitinameaningful,understandableway,
andtokeepwithallchangestothelaw.Itischieflyaneducationalpurpose.
There are many ways to provide education in a written form. The approach of the other
Wiley books that I have written has been to describe the law by subject matter (tax-exempt
organizations,charitablegiving,fundraising,andsoforth).Buttherearemanyconceptsthat
applytomorethanoneofthesefields.
Ihavebeenstrugglingtofindawaytobringallofthesefieldsintoonepublication,where
thesubjectmattercanstillbeaddressedatatechnicallevel.Onewaytodothisisadictionary
ofthetermscomprisingthelawofnonprofitorganizations.Thisisatooldesignedtoaidthe
readerofotherbooksorperiodicalswhenheorshecomesacrossawordorphrasethatisnot
understandable.
IamnotouttojointheranksofNoahWebsterorHenryCampbellBlack(thelatterbeing
theauthorofBlack’sLawDictionary);rather,thepurposeofthisvolumeistosupplementthe
educationalandinterpretativefunctionsofotherbooksintheWileyseries.Indeed,inaddition
tothedefinitionofawordorphrase,across-referenceleadstooneormoreoftheotherWiley
bookswherethereadercanfindmoredetailedinformationonthesubject.
Theexerciseofpreparingthisbookhaschangedme.IfindthatIhavebecomesomewhat
ofanamateurlexicologistorevenaphilologist.Sometimes,whileworkingonthisvolumelate
at night, numbed by mental fatigue, I became concerned with abecedarianism. Even in the
darkesthour,however,Iremainedconvincedthatthisbookisanafflatus.
AsIindicatedearlier,Iseemyselfinthisprocessasadragoman.Iwasforcedtoturninthe
manuscriptofthisbookwhenIdid,lesttheeditorsaccusemeofbarmecide.Iwantedtocall
thesebriefremarksthe“Prolegomena,”buttheymademestaywith“Preface.”Thisprocess,to
mycolleagues’dismay,hascausedmetobecomeaword-grubber.
ItisbestthatIcauseanaposiopesisandsaythat,forthoseofyouinthenonprofitworldwho
arestrainingwiththeburdenofgovernmentregulationandenforcement,IhopetheNonprofit
LawDictionaryhelpsbringmoreunderstandingtotheprocessandtopathwaysforrelief.
BruceR.Hopkins
May2015