Welcome to Moore Nonprofit Law


Welcome to my new site!

Who am I?  My name is Darren Moore and I’m a lawyer with a practice focused on the legal issues faced by nonprofit organizations.  Thus, the name of the blog (get it?  Moore is my name but this is also a place to get “more” nonprofit law — I know, that’s why I’m a lawyer and not an advertising genius).  You can find out more about me on the About page.

This is a new site I recently created as a place I can comment on current legal events affecting nonprofits and offer thoughts and advice on various nonprofit legal and tax topics.  As the number of posts grows, so will the topics and blog categories.  It also gives me a place to keep papers and presentations from seminars for anyone who may be interested.  (Side note, I am still uploading papers from previous years so as of this post, that section isn’t quite complete).  Finally, the Resources page contains a list of links that I find helpful in regard to nonprofit legal issues and hope you do too.  New categories of blog posts will be created as new posts go up, so check back in from time to time.

When I’m not tending to this site (which, let’s face it, means most of the time) I practice at the Fort Worth, Texas law firm of Bourland, Wall & Wenzel, P.C. I’m fortunate to get to work with such smart and hard-working folks.  If you are looking for legal services (as opposed to legal information which this site provides), click over to the firm site, and go from there.

Thanks for visiting and I hope you’ll stay tuned.  Next up, a series on fiduciary duties of nonprofits decision-makers.

Four Keys to Creating Lasting Vision for a Nonprofit


Years before releasing his influential book, Good to Great, Jim Collins teamed with Jerry Porras to author an article in Harvard Business Review titled, Building Your Company’s Vision, examining one aspect of how companies had created lasting success – vision.  Central to their theories of visionary companies is the idea that “companies that enjoy enduring success have core values and a core purpose that remain fixed while their business strategies and practices endlessly adapt to a changing world.”  This same idea applies with equal force to the nonprofit sector (as Collin subsequently noted in Good to Great and the Social Sectors:  A Monograph to Accompany Good to Great).

So what is “vision?”  Collins and Porras define “vision” as consisting of two major components: core ideology and envisioned future, with the core ideology being composed of core values and core purpose and envisioned future being ten to thirty-year goals.  Working together, core ideology and envisioned future combined to form a vision for the organization, functioning in the role of a “North Star” for the foundation and its board.

I suggest there are four keys to to creating lasting vision in the nonprofit context:

1. Conceptualizing Vision: Whether done at the founding stage of the organization or after, the board should take time to distill the core values (the essence of the organization) and core purpose (the reason for being) of the organization.  What values and purpose should stand the test of time, remaining fixed despite the changing world.

2. Stabilizing Vision: Once the core values and core purpose (together, the core ideology according to Collins and Porras) have been conceptualized, the board should embed that core ideology into the foundational aspects of the organization.  This will look different depending on the type of organization but may include choosing a specific form or entity to further the core ideology, drafting a specific purpose statement (as opposed to the standard broad purpose statement) into the governing documents, making choices such as whether a foundation is to be perpetual or a spend-down foundation, and considering other provisions such as requiring super-majority votes or external court approval to amend specific purpose provisions of the governing documents.

3. Institutionalizing Vision:  Because most nonprofits are created with a potential perpetual duration, and because boards change over time, the vision must move from individual to institution, from entrepreneur to enterprise.  This is accomplished through board initiation, ongoing board training (particularly including training on fiduciary duties), and strategic planning (including succession planning).  Where the organization is a family foundation, the use of junior advisory boards can be a great way to pass on vision to successive generations.

4. Contextualizing Vision: While core values and purpose should remain fixed, strategies and practices must adapt to the changing world, making the organization relevant and effective to its particular time and place.  Contextualizing the vision will necessarily look differently depending upon the variables involved—the board members, the investment climate, technological advances, the needs to be met, and those to be benefited by the organization’s work.  This requires the hard work of the board to differentiate between what is part of the core ideology of the organization and what is not.  It also requires ongoing study of what is working in the organization’s field.  Finally it requires the willingness and courage to make changes to strategies and practices.


How to Set Up a Disaster Relief Charity


When tragedy strikes as it did in different ways last week in Boston and West one thing is a constant, the desire of Americans to help their neighbors. That help comes in many forms as people seek to meet the physical, emotional, spiritual and even financial needs of those affected. Sometimes to meet those needs individuals and businesses decide to set up new charitable organizations. This post will teach you how to set up a new charity (one that follows the IRS rules) to provide aid following a disaster.

There are many ways to help our neighbors in need. We give blood, give to established charities like the Red Cross and Salvation Army, donate clothes, food, and blankets, and join together to pray and show support. After the most immediate needs have been met in the aftermath of tragedy, the focus turns to what we can do longer term. Sometimes a decision is made to establish a fund to help those affected. While not mandated, often the decision is made to seek tax exempt status. Trying to meet the needs we see while also navigating the various rules that regulate this type of good is an admirable goal but not one without challenges.

The key to establishing a tax-compliant charity to provide for disaster assistance is defining the persons eligible for aid. This requires two answering two questions: (1) what class of persons is eligible for assistance, and (2) which of the persons in that class are needy or distressed.

To qualify for tax exempt status under Section 501(c)(3) an organization must serve public purposes, not private purposes. In the context of disaster relief this means defining the class broadly so as to benefit a “charitable class” as opposed to a narrower subset of individuals. Stated differently, the class must be sufficiently large or indefinite as opposed to closed and definite. For example, an organization established to provide assistance to families of the first responders who lost their lives in West, Texas would fail to qualify as a Section 501(c)(3) organization the class is closed and defined (i.e. a specific group that would qualify and no one else). However, an organization established to provide assistance to families of West, Texas first responders who lose their lives in the line of duty, both those from last week’s fertilizer plant explosion and those who may lose their lives in the future, would qualify the class is open and indefinite (the criteria may apply to any number of people in the future). As a side note, there is no bright line on what class is “sufficiently large” so as to qualify as a charitable class. While a class like the first responders killed during the event would be too small, a class of families of those killed or injured (more than 170) could arguably be large enough.  For example, One Fund Boston, according to news reports, has been established specifically to assist families of those killed or injured in the Boston bombing. It will be interesting to see if that class is sufficiently large so as to be charitable.

After ensuring the assistance is available for a charitable class, the organization providing disaster relief must also ensure the specific persons receiving aid are proper recipients of charity. The IRS has acknowledged that both individuals and businesses may be appropriate recipients of charity. Further, charitable aid may be provided on an emergency basis, a short-term basis (e.g. 3-6 months) or a long-term basis. With respect to emergency aid (such as blankets, hot meals, clothing), it is sufficient that the persons receiving aid were victims of the disaster no showing of financial need is required. However, for assistance beyond immediate emergency assistance, the organization must conduct an assessment to ensure the recipient of aid meets the test of being in need and qualifying for charitable aid, namely lacking the resources to obtain basic necessities.

At that point, the type of aid that is appropriate depends on the recipient’s needs and resources. For example, while all victims in the immediate area of the Boston Marathon bombing may qualify for immediate crisis counseling, whether long(er) term counseling may be given by a charitable organization depends on the needs and resources of the individual.

It is critical for the organization dispensing aid to document the assessment it performs so that it will have records to show that its funds were spent for charitable purposes. More information on documentation and reporting can be found in the IRS’s helpful publication on disaster relief, Publication 3833.

Aside from the issues in this post specific to disaster relief, to create a disaster relief charity, the founders must follow state law to create the organization and file Form 1023 to obtain recognition of tax exempt status from the IRS. Here is a link to a paper that I wrote in 2004 and updated in 2011 regarding the basic set-up of a 501(c)(3) organization discussing these concepts: Setting Up Your 501(c)(3) Nonprofit Organization.