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Educational Foundations, Booster Clubs, PTAs, PTOs
And Other School Supporting Organizations May Be Impacted by Changes
to the Michigan Nonprofit Law and IRS Form 990
Recent
amendments to the Michigan Nonprofit Corporation Act (the
"Act" ) and IRS Form 990 may impact non-profit
organizations which support your School District.
Michigan Nonprofit
Corporation Act Amendments
The Act now
requires that the board of a nonprofit corporation have at least
three directors or trustees. Nonprofit corporations have until
January 16, 2009 to comply with this requirement. If your
non-profit corporation does not currently have at least three
directors or trustees, the Michigan Department of Labor &
Economic Growth has indicated that the corporation must elect
additional directors or trustees by January 16, 2009. In
addition, if the corporation's bylaws do not currently provide for at
least three directors or trustees, your corporation should amend its
bylaws.
In another
change, the Act now prohibits charitable purpose corporations from
providing loans to or guaranteeing obligations of an officer or
director of the corporation unless the officer or director is a
client of the corporation and the loan or guaranty is necessary to
carry out the corporation's charitable purposes. A charitable
purpose corporation is one that is tax exempt under Section 501(c)(3)
of the Internal Revenue Code.
IRS Form 990
Revisions
Effective for
the 2008 tax year, nonprofit organizations will be required to file
each year a newly revised, longer Form 990 with the IRS. The
new form consists of an 11-page, 11-part core form that is required
to be completed by all organizations that file the Form 990.
Most organizations will also need to complete additional schedules.
One major area
of change to Form 990 relates to the governance reporting
requirements. In particular, there are new questions that ask
whether the organization has various governance policies, including a
conflict of interest policy, a whistleblower policy, and/or a
document retention policy. A series of questions also requires an
explanation of how a board determines executive compensation.
Although the
IRS is not treating these policies as mandatory at this time, many
organizations are adopting them to avoid any unwanted consequences
that might arise. These consequences might include an increased
risk of audit or unfavorable publicity given the availability of Form
990 on the internet. Also, the organization will benefit from
complying with best practices of the nonprofit sector.
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