A charitable organization must comply with all applicable federal laws and regulations, as well as applicable laws and regulations of the states and the local jurisdictions in which it is formed or operates. If the organization conducts programs outside the United States, it must also abide by applicable international laws, regulations and conventions.
Charitable organizations (other than churches) must apply to the Internal Revenue Service for recognition as tax-exempt organizations under section 501(c)(3) of the federal tax code that are eligible to receive tax-deductible contributions. They must then file annual information returns (IRS Form 990) and abide by the rules and reporting requirements set for such organizations by the federal government. They must also abide by state and local laws regarding governance, protection of charitable assets, solicitation of charitable contributions, taxes, and a range of other requirements that apply to both for-profit and nonprofit employers and providers of various types of services. An organization’s governing board is ultimately responsible for overseeing and ensuring that the organization complies with all of its legal obligations and for detecting and remedying wrongdoing by management. While board members are not required to have specialized legal knowledge, they should be familiar with the basic rules and requirements with which their organization must comply and should secure the necessary legal and financial advice and assistance to structure appropriate monitoring and oversight mechanisms and manage charitable assets responsibly.
There are many resources listed on the Independent Sector website to help charitable organizations and their boards understand how their operations may be affected by the law. The Internal Revenue Service provides a number of resources regarding federal laws on its website. Many state attorneys general and charity officials also maintain helpful websites with information on charitable solicitation requirements and other rules applicable to organizations operating in their states.
Many national, state, and regional associations of nonprofit organizations provide online tools and resources that offer guidance on legal requirements and best practices for nonprofit organization management and governance. Organizations may also find it helpful to consult with state and local chapters of bar associations for referrals to individuals or firms offering low-cost or pro bono legal assistance.