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
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