In Minnesota, as in other states, all nonprofit organizations are governed by a specific set of laws. In this state, it is the Minnesota Nonprofit Corporation Act, Minn. Stat. ch. 317A.
This clearly outlines how a nonprofit is formed, what is required in the Articles of Incorporations and even requirements as to the specific bylaws adopted by the board of the organization. In addition, most fundraising nonprofits will also apply for tax-exempt status which is governed by the Internal Revenue Code section 501(c)(3) for most charities and organizations.
Laws to Note
There are many different laws that clearly outline how fundraising nonprofits can or cannot use the funds they obtain. In most cases, the funds will be managed by the board of directors as outlined in their bylaws and the Articles of Incorporation.
It is important for the board to understand their fiduciary duties and to avoid any possible conflicts of interest or violations of these duties. For example, under Minnesota law, the board (the nonprofit) may not lend money to a board member or his or her family or family members of officers or employees unless the loan can be reasonably expected to benefit the nonprofit.
Another commonly overlooked law that fundraising nonprofits have to follow is to have full and complete bookkeeping with regards to all of its business. This includes the minutes of board meetings, voting results, changes to articles or bylaws and all financial issues relating to the organization.
As there can be fines and civil penalties for failure to complete with these laws, having the board trained in these laws is an important consideration for any board. As new board members are elected, providing training for these individuals is also critical to avoid any possible misunderstanding or awareness of these key laws.
