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Table of Contents
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List of Forms by Chapter - Chapter 1 — Organizing an Illinois Not-for-Profit Corporation
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I. Introduction - II. [1.4] A Brief History of Not-for-Profit Corporations in Illinois
- III. [1.5] Charitable Trust Law in Illinois
- IV. [1.11] Other Statutes and Considerations Affecting Not-for-Profit Corporations
- Other Illinois Statutes
- [1.12] Religious Corporation Act
- [1.13] Special Charter Not For Profit Corporations Act
- [1.14] State Housing Act
- [1.15] Statutes Pertaining to Postsecondary Private Educational Corporations
- [1.16] Statutes Pertaining to K – 12 Private Schools
- [1.17] Condominium Property Act and Co-operative Act
- [1.18] Limited Liability Companies, Low-Profit Limited Liability Companies, and Benefit Corporations
- [1.19] Limited Liability Companies
- [1.20] Low-Profit Limited Liability Company (L3C)
- [1.21] Benefit Corporations
- Other Considerations
- [1.22] Illinois Department of Financial and Professional Regulation and Illinois Department of Public Health Oversight
- [1.23] Foreign Corporations
- [1.24] Unincorporated Associations
- [1.25] Election To Accept General Not For Profit Corporation Act
- V. Organizing a Not-for-Profit Corporation
- [1.26] Initial Planning for Nonprofit Organizations
- [1.27] First Question: Who Are the Founders?
- [1.28] Second Question: What Is the Purpose of the Organization?
- [1.29] Third Question: Where Will the Organization Serve?
- [1.30] Fourth Question: How Will the New Organization Operate?
- [1.31] Fifth Question: When Will the Organization Operate?
- [1.32] Founder’s Syndrome
- [1.33] Dissolving the Corporation
- [1.34] Organizational Documents
- [1.35] Articles of Incorporation
- [1.36] Naming the Corporation
- [1.37] Registered Agent and Address
- [1.38] Initial Board of Directors
- [1.39] Corporate Purposes
- [1.40] Other Provisions, Including Limitation of Authority or Special Powers
- [1.41] Incorporators — Name and Address
- [1.42] Filing the Articles of Incorporation
- [1.43] Filing a Restatement of the Articles of Incorporation
- [1.44] Bylaws
- [1.45] Statement of Corporate Authority and Registered Office
- [1.46] Statement of Purposes and Limitations
- [1.47] Special Limitations on Authority or Activities
- [1.48] Membership
- [1.49] Voting rights
- [1.50] Membership classifications
- Meetings of Members
- [1.51] In general
- [1.52] Notice
- [1.53] Membership Actions Without Meetings
- [1.54] Federated Organizations with Chapters, Regional Affiliates, Etc.
- [1.55] Board of Directors
- [1.56] The self-perpetuating board of directors
- [1.57] Appointment by controlling organization
- [1.58] Election by members
- [1.59] Voting rights
- [1.60] Compensation
- [1.61] Terms of office
- [1.62] Removal
- [1.63] Meetings
- [1.64] Quorum and manner of acting
- [1.65] Notice
- [1.66] Telephonic meetings and actions without meetings
- [1.67] Committees
- [1.68] Committees of the board with authority to act
- [1.69] Composition
- [1.70] Authorization to act
- [1.71] Standing and ad hoc committees
- [1.72] Commission, advisory body, or other such body
- [1.73] Officers
- [1.74] Distinction between officers and directors
- [1.75] Titles of positions
- [1.76] Roles and relationships
- [1.77] Conflicts of Interest — Directors and Officers
- [1.78] Liability of Directors, Indemnification, and Insurance
- [1.79] Limited liability for directors and officers
- [1.80] Corporations qualified for tax-exempt status under Code §501(c)
- [1.81] Directors, officers, and persons who serve without compensation
- [1.82] Individuals directly or indirectly responsible for causing an injury
- [1.83] Indemnification of directors, officers, volunteers, and employees
- [1.84] When to indemnify
- [1.85] How to indemnify
- [1.86] Additional considerations
- [1.87] Insurance to cover indemnification
- [1.88] Alternative dispute resolution
- [1.89] Amendments to the Articles of Incorporation and Bylaws
- VI. Special Considerations
- VII. Initial Operations
- VIII. Ongoing Corporate Requirements
- IX. [1.98] Initial Governmental Registrations
- [1.99] IRS Registration for Federal Employer Identification Number
- [1.100] Attorney General Registration Under the Charitable Trust and Solicitation for Charity Acts
- [1.101] Illinois Employer Registrations
- [1.102] Illinois Employer Identification Number
- [1.103] Department of Employment Security
- [1.104] Illinois Workers’ Compensation
- [1.105] Illinois Sales Tax Issues
- [1.106] Qualifying Organizations
- [1.107] Application for Sales and Use Tax Exemption
- [1.108] Registration as a Retail Seller
- X. [1.109] Other Forms Related to the General Not For Profit Corporation Act
- [1.110] Form NFP 104.10 — Application for Reservation of Name
- [1.111] Form NFP 104.15/20 — Application To Adopt, Change or Cancel an Assumed Corporate Name
- [1.112] Form NFP 101.15 — Statement of Correction
- [1.113] Form NFP 110.30 — Articles of Amendment
- [1.114] Form NFP 105.10/105.20 — Statement of Change of Registered Agent and/or Registered Office
- [1.115] Form NFP 105.15 — Notice of Resignation of Registered Agent
- [1.116] Form NFP 112.45/113.60 — Application for Reinstatement of Domestic/Foreign Corporations
- [1.117] Form NFP 111.25 — Articles of Merger or Consolidation
- [1.118] Form NFP 112.20 — Articles of Dissolution
- [1.119] Form NFP 112.25 — Articles of Revocation of Dissolution
- [1.120] Form NFP 113.15 — Application for Authority To Conduct Affairs in Illinois
- [1.121] Form NFP 113.45 — Application for Withdrawal and Final Report
- [1.122] Election To Accept the NFPCA
- XI. [1.123] Conclusion
- XII. Appendix
- [1.124] Bibliography
- [1.125] Government Resources
- [1.126] Certified Corporate Resolution To Make Election
- Sample Bylaws
- [1.127] Article I — Offices
- [1.128] Article II — Members
- [1.129] Article III — Meetings of Members
- [1.130] Article IV — Board of Directors
- [1.131] Article V — Officers
- [1.132] Article VI — Committees, Commissions, and Advisory Boards
- [1.133] Article VII — Contracts, Checks, Deposits, and Funds
- [1.134] Article VIII — Certificates of Membership
- [1.135] Article IX — Books and Records
- [1.136] Article X — Fiscal Year
- [1.137] Article XI — Dues
- [1.138] Article XII — Seal
- [1.139] Article XIII — Waiver of Notice
- [1.140] Article XIV — Indemnification
- [1.141] Article XV — Amendments
- [1.142] Alternative Indemnification Provisions
- [1.143] Sample Bylaw for Director Conflicts of Interest — Nonmember Corporation
- Board Conflict Resolution Policies
- [1.144] Short Form
- [1.145] Parties Pick Mediator
- [1.146] More Specific Guidelines, Parties Pick Mediator
- Chapter 2 — Tax Considerations
- I. Scope of Chapter
- II. Advantages of Establishing Exemption
- III. Not-for-Profit Organizations Exempt from Federal Income Tax — Charitable, Educational, Religious, Literary, and Scientific Organizations
- [2.9] In General
- [2.10] Organizational Test
- [2.11] Limitation of Legislative or Political Activities
- [2.12] Distribution of Assets on Dissolution
- [2.13] Operational Test
- [2.14] Legislative or Political Activities
- [2.15] Legislative Activities in General
- [2.16] Section 501(h) Election
- [2.17] Political Activities
- [2.18] Inurement of Net Earnings
- [2.19] Avoidance of Terrorist Activities
- [2.20] Exempt Purposes
- [2.21] Definition of “Religious”
- [2.22] Definition of “Charitable”
- [2.23] Definition of “Scientific”
- [2.24] Definition of “Testing for Public Safety”
- [2.25] Definition of “Literary”
- [2.26] Definition of “Educational”
- [2.27] Definition of “Amateur Sports Organizations”
- [2.28] Definition of “Prevention of Cruelty to Children or Animals”
- [2.29] Status as Publicly Supported Organization or Private Foundation
- Certain Organizations Described in §170(b)(1)(A)
- [2.30] In General
- [2.31] Section 170(b)(1)(A)(vi) Organizations
- [2.32] “33 1/3 percent-of-support” test
- [2.33] Facts and circumstances test
- [2.34] Definition of “general public”
- [2.35] Definition of “support”
- [2.36] Support from a governmental unit
- [2.37] Publicly Supported Organizations
- [2.38] Gifts and Contributions Distinguished from Gross Receipts
- [2.39] Grants Distinguished from Gross Receipts
- [2.40] Gross Receipts Distinguished from Gross Investment Income
- [2.41] Supporting Organizations
- [2.42] Organizational and Operational Tests
- [2.43] Organizational test
- [2.44] Operational test
- [2.45] Relationship Test
- [2.46] Control Test
- [2.47] Restrictions on Donor-Advised Funds
- Intermediate Sanctions for 501(c)(3) Public Charities and 501(c)(4) Organizations
- [2.48] Overview
- [2.49] Effective Date
- [2.50] Definition of “Excess Benefit Transaction”
- [2.51] Definition of “Disqualified Person”
- [2.52] Types of Transactions to Which Intermediate Sanctions Apply
- [2.53] Definition of “Fair Market Value”
- [2.54] Definition of “Organization Manager” and Organization Manager’s Liability
- [2.55] Filing Requirements
- [2.56] Tax on Participation in Abusive Tax Transactions
- IV. [2.57] Private Foundation Rules
- [2.58] Excise Tax on Net Investment Income
- [2.59] Disqualified Persons
- [2.60] Self-Dealing Tax
- Acts of Self-Dealing and Exceptions
- [2.61] Sale or Exchange of Property
- [2.62] Leasing of Property
- [2.63] Lending of Money
- [2.64] Furnishing of Goods, Services, or Facilities
- [2.65] Payment of Compensation
- [2.66] Use of Income or Assets
- [2.67] Payments to Government Officials
- [2.68] Indirect Self-Dealing
- [2.69] Correction of Acts of Self-Dealing
- [2.70] Filing of Returns
- [2.71] Taxes on Failure To Distribute Income
- [2.72] Distributable Amount
- [2.73] Qualifying Distributions
- [2.74] Grants to Non-Operating Foundations, Controlled Organizations, and Certain Supporting Organizations
- [2.75] Order of Qualifying Distributions
- [2.76] Operating Foundations
- Taxes on Excess Business Holdings
- [2.77] In General
- [2.78] Tax Rates
- [2.79] Permitted Holdings
- [2.80] Pre-May 27, 1969, Business Holdings — Present Holdings
- [2.81] Pre-May 27, 1969, Wills and Trusts
- [2.82] Other Post-May 26, 1969, Changes in Business Holdings
- [2.83] Divestiture of Excess Business Holdings
- Taxes on Investments That Jeopardize Charitable Purposes
- [2.84] In General
- [2.85] Tax Rates
- Taxes on Taxable Expenditures
- [2.86] In General
- [2.87] Expenditure Responsibility
- [2.88] Tax Rates
- Procedural Aspects of Private Foundation Status
- [2.89] Amendments of Governing Instruments
- [2.90] Termination of Private Foundation Status
- V. Organizations Described in Sections Other than §501(c)(3)
- [2.91] In General
- [2.92] Social Welfare Organizations
- [2.93] Legislative and Political Activities
- [2.94] Profit-Making Activities
- [2.95] Providing Services to Members
- [2.96] Trade Associations
- [2.97] Promotion of a Common Business Interest
- [2.98] Net Earnings Inuring to Members, Particular Services for Members, and Business Activities
- [2.99] Cooperative Activities — Buying or Selling
- [2.100] Advertising
- [2.101] Labor Relations Activity
- [2.102] Services to Nonmembers
- [2.103] Social Clubs
- [2.104] Benefits to Members
- [2.105] Business Activities
- VI. Taxation of Business Income
- [2.106] In General
- [2.107] Investment Income
- [2.108] Income from Debt-Financed Property
- [2.109] Unrelated Trade or Business Income
- [2.110] Related vs. Unrelated
- [2.111] Trade or Business Determination
- [2.112] Definition of “Regularly Carried On”
- [2.113] Trade Shows
- [2.114] Advertising Income
- [2.115] Social Clubs
- [2.116] Income from Controlled Organizations
- [2.117] Determination of Amount Subject to Tax
- VII. Acquiring Tax-Exempt Status
- VIII. [2.124] Loss of Tax-Exempt Status
- IX. [2.125] Federal Tax Returns Required To Be Filed by Exempt Organizations
- Chapter 3 — Operating Considerations
- I. [3.1] Introduction
- II. Membership
- III. Meetings of Members
- IV. Board of Directors
- [3.18] Management of Affairs
- [3.19] Number of Directors
- [3.20] Qualifications
- [3.21] Election or Selection
- [3.22] Cumulative Voting
- [3.23] Nomination
- [3.24] Term of Office
- [3.25] Acceptance
- [3.26] Vacancies
- [3.27] Meetings
- [3.28] Quorum — Proxy
- [3.29] Compensation
- [3.30] Committees
- [3.31] Removal of Directors
- V. Officers
- [3.32] In General
- [3.33] Qualifications — Term
- Officers’ Powers and Responsibilities
- [3.34] President
- [3.35] Vice President
- [3.36] Secretary
- [3.37] Treasurer
- [3.38] Assistant Offices
- [3.39] Chief Executive or Operating Officer
- [3.40] Compensation
- [3.41] Authority of Officers
- [3.42] Resignation or Removal
- [3.43] Vacancies
- VI. [3.44] Books and Records
- VII. Amendment of Articles of Incorporation
- VIII. [3.49] Amendment of Bylaws
- IX. [3.50] Change of Registered Office or Registered Agent
- X. Incurring Debt
- XI. [3.53] Investments
- XII. [3.54] Insurance
- XIII. Miscellaneous Special Statutes
- XIV. Annual Report
- XV. Foreign Not-for-Profit Corporations
- XVI. [3.72] Recording Documents
- XVII. [3.73] Waiver of Notice
- XVIII. [3.74] Implications of the Sarbanes-Oxley Act
- Chapter 4 — Directors’ and Officers’ Liability
- I. [4.1] Introduction
- II. [4.2] Functions of the Board of Directors and Officers
- III. [4.3] Choosing Directors and Officers
- IV. [4.4] Legal Responsibilities of Directors and Officers
- [4.5] Responsibilities Consistent with the For-Profit Sector
- [4.6] Duty of Loyalty
- [4.7] Transactions Involving Conflicts of Interest
- [4.8] Misuse of Corporate Information or Resources
- [4.9] Excess Benefit Transactions
- [4.10] Duty of Care
- [4.11] Active Oversight Through Board Participation
- [4.12] Reliance on Outside Counsel
- [4.13] Fiscal Responsibility
- [4.14] Loans to Corporate Directors and Officers
- [4.15] Loans to Corporate Insiders
- [4.16] Augmented Duties
- [4.17] Duties and Liabilities Unique to the Not-for-Profit Sector
- [4.18] The Charitable Trust Act
- [4.19] Other Financial Control Statutes
- [4.20] Designated Funds and Donor-Advised Funds
- [4.21] Distribution upon Dissolution of the Organization
- [4.22] Duty of Obedience
- V. [4.23] Limitations on Liability
- VI. [4.31] Contracts
- VII. [4.32] Maintenance of Corporate Property
- VIII. [4.33] Supervision of Charitable Services
- IX. [4.34] Conclusion
- X. Appendix
- Chapter 5 — Employment Issues
- I. [5.1] Introduction
- II. Classification of Employees
- III. Compensation and Benefits
- IV. Liability Issues
- [5.16] Introduction
- [5.17] Vicarious Liability and the Doctrine of Respondeat Superior
- [5.18] Diminution of Doctrine of Charitable Immunity in Employment Torts
- [5.19] Federal Volunteer Protection Act of 1997
- [5.20] Limited Liability of Directors, Officers, and Persons Who Serve Without Compensation Under Illinois Law
- [5.21] Nondischargeability of Tax Liability
- V. Employment-Related Insurance
- [5.22] Introduction
- [5.23] Unemployment Compensation Insurance for Not-for-Profits
- [5.24] Workers’ Compensation Insurance
- [5.25] Directors and Officers Liability Insurance
- [5.26] Professional Acts and Omissions Insurance
- [5.27] Fidelity Bonds
- [5.28] Employment Practices Liability Coverage
- [5.29] Employee Benefits Liability Endorsement
- VI. Personnel Practices for Employees and Volunteers
- [5.30] Introduction
- [5.31] At-Will Employment in Illinois
- [5.32] Content of Personnel Policy Manuals and Employee Handbooks
- [5.33] Personnel Information Storage
- [5.34] Selection, Screening, and Hiring Issues
- [5.35] Supervision and Supervisor Liability
- [5.36] Performance Evaluation Issues
- [5.37] Sexual Harassment Issues
- [5.38] Conflict of Interest Issues
- [5.39] Termination and Severance Issues
- VII. [5.40] Employment-Related Laws
- Federal Laws
- [5.41] Age Discrimination in Employment Act of 1967
- [5.42] Americans with Disabilities Act of 1990
- [5.43] Bankruptcy Code §525
- [5.44] Civil Rights Acts of 1866, 1964, and 1991
- [5.45] Consolidated Omnibus Budget Reconciliation Act of 1985
- [5.46] Consumer Credit Protection Act
- [5.47] Drug-Free Workplace Act of 1988
- [5.48] Employee Polygraph Protection Act of 1988
- [5.49] Employee Retirement Income Security Act of 1974
- [5.50] Equal Pay Act of 1963
- [5.51] Executive Order No. 11,246
- [5.52] Fair and Accurate Credit Transactions Act
- [5.53] Fair Credit Reporting Act
- [5.54] Fair Labor Standards Act of 1938
- [5.55] Family and Medical Leave Act of 1993
- [5.56] Federal Arbitration Act
- [5.57] Federal Election Campaign Act of 1971
- [5.58] Federal Unemployment Tax Act
- [5.59] Genetic Information Nondiscrimination Act of 2008
- [5.60] Health Insurance Portability and Accountability Act
- [5.61] Higher Education Act of 1965
- [5.62] Immigration Reform and Control Act of 1986
- [5.63] Jury System Improvements Act of 1978
- [5.64] Lilly Ledbetter Fair Pay Act of 2009
- [5.65] National Labor Relations Act
- [5.66] Occupational Safety and Health Act of 1970
- [5.67] Pregnancy Discrimination Act
- [5.68] Rehabilitation Act of 1973
- [5.69] Sarbanes-Oxley Act
- [5.70] Uniformed Services Employment and Reemployment Rights Act of 1994
- [5.71] Vietnam Era Veterans’ Readjustment Assistance Act of 1974
- [5.72] Whistleblower Claims
- [5.73] Worker Adjustment and Retraining Notification Act
- [5.74] State Laws
- [5.75] Abortion Performance Refusal Act
- [5.76] AIDS Confidentiality Act
- [5.77] Child Labor Law
- [5.78] Disclosure of Offenses Against Children Act
- [5.79] Election Code
- [5.80] Employee Credit Privacy Act
- [5.81] Equal Wage Act
- [5.82] Illinois Freedom To Work Act
- [5.83] Health Insurance Claim Filing Act
- [5.84] Illinois Human Rights Act
- [5.85] Jury Act
- [5.86] Job Opportunities for Qualified Applicants Act (Ban the Box)
- [5.87] Medical Examination of Employees Act
- [5.88] Minimum Wage Law
- [5.89] Nursing Mothers in the Workplace Act
- [5.90] One Day Rest in Seven Act and Eight Hour Work Day Act
- [5.91] Personnel Record Review Act
- [5.92] Right to Privacy in the Workplace Act
- [5.93] School Visitation Rights Act
- [5.94] Employee Sick Leave Act
- [5.95] Toxic Substances Disclosure to Employees Act
- [5.96] Unemployment Insurance Act
- [5.97] Illinois Uniform Conviction Information Act
- [5.98] Illinois Wage Payment and Collection Act
- [5.99] Whistleblower Claims
- [5.100] Workers’ Compensation Act
- Local Laws
- [5.101] Cook County Human Rights Ordinance
- [5.102] City of Chicago Human Rights Ordinance
- [5.103] City of Chicago Minimum Wage Ordinance
- [5.104] City of Chicago Paid Sick Leave Ordinance
- [5.105] Cook County Earned Paid Sick Leave Ordinance
- VIII. [5.106] Churches and Other Religious Organizations — Federal Law Regarding Clergy and Church Employees
- [5.107] Definitions of “Church” and “Clergy Person”
- [5.108] The Church as Employer
- [5.109] The Minister as Employee
- [5.110] Clergy Housing Allowance
- [5.111] Exemption from Social Security Coverage
- [5.112] Self-Employed Social Security Contributions
- [5.113] Income Tax Withholding
- [5.114] Churches Are Exempt from Unemployment Compensation
- [5.115] Judicial Involvement in Clergy-Related Employment Disputes
- IX. [5.116] Bibliography
- Chapter 6 — Merger and Consolidation, Sale of Assets, and Dissolution
- I. Scope of Chapter
- II. Merger and Consolidation
- Domestic Not-for-Profit Corporations
- Developing the Plan of Merger or Consolidation
- [6.3] In General
- [6.4] Form: Plan and Agreement of Merger
- Adoption of the Plan by the Board of Directors and/or Members of Each Corporation
- Corporation Having No Members Entitled To Vote on Mergers or Consolidations
- [6.5] In general
- [6.6] Form: Board Resolution Adopting Plan and Agreement of Merger or Consolidation
- Corporation Having Members Entitled To Vote on Mergers or Consolidations
- [6.7] In general
- [6.8] Form: Board Resolution Adopting Plan and Agreement of Merger or Consolidation
- [6.9] Form: Members’ Resolution Adopting Plan and Agreement of Merger or Consolidation
- [6.10] Articles of Merger or Consolidation
- [6.11] Domestic and Foreign Not-for-Profit Corporations
- [6.12] For-Profit and Not-for-Profit Corporations
- [6.13] Domestic Not-for-Profit Corporations and Governing Bodies of State Universities
- III. Sale, Lease, or Exchange of Assets
- Agreement To Sell, Lease, or Exchange Assets
- [6.14] In General
- [6.15] Form: Agreement for the Sale of Assets
- Approval of the Sale, Lease, or Exchange of Assets
- Sale, Lease, or Exchange of Assets in the Usual and Regular Conduct of the Affairs of the Corporation or Mortgage or Pledge of Its Assets
- [6.16] In General
- [6.17] Form: Board Resolution Authorizing Sale of Assets
- Sale, Lease, or Exchange of Assets Other than in the Usual and Regular Conduct of the Corporation’s Affairs
- [6.18] In General
- [6.19] Form: Board Resolution Authorizing Sale of Assets
- [6.20] Form: Members’ Resolution Approving Sale of Assets
- Agreement of Sale and Conveyance of Assets
- [6.21] In General
- [6.22] Form: Omnibus Instrument of Conveyance
- [6.23] Additional Assignments and Transfers
- IV. Dissolution, Liquidation, and Distribution of Assets
- [6.24] Preliminary Considerations
- [6.25] Charitable Trust Law
- [6.26] Dissolution
- General Considerations
- [6.27] Plan of Distribution
- Barring Known Claims
- [6.28] In general
- [6.29] Form: Notice to Creditors
- [6.30] Post-Dissolution Actions
- Specific Considerations in Each Type of Dissolution
- Voluntary Dissolution
- Corporation having no members entitled to vote on dissolution
- [6.31] In general
- [6.32] Form: Board Resolution Approving Dissolution
- [6.33] Form: Plan of Distribution
- Corporation having members entitled to vote on dissolution
- [6.34] In general
- [6.35] Form: Board Resolution Approving Dissolution
- [6.36] Form: Plan of Distribution
- [6.37] Form: Members’ Resolution Approving Dissolution and Plan of Distribution
- [6.38] Articles of dissolution
- Revoking dissolution proceedings
- [6.39] In general
- [6.40] Form: Board Resolution Revoking Dissolution
- [6.41] Administrative Dissolution of Domestic Corporations and Revocation of Foreign Corporations’ Authority To Do Business in Illinois
- [6.42] Judicial Dissolution
- Chapter 7 — Government Regulation
- I. [7.1] Scope of Chapter
- II. Attorney General
- Entities Subject to Jurisdiction
- [7.8] Charitable Organizations
- [7.9] Noncharitable Organizations
- Powers of the Attorney General
- [7.10] In General
- [7.11] Powers Cannot Be Diminished
- [7.12] Right To Intervene
- [7.13] Necessary Party
- [7.14] Cy Pres Proceedings
- [7.15] Registration Under the Charitable Trust Act
- [7.16] Who Must Register?
- [7.17] “Charitable Purposes” Defined
- [7.18] Annual Reporting
- Registration Under the Solicitation for Charity Act
- [7.19] By Charitable Organizations
- [7.20] Exemptions
- [7.21] Annual Reporting
- [7.22] Religious Exemptions
- By Fund-Raisers
- [7.23] Professional Fund-Raisers
- [7.24] Out-of-State Fund-Raisers
- [7.25] Professional Fund-Raising Consultants
- [7.26] Professional Solicitors
- [7.27] Filing of Contracts
- Annual Reporting Under Community Benefits Act
- [7.28] Who Must Report?
- [7.29] Community Benefits Plan
- [7.30] Annual Reporting
- Enforcement Alternatives
- [7.31] Informal Conferences — Attorney General’s Website
- [7.32] Office Administrative Subpoena
- Litigation Under the General Not For Profit Corporation Act
- [7.33] Wrongdoing by the Corporation
- [7.34] Violations of the Consumer Fraud and Deceptive Business Practices Act
- [7.35] Violations of federal tax laws
- Remedies
- [7.36] Appointment of a receiver
- [7.37] Appointment of a provisional director or custodian
- [7.38] Action Against Directors
- Litigation Under the Charitable Trust Act
- [7.39] Compliance with the Charitable Trust Act
- [7.40] Suit for Mismanagement of Trust
- [7.41] Conduct Considered Breach of Trust
- Fiduciary Standards
- [7.42] Uncompensated directors and officers
- [7.43] Compensated directors
- [7.44] Agricultural cooperatives
- [7.45] Colleges, universities, and schools
- [7.46] Compensated directors and officers — other organizations
- [7.47] Volunteers
- [7.48] Remedies — Consent Orders
- [7.49] Conversion to For-Profit Entity
- [7.50] Acts of Terrorism
- Litigation Under the Solicitation for Charity Act
- [7.51] In General
- [7.52] “Charitable Solicitation” Defined
- [7.53] Fraudulent Solicitations
- Misuse of Proceeds
- [7.54] Historical background
- [7.55] Statutory misrepresentation
- [7.56] Disclosure requirements
- [7.57] Duty to supervise
- [7.58] Use for terrorism
- [7.59] Contract Language
- [7.60] Improper Use of Charitable Names
- [7.61] To Compel Registration
- [7.62] Criminal Violations
- [7.63] Litigation Under the Uniform Prudent Management of Institutional Funds Act
- [7.64] Standards of Fund Manager’s Conduct
- [7.65] Release or Modification of Gift Restrictions
- III. [7.66] Illinois Department of Revenue
- Charitable Games Act — Las Vegas Nights
- [7.67] Legislative Intent
- Licensing Provisions
- [7.68] Charitable Organizations
- [7.69] Providers and Suppliers
- [7.70] Lists of Operators, Providers, and Suppliers
- [7.71] Other Restrictions and Limitations
- Bingo License and Tax Act
- [7.72] Scope of Bingo License and Tax Act
- Licensing Provisions
- [7.73] Organizations
- [7.74] Providers
- [7.75] Lists of Operators, Providers, and Suppliers
- [7.76] Reporting Requirements
- Illinois Pull Tabs and Jar Games Act
- [7.77] Scope of Illinois Pull Tabs and Jar Games Act
- Licensing Provisions
- [7.78] Organizations
- [7.79] Suppliers and Manufacturers
- [7.80] Lists of Seller Locations, Manufacturers, and Suppliers
- [7.81] Reporting Requirements
- IV. [7.82] Municipal and County Government Regulation
- V. [7.89] References
- Chapter 8 — State Property and Sales Tax Exemptions
- I. [8.1] Introduction
- II. [8.2] Initial Policy Considerations
- III. Constitutional and Legislative Authorization for Exemptions
- IV. State Property Tax Exemptions
- Critical Requirements for Religious, Educational, and Charitable Property Tax Exemptions
- [8.5] Burden of Proving Exemption
- [8.6] Exclusivity
- [8.7] No “View To Profit”
- [8.8] Ownership Requirement and Exceptions
- [8.9] Certain Religious Use
- [8.10] Leasehold Tax Liability
- Categories of Exemption
- [8.11] Illinois Statutory Delineation
- Religious Exemption
- [8.12] Religious Use
- [8.13] Housing Facilities for Ministers and Other Religious Workers
- [8.14] Educational Exemption
- Charitable Property Tax Exemption
- [8.15] Applicable Statutory Provisions
- [8.16] Defining “Charity” — Illinois Caselaw Through Provena
- [8.17] Methodist Old Peoples Home Test
- [8.18] Indefinite beneficiaries
- [8.19] No capital, no stockholders, no profits or dividends
- [8.20] Funded “mainly” by public and private charity
- [8.21] Charity dispensed to all who need it; no undue obstacles to charitable benefits
- [8.22] Exclusive use for charitable purposes
- [8.23] Parking Lot Exemption
- Space-Sharing Agreements
- [8.24] Permissible Arrangements Under Property Tax Code
- [8.25] Space-Sharing Agreement Terms
- [8.26] Long-Term and Short-Term Agreements
- Special Exemption Issues
- [8.27] Vacant Property
- [8.28] Partial Exemption
- [8.29] Adaptation and Development of Exempt Property
- [8.30] Public and Utility Easements
- Ownership Issues
- [8.31] Actual, Equitable Ownership vs. Legal Title
- [8.32] Limited Liability Company Ownership
- [8.33] Property Holding Subsidiaries
- [8.34] Private Foundations
- Obtaining and Maintaining Property Tax Exemption
- [8.35] Necessity of Applying for Exemption; Potential Back Taxes
- [8.36] Remedies for Taxes Assessed on Exempt Property
- [8.37] Exemption Applications
- [8.38] Property Tax Exemption Appeals
- [8.39] Subsequent Filing Requirements
- V. State Sales Tax Exemptions — Retail Purchases and Sales
- [8.40] Applicable Statutes
- [8.41] Liability for Sales Tax
- Exemption for Retail Purchases
- [8.42] Eligible Types of Nonprofit Organizations
- [8.43] Burden of Proving Exemption
- [8.44] Exclusively Charitable, Religious, or Educational Organizations
- [8.45] Religious Exemption
- [8.46] Educational Exemption
- [8.47] Charitable Exemption
- [8.48] Obtaining Sales Tax Exemption Number
- [8.49] Application Contents
- [8.50] Approval and Use of “E” Number
- Exemptions for Retail Sales
- [8.51] Exempt Transactions
- [8.52] Sales to Qualified Exempt Organizations
- [8.53] Isolated or Occasional Sales
- [8.54] Newspapers and Magazines
- Qualified Nonprofit Sellers and Limited Exceptions for Sales Tax Liability
- [8.55] General Rule of Taxation on Retail Sales
- [8.56] Sales to Members, Students, and Patients
- [8.57] Noncompetitive Sales
- [8.58] Occasional Dinners and Similar Activities
- Rules for Special Kinds of Selling by Qualified Organizations
- [8.59] Meals
- [8.60] Hospital Sales
- [8.61] Gift Shops and Rummage Stores
- [8.62] Certain Sales by Schools
- [8.63] Sales by School-Related Entities
- Chapter 9 — Homeowners’ Associations
- I. [9.1] Introduction
- II. Legal Basis of the Homeowners’ Association
- [9.2] Creating a Homeowners’ Association
- [9.3] Turnover
- [9.4] Declaration of Restrictive Covenants (Declaration)
- Bylaws
- [9.5] In General
- Contents of Bylaws
- [9.6] Purposes and Powers
- [9.7] Establishment of a Registered Agent
- [9.8] Qualification for Membership
- [9.9] Meetings
- [9.10] Proxies
- [9.11] Board of Directors
- [9.12] Officers
- [9.13] Committees
- [9.14] Standing
- [9.15] Small Association Exemption
- III. [9.16] Insurance
- IV. [9.17] Real Estate Taxes
- V. [9.18] Finances
- VI. [9.19] Amendments
- VII. [9.20] Removal of Directors and Officers
- VIII. [9.21] Liability
- IX. [9.22] Merger and Consolidation
- X. [9.23] Dissolution
- XI. [9.24] Property Managers
- XII. [9.25] Appendix — Sample Bylaws
- Chapter 10 — The Dos and Don’ts of Not-for-Profit Corporations
Authors
- David L. Bea
David L. Bea
David L. Bea is a Founding Shareholder of Bea & VandenBerk Attorneys at Law in Chicago, where he focuses his practice on nonprofit organization law. He is a member of the Illinois State and Chicago Bar Associations. Mr. Bea received his J.D. from DePaul University College of Law.
- Avery S. Buffa
Avery S. Buffa
Avery S. Buffa is Vice President, Associate Director of Philanthropic Advisory Services, at Northern Trust Corporation in Chicago. He is a member of the Chicago Bar Association. Mr. Buffa received his B.A. from DePaul University, his M.A. from The New School, and his J.D. from DePaul University College of Law.
- Tempia A. Courts
Tempia A. Courts
Tempia A. Courts is a Partner at Pluymert, MacDonald, Hargrove & Lee, Ltd., in Hoffman Estates, where she focuses her practice on not-for-profit, business, and corporate law. She is a member of the American and Illinois State Bar Associations. Ms. Courts received both her B.A. and her J.D. from the University of Illinois, where she was honored by the President’s Award Program, received the Dean S. Dorman Award, and was recognized for Best Oral Argument, Civil Rights Moot Court.
- Jonathan T. Howe
Jonathan T. Howe
Jonathan T. Howe is President and Founding Partner at Howe & Hutton, Ltd., in Chicago, where he concentrates his practice in the representation of not-for-profit and related organizations, including those in the travel, tourism, hospitality, incentive, meetings, and tradeshow industries worldwide. He is a member of the American, Illinois State, and Chicago Bar Associations. Mr. Howe received his B.A. from Northwestern University and his J.D. with highest distinction from Duke University School of Law.
- Sorin A. Leahu
Sorin A. Leahu
Sorin A. Leahu is an associate at Mauck & Baker, LLC, in Chicago, where he practices in the areas of civil rights litigation, nonprofit law, probate, estate planning, tax exemption, business formation, and religious land use. He is a member of the Chicago Bar Association, Christian Legal Society, and Federalist Society. He received his undergraduate degree from North Park University and his J.D. from The John Marshall Law School, graduating third in his class and receiving the Order of John Marshall.
- Omar K. Malik
Omar K. Malik
Omar K. Malik is a Principal at Kovitz Shifrin Nesbit in Chicago, where he focuses his practice on condominium, townhome, homeowners, and master association and cooperative law. He is a member of the Illinois State Chicago Bar Associations and the Illinois Chapter of the Community Associations Institute. Mr. Malik received his B.A. from The George Washington University and his J.D. from the University of Miami School of Law.
- Daniel J. Mays
Daniel J. Mays
Daniel J. Mays is a Shareholder of Bea & VandenBerk Attorneys at Law in Chicago, where he focuses his practice on nonprofit organization, tax-exempt organization, intellectual property, and publishing law. Mr. Mays received his B.A. from Calvin College and his J.D. from Baylor Law School.
- Elizabeth M. Mills
Elizabeth M. Mills
Elizabeth M. Mills is President of Elisabeth M. Mills P.C. in Woodstock, where she focuses her practice on health law and tax-exempt organizations. She is a Fellow of the American Health Law Association and a member of the Tax Section of the American Bar Association. Ms. Mills received her B.A. with highest distinction from the University of Kansas; her M.S. from the Harvard T.H. Chan School of Public Health; and her J.D. cum laude, Order of the Coif, from Northwestern University Pritzker School of Law.
- Michael P. Mosher
Michael P. Mosher
Michael P. Mosher established Mosher & Associates, LLC, in River Forest, serving the legal needs of charitable, religious, and educational organizations throughout the Chicago area and around the country. He is currently a member of the IRS TE/GE Advisory Council for the Great Lakes Region and of the Illinois Attorney General’s Charitable Advisory Council, and is Cofounder and a member of the Tax-Exempt Organization Committee of the Chicago Bar Association. He serves as a part-time faculty member for the DePaul University School of Public Service, Northwestern University School of Continuing Studies, and The John Marshall Law School. Mr. Mosher received his B.A. from Michigan State University and his J.D. from DePaul University College of Law.
- James H. Pluymert
James H. Pluymert
James H. Pluymertis a Partner at Pluymert, MacDonald, Hargrove & Lee, Ltd., in Hoffman Estates, where he focuses his practice on commercial litigation, church and not-for-profit law, mediation, and arbitration. He is a member of the Kane County Bar Association and the Christian Legal Society. Mr. Pluymert received his undergraduate degree from Calvin College and his J.D. from DePaul University School of Law.
- Patricia A. Tauchert
Patricia A. Tauchert
Patricia A. Tauchert is a Partner at Pluymert, MacDonald, Hargrove & Lee, Ltd., in Hoffman Estates, where she focuses her practice on not-for-profit and for-profit business organizations and transactions. She is a member of the Advisory Board of the Salvation Army Elgin Corps and the Board of Trustees of the Conservation Foundation and is an adjunct faculty member at Judson University. Ms. Tauchert received her B.A. from Southern Illinois University and her J.D. from Northwestern University Pritzker School of Law.
- Joshua A. Weinstein
Joshua A. Weinstein
Joshua A. Weinstein is a Principal at Kovitz Shifrin Nesbit in Mundelein, where he focuses his practice on condominium, townhome, homeowners, and master association and cooperative law. He is a member of the Illinois State Chicago Bar Associations and the Illinois Chapter of the Community Associations Institute. Mr. Weinstein received his B.A. from the University of Illinois and his J.D. from Chicago-Kent College of Law.
Not-for-Profit Corporations (ARCHIVED 2017 EDITION)
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