Common Legal Mistakes Nonprofits Make (And How Non Profit Lawyers Can Help)
Running a nonprofit sounds noble, right? You have a mission, you have supporters, and you want to make a difference. But even the most well-intentioned organizations can land in serious legal trouble if they overlook key compliance steps. Could your nonprofit face fines, lose its tax-exempt status, or even dissolve entirely? It’s more common than you’d think.
Don’t Let Legal Mistakes Derail Your Mission
All it takes is one oversight—maybe you forgot to file Form 990 this year, or you didn’t realize your bylaws were out of date—and suddenly, your nonprofit is at risk. The good news? Non-profit lawyers know how to keep you on track and shield you from expensive legal pitfalls.
Are You Risking Your Tax-Exempt Status?
One of the biggest fears nonprofits face is losing their 501(c)(3) status. The IRS has strict rules, and if you don’t follow them, your nonprofit could end up paying taxes like any other business.
To Maintain Tax-Exempt Compliance:
- File your IRS Form 990 on time, every time.
- Steer clear of excessive political activities or lobbying.
- Use your funds strictly for nonprofit purposes—no exceptions.
A non-profit lawyer can make sure you’re filing the right forms and staying well within the boundaries of tax law. Overlooking these details could mean penalties—or losing the very status that defines your organization.
Weak Bylaws Could Spell Big Trouble
Does your nonprofit operate with outdated or one-size-fits-all bylaws? Vague governance documents can lead to infighting, financial mismanagement, and even lawsuits down the road. Non-profit lawyers help you draft or revise bylaws so they comply with state and federal regulations. Strong bylaws also keep your leadership team accountable, reducing the chance of bad decisions that could harm your nonprofit’s reputation.
Ignoring Employment Laws? Think Again
Some people assume nonprofit employees don’t fall under typical labor regulations, but that’s not true. If you misclassify workers as independent contractors, fail to follow wage and hour laws, or neglect anti-discrimination policies, your nonprofit could face serious legal claims. A lawsuit doesn’t just drain your resources—it threatens the very mission you’re trying to serve. With the right legal guidance, you’ll stay on top of employment laws and protect your team.
Skipping Charitable Solicitation Rules
Does your nonprofit ask for donations online, by mail, or at events? Many states require nonprofits to register before soliciting any funds. If you forget—or never knew you had to register—you could face fines or, worse, lose the trust of donors who expect transparency. Non-profit lawyers can help you navigate these state-by-state rules, keeping your solicitations above board.
Signing Bad Contracts
Partnership agreements, vendor contracts, and sponsorship deals: your nonprofit likely signs plenty of them. One bad clause or overlooked provision could cost you thousands of dollars or tank your operations at a critical moment. A quick legal review often saves you from big headaches later. It’s worth the peace of mind to have someone who understands nonprofit laws look at any binding agreement.
Protect Your Nonprofit—Protect Your Mission
The bottom line? Legal mistakes don’t just hurt your finances; they threaten everything your nonprofit stands for. Luckily, non-profit lawyers can spot potential pitfalls, fix compliance gaps, and give you the confidence to focus on what matters most—serving your community.
Ready to Safeguard Your Organization?
Contact Laura Brown Law Office today. We’ll help you navigate complex regulations, shore up your governance documents, and ensure your nonprofit is legally sound. Don’t let a legal misstep derail your cause. Reach out now and get the peace of mind your mission deserves.