Nonprofit Leadership Podcast · Dr. Rob Harter

Rules of the Road for Social Impact Organizations

·31 min·2 clips

Betsy Schmidt pictures a green light for educating and a single red light: opposing or endorsing a candidate.

1. The Nonprofit Leadership Podcast episode 'Rules of the Road for Social Impact Organizations' covers how federal and state law governs advocacy, political activity, governance, and financial oversight for nonprofits. 2. Host Dr. Rob Harder speaks with Elizabeth "Betsy" Schmidt, a senior research fellow at the University of Massachusetts who has worked with nonprofit students for about 25 years and wrote 'Rules of the Road for Nonprofit Leaders: Using the Law to Support Your Mission.' 3. Schmidt's thesis is that the law is a tool rather than an obstacle, and that a leader who stays true to the mission is "very unlikely" to drift into prohibited politics or commercial activity. 4. She condenses the book into eight positive statements, including "keep the mission front and center," "govern wisely," "fill your coffers," "do the paperwork," and "advocate for your cause." 5. On governance, Schmidt notes that state law punishes only gross negligence, so ethical leaders must do more than the law requires, and she says surveys show some boards fixate on money while others forget payroll. 6. She identifies unrelated business income as a persistent point of confusion, citing the IRS's 2014 finding that most colleges and universities were not calculating it as the agency wanted, and she compares vague rules to unposted speed limits. 7. For advocacy, she describes a green light for education and a single red light for endorsing or opposing a candidate, with lobbying limited to 20% of budget for organizations under $500,000 and a maximum of $1 million for larger ones. 8. She explains that a 501(c)(3) gets two tax benefits, exemption for the organization and deductions for donors, and that groups wanting unlimited lobbying create a separate 501(c)(4) with its own bylaws and articles of incorporation, as the NRA and Planned Parenthood have done. 9. Schmidt reviews recent changes: 530 lawsuits against the Trump administration as of November 15, a challenge by 21 states to new student loan forgiveness conditions, California's law keeping state exemption after loss of federal status, and the False Claims Act risk in federal grant conditions on DEI. 10. Nonprofit executives and board members who want a plain-language legal overview will benefit.

Listen to the show on

Apple Podcasts Spotify

Play clips from this episode More from Nonprofit Leadership Podcast