Know and Understand Your Legal Standing

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Know and Understand Your Legal Standing

• North Central Association of RCD Councils
• Dubuque, Iowa
• April 5, 2005

Lindy Turner, Clinch-Powell RCD Coordinator
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Dual Roles of RCD

• Federal RCD program
• Independent RCD Council

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What does it really mean to be nonprofit,
tax-exempt and an RCD?

• At least 3 different and distinct designations
  important to the RCD

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Formal Nonprofit Designation

• Legal designation from the State
• Charter and Articles of Incorporation
• May or may not be incorporated
• Some tort protection by State law
• Required annual reporting

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Tax Exempt Status

• Legal designation by IRS
• Tax Exempt from federal income tax
• Many typesmost RCDs are 501C3
• Required tax reporting
• Governed by IRS Pub 557

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Authorization as an RCD

• Granted by USDA Secretary of Ag
• Awarded based on a competitive process
• Requires Area Plan and Plan of Work
• Reward is federal assistance of Coordinator at a
  minimum
• Regulatory rather than a legal designation

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Loss of Federal Support to the RCD Nonprofit
Organization

• Impact viability
• Legal status unchanged
• LEGAL AND FIDUCIARY OBLIGATIONS REMAIN

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Summary

• Thousands and thousands of nonprofit
  organizations but only some are formal with a
  legal designation.
• Many formal nonprofit organizations also have
  tax-exemption status with IRS.
• Only 375 have designation as an RCD

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Are Directors at Risk?

• It is possible..
• What if..

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Questions.
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• Lindy Turner
• Clinch-Powell RCD
• 865-828-5927
• Lindy_at_clinchpowell.org
• www.clinchpowell.net