BRUCE R. HOPKINS, a lawyer with the firm Polsinelli, Shalton & Welte, is the country's leading authority on the law of tax-exempt organizations. He is also the author of fifteen books, including The Legal Answer Book for Nonprofit Organizations; The Law of Tax-Exempt Organizations, Seventh Edition; The Law of Fundraising, Second Edition; Private Foundations: Tax Law and Compliance; A Legal Guide to Starting and Managing a Nonprofit Organization, Second Edition; The Tax Law of Charitable Giving, Second Edition; and The Law of Intermediate Sanctions: A Guide for Nonprofits, as well as the newsletter The Nonprofit Counsel, all published by Wiley.

• FOREWORD XIPREFACE XVABOUT THE AUTHOR XIXCHAPTER 1 Introduction to Legal Aspects of Internet Communications by Nonprofit Organizations 1§ 1.1 Some Basics about the Internet 2(a) Introduction to the Internet 2(b) Internet as Seen by the Supreme Court 3(c) Internet as Seen by Others 7§ 1.2 Main Applications of the Internet 8(a) Electronic Mail 8(b) World Wide Web in General 9(c) Newsgroups 10(d) Internet Chat 11§ 1.3 Understanding the Internet—Questions and Answers 11(a) Why Does the Internet Appear Disorganized? 11(b) Who Can Use the Internet? 12(c) How Does the World Wide Web Fit into the Internet? 12(d) How Can Nonprofits Compete with For-Profits on the Internet? 13(e) Does Anyone Monitor the Quality and Accuracy of Information on the Internet? 13(f ) What Are the Security Concerns on the Internet? 13§ 1.4 Reasons a Nonprofit Organization Should Go Online 14(a) Improvement in Communications 14(b) Improved Access to Information 16(c) Professional Development 16(d) Taking Action 17§ 1.5 Other Aspects of Nonprofit Organizations’ Use of the Internet 19§ 1.6 Nonprofit Organizations and the Internet: Origins and Culture 20§ 1.7 Internet and Program Advancement 22§ 1.8 Three Overarching Issues 26(a) Cost of Internet Operations 26(b) Essence of Hyperlinks 28(c) Web Site Record Keeping 34§ 1.9 Contemporary State of the "Law" 36CHAPTER 2 Business Activities 39§ 2.1 Introduction 40(a) Scope of Law 40(b) Definition of Business 44(c) Definition of Regularly Carried On 53(d) Definition of Substantially Related 58§ 2.2 General Rules 64(a) Advertising 64(b) Corporate Sponsorships 71(c) Fundraising Activities 75(d) Trade Shows 85(e) Provision of Services 87§ 2.3 Exceptions 90(a) Modifications 91(b) Exceptions 96§ 2.4 Other Rules 98(a) Partnership Rules 98(b) Limited Liability Company Rules 99(c) Deduction Rules 99(d) Tax Structure 101§ 2.5 Internet Communications 102(a) Internet Unrelated Business Activity in General 102(b) Questions Posed by IRS Announcement 116(c) Summary 125CHAPTER 3 Charitable Giving Programs Administration 127§ 3.1 Introduction 127§ 3.2 Substantiation Requirements 129§ 3.3 Quid Pro Quo Contribution Rules 135§ 3.4 Appraisal Requirements 137(a) Similar Items of Property 138(b) Qualified Appraisal 138(c) Appraisal Summary 140(d) Qualified Appraiser 142§ 3.5 Valuation of Property 143§ 3.6 Vehicle Donation Programs 144(a) Valuation 145(b) Substantiation Requirements 145(c) Appraisal Requirement 146(d) Deductibility 146(e) Characterization of Income 148(f ) Private Benefit Doctrine 149(g) Private Inurement 151(h) Intermediate Sanctions 151(i) Royalty Exception 151( j) Penalties 152§ 3.7 Internet Communications 153(a) Substantiation Requirements 153(b) Quid Pro Quo Contributions 156(c) Appraisal Requirements 157(d) Valuation of Property 157(e) Vehicle Donation Programs 158(f ) Charitable Gift Planning 158CHAPTER 4 Fundraising Programs 161§ 4.1 Introduction 162§ 4.2 State Fundraising Regulation In General 164(a) Summary 164(b) Meaning of Solicitation 166(c) Definition of Professional Fundraiser 168§ 4.3 State Fundraising Regulation and the Internet 170§ 4.4 Charleston Principles 173(a) General Principles 174(b) Definitions 175(c) Other Principles 176(d) "Exclusions" 176(e) Responsibilities for Multistate Filers 177§ 4.5 Internet Communications 178CHAPTER 5 Lobbying Activities 183§ 5.1 Introduction 184(a) Scope of Law 184(b) Definition of Lobbying 185(c) Definition of Legislation 185(d) Definition of Direct Lobbying 187(e) Definition of Indirect Lobbying 188(f ) Definition of Specific Legislation 191(g) Educational Activities 191§ 5.2 General Rules 192(a) Introduction 192(b) Substantial Part Test Basics 193(c) Expenditure Test Basics 195(d) Substantial Part Test Exceptions 198(e) Expenditure Test Exceptions 199§ 5.3 Other Rules 201(a) Definition of Propaganda 201(b) Paid Mass Media Advertisements 202(c) Making the Election 203(d) Record Keeping 203(e) Affiliated Organizations 204(f ) Reporting 205(g) Allocation Rules 206(h) Associations’ Dues Rules 207§ 5.4 Sanctions 207(a) Nonelecting Public Charitable Organizations 207(b) Electing Public Charitable Organizations 209(c) Private Foundations 209(d) Other Tax-Exempt Organizations 210§ 5.5 Internet Communications 210(a) Internet Lobbying in General 210(b) Questions Posed by Announcement 213CHAPTER 6 Political Campaign Activities 225§ 6.1 Introduction 226(a) Scope of Law 226(b) Definition of Political Campaign Activity 226(c) Requirement of a Candidate 230(d) Requirement of a Campaign 231(e) Requirement of a Public Office 231§ 6.2 General Rules 234(a) Introduction 234(b) Scope of the Proscription on Charitable Organizations 235(c) Rules for Social Welfare Organizations 236(d) Rules for Associations 238(e) Rules for Political Organizations 239(f ) Rules for Other Tax-Exempt Organizations 240§ 6.3 Other Rules 241(a) Educational Activities in General 241(b) Voter Guides 242(c) Candidate Debates 246§ 6.4 Sanctions 248(a) Public Charitable Organizations 248(b) Private Foundations 251(c) Other Tax-Exempt Organizations 251§ 6.5 Internet Communications 252(a) Internet Political Campaign Activity in General 252(b) Questions Posed by IRS Announcement 254§ 6.6 Pending Legislation 262(a) Proposed Legislation 263(b) Commentary 264CHAPTER 7 Still Other Aspects of the Law 267§ 7.1 Annual Reporting Requirements 268(a) Existing Law 268(b) Electronic Filing 269§ 7.2 Application for Recognition of Tax-Exempt Status 271§ 7.3 Disclosure Requirements 272(a) Annual Information Returns 272(b) Applications for Recognition of Exemption 273(c) Fundraising Disclosure by Noncharitable Organizations 274(d) Fundraising Disclosure by Charitable Organizations 276§ 7.4 Private Inurement Doctrine 276(a) Rules in General 276(b) Internet Communications 278§ 7.5 Private Benefit Doctrine 279(a) Rules in General 279(b) Internet Communications 281§ 7.6 Intermediate Sanctions 282(a) Rules in General 283(b) Internet Communications 286§ 7.7 Public Charity and Private Foundation Rules 287(a) Definition of Private Foundation 287(b) Private Foundation Rules 288(c) Internet Communications 289§ 7.8 Charitable Giving Rules 290(a) Rules in General 290(b) Internet Communications 292§ 7.9 Tax-Exempt Organization Rules 293§ 7.10 IRS Audits And Litigation 297§ 7.11 Electronic Signatures Act 298§ 7.12 Penalties 302(a) Annual Reporting Requirements 302(b) Disclosure Requirements 303(c) Fundraising Disclosure by NoncharitableOrganizations 303(d) Fundraising Disclosure by CharitableOrganizations 304(e) Other Penalties 304APPENDIX A Table of Cases 307APPENDIX B Table of IRS Revenue Rulings 313APPENDIX C Table of IRS Technical Advice Memoranda 315APPENDIX D Table of IRS Private Letter Rulings 317APPENDIX E Table of IRS Announcements 319GLOSSARY 321BIBLIOGRAPHY 325INDEX 329

BRUCE R. HOPKINS, a lawyer with the firm Polsinelli, Shalton & Welte, is the country's leading authority on the law of tax-exempt organizations. He is also the author of fifteen books, including The Legal Answer Book for Nonprofit Organizations; The Law of Tax-Exempt Organizations, Seventh Edition; The Law of Fundraising, Second Edition; Private Foundations: Tax Law and Compliance; A Legal Guide to Starting and Managing a Nonprofit Organization, Second Edition; The Tax Law of Charitable Giving, Second Edition; and The Law of Intermediate Sanctions: A Guide for Nonprofits, as well as the newsletter The Nonprofit Counsel, all published by Wiley.

• FOREWORD XIPREFACE XVABOUT THE AUTHOR XIXCHAPTER 1 Introduction to Legal Aspects of Internet Communications by Nonprofit Organizations 1§ 1.1 Some Basics about the Internet 2(a) Introduction to the Internet 2(b) Internet as Seen by the Supreme Court 3(c) Internet as Seen by Others 7§ 1.2 Main Applications of the Internet 8(a) Electronic Mail 8(b) World Wide Web in General 9(c) Newsgroups 10(d) Internet Chat 11§ 1.3 Understanding the Internet—Questions and Answers 11(a) Why Does the Internet Appear Disorganized? 11(b) Who Can Use the Internet? 12(c) How Does the World Wide Web Fit into the Internet? 12(d) How Can Nonprofits Compete with For-Profits on the Internet? 13(e) Does Anyone Monitor the Quality and Accuracy of Information on the Internet? 13(f ) What Are the Security Concerns on the Internet? 13§ 1.4 Reasons a Nonprofit Organization Should Go Online 14(a) Improvement in Communications 14(b) Improved Access to Information 16(c) Professional Development 16(d) Taking Action 17§ 1.5 Other Aspects of Nonprofit Organizations’ Use of the Internet 19§ 1.6 Nonprofit Organizations and the Internet: Origins and Culture 20§ 1.7 Internet and Program Advancement 22§ 1.8 Three Overarching Issues 26(a) Cost of Internet Operations 26(b) Essence of Hyperlinks 28(c) Web Site Record Keeping 34§ 1.9 Contemporary State of the "Law" 36CHAPTER 2 Business Activities 39§ 2.1 Introduction 40(a) Scope of Law 40(b) Definition of Business 44(c) Definition of Regularly Carried On 53(d) Definition of Substantially Related 58§ 2.2 General Rules 64(a) Advertising 64(b) Corporate Sponsorships 71(c) Fundraising Activities 75(d) Trade Shows 85(e) Provision of Services 87§ 2.3 Exceptions 90(a) Modifications 91(b) Exceptions 96§ 2.4 Other Rules 98(a) Partnership Rules 98(b) Limited Liability Company Rules 99(c) Deduction Rules 99(d) Tax Structure 101§ 2.5 Internet Communications 102(a) Internet Unrelated Business Activity in General 102(b) Questions Posed by IRS Announcement 116(c) Summary 125CHAPTER 3 Charitable Giving Programs Administration 127§ 3.1 Introduction 127§ 3.2 Substantiation Requirements 129§ 3.3 Quid Pro Quo Contribution Rules 135§ 3.4 Appraisal Requirements 137(a) Similar Items of Property 138(b) Qualified Appraisal 138(c) Appraisal Summary 140(d) Qualified Appraiser 142§ 3.5 Valuation of Property 143§ 3.6 Vehicle Donation Programs 144(a) Valuation 145(b) Substantiation Requirements 145(c) Appraisal Requirement 146(d) Deductibility 146(e) Characterization of Income 148(f ) Private Benefit Doctrine 149(g) Private Inurement 151(h) Intermediate Sanctions 151(i) Royalty Exception 151( j) Penalties 152§ 3.7 Internet Communications 153(a) Substantiation Requirements 153(b) Quid Pro Quo Contributions 156(c) Appraisal Requirements 157(d) Valuation of Property 157(e) Vehicle Donation Programs 158(f ) Charitable Gift Planning 158CHAPTER 4 Fundraising Programs 161§ 4.1 Introduction 162§ 4.2 State Fundraising Regulation In General 164(a) Summary 164(b) Meaning of Solicitation 166(c) Definition of Professional Fundraiser 168§ 4.3 State Fundraising Regulation and the Internet 170§ 4.4 Charleston Principles 173(a) General Principles 174(b) Definitions 175(c) Other Principles 176(d) "Exclusions" 176(e) Responsibilities for Multistate Filers 177§ 4.5 Internet Communications 178CHAPTER 5 Lobbying Activities 183§ 5.1 Introduction 184(a) Scope of Law 184(b) Definition of Lobbying 185(c) Definition of Legislation 185(d) Definition of Direct Lobbying 187(e) Definition of Indirect Lobbying 188(f ) Definition of Specific Legislation 191(g) Educational Activities 191§ 5.2 General Rules 192(a) Introduction 192(b) Substantial Part Test Basics 193(c) Expenditure Test Basics 195(d) Substantial Part Test Exceptions 198(e) Expenditure Test Exceptions 199§ 5.3 Other Rules 201(a) Definition of Propaganda 201(b) Paid Mass Media Advertisements 202(c) Making the Election 203(d) Record Keeping 203(e) Affiliated Organizations 204(f ) Reporting 205(g) Allocation Rules 206(h) Associations’ Dues Rules 207§ 5.4 Sanctions 207(a) Nonelecting Public Charitable Organizations 207(b) Electing Public Charitable Organizations 209(c) Private Foundations 209(d) Other Tax-Exempt Organizations 210§ 5.5 Internet Communications 210(a) Internet Lobbying in General 210(b) Questions Posed by Announcement 213CHAPTER 6 Political Campaign Activities 225§ 6.1 Introduction 226(a) Scope of Law 226(b) Definition of Political Campaign Activity 226(c) Requirement of a Candidate 230(d) Requirement of a Campaign 231(e) Requirement of a Public Office 231§ 6.2 General Rules 234(a) Introduction 234(b) Scope of the Proscription on Charitable Organizations 235(c) Rules for Social Welfare Organizations 236(d) Rules for Associations 238(e) Rules for Political Organizations 239(f ) Rules for Other Tax-Exempt Organizations 240§ 6.3 Other Rules 241(a) Educational Activities in General 241(b) Voter Guides 242(c) Candidate Debates 246§ 6.4 Sanctions 248(a) Public Charitable Organizations 248(b) Private Foundations 251(c) Other Tax-Exempt Organizations 251§ 6.5 Internet Communications 252(a) Internet Political Campaign Activity in General 252(b) Questions Posed by IRS Announcement 254§ 6.6 Pending Legislation 262(a) Proposed Legislation 263(b) Commentary 264CHAPTER 7 Still Other Aspects of the Law 267§ 7.1 Annual Reporting Requirements 268(a) Existing Law 268(b) Electronic Filing 269§ 7.2 Application for Recognition of Tax-Exempt Status 271§ 7.3 Disclosure Requirements 272(a) Annual Information Returns 272(b) Applications for Recognition of Exemption 273(c) Fundraising Disclosure by Noncharitable Organizations 274(d) Fundraising Disclosure by Charitable Organizations 276§ 7.4 Private Inurement Doctrine 276(a) Rules in General 276(b) Internet Communications 278§ 7.5 Private Benefit Doctrine 279(a) Rules in General 279(b) Internet Communications 281§ 7.6 Intermediate Sanctions 282(a) Rules in General 283(b) Internet Communications 286§ 7.7 Public Charity and Private Foundation Rules 287(a) Definition of Private Foundation 287(b) Private Foundation Rules 288(c) Internet Communications 289§ 7.8 Charitable Giving Rules 290(a) Rules in General 290(b) Internet Communications 292§ 7.9 Tax-Exempt Organization Rules 293§ 7.10 IRS Audits And Litigation 297§ 7.11 Electronic Signatures Act 298§ 7.12 Penalties 302(a) Annual Reporting Requirements 302(b) Disclosure Requirements 303(c) Fundraising Disclosure by NoncharitableOrganizations 303(d) Fundraising Disclosure by CharitableOrganizations 304(e) Other Penalties 304APPENDIX A Table of Cases 307APPENDIX B Table of IRS Revenue Rulings 313APPENDIX C Table of IRS Technical Advice Memoranda 315APPENDIX D Table of IRS Private Letter Rulings 317APPENDIX E Table of IRS Announcements 319GLOSSARY 321BIBLIOGRAPHY 325INDEX 329