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		<title>Key Provisions of California Assembly Bill 488 Regulating Charitable Fundraising Platforms Take Effect January 1, 2023</title>
		<link>https://dev.staging-perlmanandperlman.com/key-provisions-of-california-assembly-bill-488-regulating-charitable-fundraising-platforms-take-effect-january-1-2023/</link>
		
		<dc:creator><![CDATA[Karen l. Wu]]></dc:creator>
		<pubDate>Thu, 29 Dec 2022 17:46:34 +0000</pubDate>
				<category><![CDATA[Uncategorized]]></category>
		<category><![CDATA[CA AB488]]></category>
		<category><![CDATA[California Bill 488]]></category>
		<category><![CDATA[Online Fundraising Platforms]]></category>
		<category><![CDATA[Platform Charities]]></category>
		<guid isPermaLink="false">https://dev.staging-perlmanandperlman.com/?p=11672</guid>

					<description><![CDATA[<p>This blog post summarizes the portions of California Assembly Bill 488 that go into effect on January 1, 2023, the delayed effective date for other portions of the law, and the status of the proposed regulations to fully implement the law. The&#160;California Department of Justice (“DOJ”) published a&#160;notice&#160;on December 23rd stating that certain key provisions [&#8230;]</p>
<p>The post <a href="https://dev.staging-perlmanandperlman.com/key-provisions-of-california-assembly-bill-488-regulating-charitable-fundraising-platforms-take-effect-january-1-2023/">Key Provisions of California Assembly Bill 488 Regulating Charitable Fundraising Platforms Take Effect January 1, 2023</a> first appeared on <a href="https://dev.staging-perlmanandperlman.com">Perlman Sandbox</a>.</p>]]></description>
										<content:encoded><![CDATA[<p><em>This blog post summarizes the portions of California Assembly Bill 488 that go into effect on January 1, 2023, the delayed effective date for other portions of the law, and the status of the proposed regulations to fully implement the law.</em></p>



<p>The&nbsp;California Department of Justice (“DOJ”) published a&nbsp;<a href="https://oag.ca.gov/charities/pf/cfp" target="_blank" rel="noopener">notice</a>&nbsp;on December 23<sup>rd</sup> stating that certain key provisions of the new law governing charitable fundraising platforms, known as California Assembly Bill 488, go into effect on January 1, 2023 (as is stated in the law), and noting that the registration and other requirements in the new law are delayed until January 1, 2024 while the California Attorney General finalizes the regulations necessary to administer the new law.</p>



<p>According to the December 23<sup>rd</sup>&nbsp;notice, the key provisions of Assembly Bill 488 that become operative on January 1, 2023 are:</p>



<ol class="wp-block-list">
<li><u>Soliciting or Receiving Funds Only for Charities in Good Standing</u></li>
</ol>



<p>A charitable fundraising platform or platform charity may only facilitate solicitations or the receipt of donations for the benefit of charitable organizations in good standing.&nbsp; “Good standing” means the platform charity or other recipient charity’s tax-exempt status has not been revoked by the Internal Revenue Service or the California Franchise Tax Board, or is not prohibited from soliciting or operating in California by the Attorney General. The notice includes links to the Attorney General’s&nbsp;<a href="https://oag.ca.gov/charities/reports#crr" target="_blank" rel="noopener">list</a>&nbsp;of charities that may not operate or solicit in California, as well as to the Internal Revenue Service’s&nbsp;<a href="https://www.irs.gov/charities-non-profits/tax-exempt-organization-search" target="_blank" rel="noopener">list</a>.</p>



<ol class="wp-block-list" start="2">
<li><u>Segregation of Funds</u></li>
</ol>



<p>Charitable fundraising platforms and platform charities must hold charitable funds raised in a separate account or accounts from other funds belonging to the platform or platform charity.</p>



<ol class="wp-block-list" start="3">
<li><u>Required Disclosures</u></li>
</ol>



<p>The new law requires charitable fundraising platforms to clearly disclose certain information, including: (1) a statement about who will receive the donations; (2) if applicable, a statement that a recipient charity may not receive donations or grants of recommended donations, with an explanation identifying the circumstances under which a recipient charity may not receive the funds; (3) the length of time it takes to send the donation or a grant of the recommended donation to a recipient charity; (4) the fees or other amounts (if any) deducted from or added to the donation or a grant of the recommended donation; and (5) whether the donation is tax-deductible or not.</p>



<p>The new law permits some, but not all, of these disclosures to be provided through a conspicuous hyperlink, so long as the disclosure is conspicuous when the hyperlink is selected.&nbsp; The proposed regulations include additional&nbsp;details relating to these disclosure requirements.</p>



<ol class="wp-block-list" start="4">
<li><u>Solicitations for Non-Consenting Charities</u></li>
</ol>



<p>The law generally requires that a charitable fundraising platform or platform charity obtain the written consent of any recipient charity before using its name in a solicitation, but provides that such written consent is not needed if all of the following circumstances are met: (1) the platform&nbsp;<u>only</u>&nbsp;includes certain information about the recipient charities on the platform, as set forth in the new law or future regulations (e.g., the recipient charities’ name, address, telephone number, internet website, EIN, registration number with the California AG’s office, NTEE Code, and publicly available information from the recipient charity’s tax or information returns filed with the Internal Revenue Service or the California AG’s office); (2) the platform conspicuously discloses before persons can complete a donation that the recipient charity has not provided consent or permission for the solicitation, and has not reviewed or approved the content generated by individuals engaging in peer-to-peer charitable fundraising, when applicable; (3) the platform promptly removes any recipient charity from its list or any solicitation regarding the recipient charity upon written request by the recipient charity; and (4) the platform or platform charity does not require that a recipient charity consent to any solicitations as a condition for accepting a donation or grant of a recommended donation.</p>



<p>The notice states that the registration and other requirements in California Government Code section 12599.9 are being delayed to January 2024, given the pending nature of the&nbsp;<a href="https://oag.ca.gov/charities/regs/platforms" target="_blank" rel="noopener">proposed regulations</a>.&nbsp; The notice further states that “[p]roposed regulations do not carry the force of law.”</p>



<p><strong><em>Status of the Proposed Regulations</em></strong></p>



<p>Under Assembly Bill 488, the Attorney General is authorized to establish rules and regulations necessary to administer the new law. This includes regulations governing: (1) the additional acts of solicitation that meet the definition of a charitable fundraising platform or platform charity, as needed, in order to address changes in technology and charitable fundraising through platforms; (2) the content of the registration and annual reporting forms and other information to be provided to the Attorney General’s office; (3) the requirements for any written agreement between a consenting recipient charitable organization and a charitable fundraising platform or platform charity; and (4) the requirements for holding donations or distributing donations and grants of recommended donations (including the maximum length of time it takes to send the donated funds, taking into account various considerations; and the circumstances under which donors or persons may be contacted to provide alternate recipient charitable organizations or notified when the donated funds are sent).</p>



<p>On May 27, 2022, the California DOJ published a&nbsp;<a href="https://oag.ca.gov/charities/regs/platforms" target="_blank" rel="noopener">Notice of Proposed Rulemaking</a>&nbsp;for Charitable Fundraising Platforms and Platform Charities regulations, including draft regulations to implement the law, and draft registration forms to implement the new registration requirement applicable to charitable fundraising platforms.&nbsp; The California DOJ invited comments to be submitted by July 12<sup>th</sup>, and held a public hearing on July 13<sup>th</sup>.</p>



<p>On November 21, 2022, the California DOJ published a&nbsp;<a href="https://oag.ca.gov/charities/regs/platforms" target="_blank" rel="noopener">Notice of Modifications</a>&nbsp;related to the Department of Justice Charitable Fundraising Platforms and Platform Charities proposed rulemaking initially noticed on May 27, 2022. &nbsp;Comments to the Notice of Modifications were accepted through December 7<sup>th</sup>. Final regulations have not yet been issued.</p>



<p>For a summary of the key provisions of California Assembly Bill 488, and additional context leading up to its enactment, read this earlier&nbsp;<a href="/california-enacts-new-law-to-regulate-charitable-fundraising-platforms/" target="_blank" rel="noopener">blog post</a>.</p>



<hr class="wp-block-separator has-alpha-channel-opacity"/><p>The post <a href="https://dev.staging-perlmanandperlman.com/key-provisions-of-california-assembly-bill-488-regulating-charitable-fundraising-platforms-take-effect-january-1-2023/">Key Provisions of California Assembly Bill 488 Regulating Charitable Fundraising Platforms Take Effect January 1, 2023</a> first appeared on <a href="https://dev.staging-perlmanandperlman.com">Perlman Sandbox</a>.</p>]]></content:encoded>
					
		
		
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		<title>COVID-19 and the Workplace:  NY State Hits the “PAUSE” Button, and Extends It to April 15th– the latest information for your organization</title>
		<link>https://dev.staging-perlmanandperlman.com/covid-19-workplace-ny-state-hits-pause-button-extends-april-15th-latest-information-organization/</link>
					<comments>https://dev.staging-perlmanandperlman.com/covid-19-workplace-ny-state-hits-pause-button-extends-april-15th-latest-information-organization/#respond</comments>
		
		<dc:creator><![CDATA[Perlman &amp; Perlman]]></dc:creator>
		<pubDate>Sun, 29 Mar 2020 20:35:52 +0000</pubDate>
				<category><![CDATA[Employment]]></category>
		<category><![CDATA[Nonprofit]]></category>
		<category><![CDATA[Socially Responsible Businesses]]></category>
		<category><![CDATA[Uncategorized]]></category>
		<category><![CDATA[#COVID-19]]></category>
		<category><![CDATA[#NewYorkemployer]]></category>
		<category><![CDATA[#nonprofitemployer]]></category>
		<category><![CDATA[employer]]></category>
		<guid isPermaLink="false">https://dev.staging-perlmanandperlman.com/covid-19-workplace-ny-state-hits-pause-button-extends-april-15th-latest-information-organization/</guid>

					<description><![CDATA[<p>What Governor Cuomo’s Executive Order&#8211;“New York on PAUSE”&#8211;means for your organization’s workforce and operations I. Governor’s Executive Order  Effective Sunday, March 22, 2020 at 8 p.m., all businesses and nonprofit organizations were required to have all employees in New York staying home/working remotely due to the pandemic of COVID-19, the disease caused by the novel [&#8230;]</p>
<p>The post <a href="https://dev.staging-perlmanandperlman.com/covid-19-workplace-ny-state-hits-pause-button-extends-april-15th-latest-information-organization/">COVID-19 and the Workplace:  NY State Hits the “PAUSE” Button, and Extends It to April 15th– the latest information for your organization</a> first appeared on <a href="https://dev.staging-perlmanandperlman.com">Perlman Sandbox</a>.</p>]]></description>
										<content:encoded><![CDATA[<p><em>What Governor Cuomo’s Executive Order&#8211;“New York on PAUSE”&#8211;means for your organization’s workforce and operations</em></p>
<p><strong>I.<em> Governor’s Executive Order</em></strong></p>
<p><strong><em> </em></strong><strong><u>Effective Sunday, March 22, 2020 at 8 p.m</u></strong>., all businesses and nonprofit organizations were required to have <strong><u>all</u></strong> employees in New York staying home/working remotely due to the pandemic of COVID-19, the disease caused by the novel coronavirus,<a href="#_ftn1" name="_ftnref1">[1]</a> except for those employees providing “essential services,”* as per an <a href="https://www.governor.ny.gov/news/governor-cuomo-issues-guidance-essential-services-under-new-york-state-pause-executive-order">Executive Order from Governor Andrew Cuomo.</a>  All non-essential businesses and schools in New York State must remain closed.  Additionally, all non-essential gatherings of <strong><u>any size</u></strong> for any reason are banned.<a href="#_ftn2" name="_ftnref2">[2]</a> On Sunday, March 29th, Governor Cuomo extended all school and non-essential business closures to April 15th.</p>
<p><strong>Empire State Development also issued </strong><a href="https://esd.ny.gov/guidance-executive-order-2026">guidance</a>* identifying which types of for-profits businesses and non-profit organizations are considered to be providing “essential services” as per Governor Cuomo’s Executive Order and could remain open (other States should take note of the terms as well as you may be next). Exemptions from the order include: shipping, media, warehousing, grocery and food production, pharmacies, healthcare providers, utilities, banks and related financial institutions and any business with a single employee/occupant (i.e., gas station).</p>
<p><strong><em>How Can I Seek an “Essential Function” Designation?</em></strong>  Notably, certain businesses and nonprofits deemed “non-essential” may request a designation from NYS State to be designated an “essential function” by completing an <a href="https://esd.ny.gov/content/request-designation-essential-business-purposes-executive-order-2026">online form</a> at Empire State Development’s website or emailing: <strong><u>covid19designations@esd.ny.gov</u></strong>.</p>
<p>Note, however, that the following may not seek an “essential function” designation:  Any business that only has a single occupant/employee (i.e. gas station) as that has already been deemed exempt and need not submit a request to be designated as an essential business; businesses ordered to close on Monday, March 15, 2020 under the restrictions on any gathering with 50 or more participants, including but not limited to, bars, restaurants, gyms, movie theaters, casinos, auditoriums, concerts, conferences, worship services, sporting events, and physical fitness centers.</p>
<p><strong><em>Is There Any Government Guidance on the Executive Order?</em></strong></p>
<p><strong><em> </em></strong>Yes, Empire State Development has issued an <a href="https://esd.ny.gov/sites/default/files/ESD_EssentialEmployerFAQ_032220.pdf">FAQ</a> for businesses and nonprofit organizations.</p>
<p>It includes answers to common questions (excerpted here) like:</p>
<p>QUESTION: If my business is determined to be an “Essential Business” are <em>all </em>employees permitted to work at the business location?</p>
<p>ANSWER: No. Only those employees that are needed to provide the products and services that are essential to provide such products or services are permitted to work at the business location. In addition, Essential Businesses are still required to utilize telecommuting or work from home procedures to the maximum extent possible. Those employees who do report to work must adhere to the requirements set forth in the Department of Health guidelines, which can be found at <a href="https://coronavirus.health.ny.gov/home">https://coronavirus.health.ny.gov/home</a>.</p>
<p>QUESTION: What if my business is not essential, but a person must pick up the mail or perform a similar routine function each day?</p>
<p>ANSWER: A single person attending a non-essential closed business temporarily to perform a specific task is permitted so long as they will not be in contact with other people.</p>
<p>Further information for New Yorkers can be found at: <a href="https://esd.ny.gov/covid-19-help">https://esd.ny.gov/covid-19-help</a></p>
<p>New York State’s Office of Children and Family Services has also issued <a href="https://ocfs.ny.gov/main/news/COVID-19/#t1-Guidance-Documents">guidance</a> to a variety of different categories of non-profit organizations during New York’s “Pause.” including nonprofit organizations providing social services, during New York’s “Pause.”</p>
<p><strong>II.<em> What Else Should Employers Consider in the Face of the “New York Pause?” </em></strong></p>
<p><strong> </strong><em>What If We Need to Close our Office and Lay off Our Employees; What Do We Do When We Lay off Employees?</em></p>
<p><strong>       A.  </strong><strong>NY Termination Requirements</strong>: In New York, when an organization terminates an employee, it must provide a written notice of termination containing the termination date and date any health insurance coverage so that the employee can file for unemployment insurance benefits, and provide COBRA paperwork.</p>
<p><strong>      B. WARN Acts</strong>: Some organizations will also need to consider New York&#8217;s Worker Adjustment and Retraining Notification Act (WARN).  In fact, NYS Department of Labor has made clear on its website that an employer’s 90-day <a href="https://labor.ny.gov/workforcenypartners/warn/warnportal.shtm">New York WARN notice obligations</a> in the event of a “plant closing, mass layoff or covered reduction in work hours”&#8211; as defined by the regulations&#8211; are not suspended because of COVID-19.  Where a covered organization is forced to close unexpectedly, it still must provide a WARN notice as soon as possible and identify the circumstances that required the closure. The federal WARN Act which applies to employers with 100 or more employees and requires 60 days&#8217; advance notice may also be applicable depending on the particular facts.</p>
<p><strong>      C. Unemployment Insurance (UI) Benefits</strong>: There is no waiting period in New York for claiming unemployment insurance benefits related to COVID-19 (typically, there’s a 7-day waiting period after separation before filing for UI benefits).   Additionally, the U.S. Department of Labor issued new guidance providing flexibility to States in administering their UI programs because of the COVID-19 outbreak. For example, federal law allows states to pay benefits where: (1) An employer temporarily ceases operations due to COVID-19, preventing employees from coming to work; (2) An individual is quarantined with the expectation of returning to work after the quarantine is over; and (3) An individual leaves employment due to a risk of exposure or infection or to care for a family member. In addition, federal law does not require an employee to quit in order to receive benefits due to the impact of COVID-19.</p>
<p><strong><em>If We Reduce Our Full-Time Staff to Part-Time, May They Collect Unemployment Insurance?</em></strong></p>
<p>Maybe.  It will depend on how many hours they work and how much they are earning. New York State has a <a href="https://www.labor.ny.gov/ui/employerinfo/shared-work-program.shtm">Shared Work Program</a> for employers who may want to reduce the number of hours worked for employees but still allow those employees to be able to continue their health insurance benefits and collect unemployment insurance.</p>
<p><strong><em>What Kinds of Things Should We Be Considering with Respect to Business Continuity and Logistics of Dealing with The Closure of Our Office During the “NY PAUSE”?</em></strong></p>
<p><strong><em> </em></strong>There are a whole host of issues—logistical and practical—to consider when shutting the office temporarily for an indefinite period of time and working remotely.  Some include:</p>
<ol>
<li>Does our business continuity plan address contingencies for pandemics?</li>
<li>What are alternative means of servicing clients?</li>
<li>How will our budget need to be modified?</li>
<li>Have we anticipated/mapped out different scenarios and consequences depending on longevity of closure by the Governor, and what, if any, staffing/personnel/restructuring changes need to be made, even if on a temporary basis, depending on how long the office shutdown is in place?</li>
<li>Insurance/Financial Assistance: Do we have business interruption insurance or other insurance that will cover any losses?  Do we need a line of credit from a bank, disaster relief loan, disaster grant (for nonprofits)?</li>
<li>How will we process payroll, send out invoices, receive our mail (and any checks)?</li>
<li>How will we access files if our landlord closes the building?</li>
<li>How will we stay connected with our clients/stakeholders/donors?</li>
<li>Will there be a rent suspension by landlords during this period we are unable to use our space due to the “NY Pause”?</li>
<li>Remote working:
<ul>
<li>how data will be kept secure with all of your employees working remotely: See tips here: Consider <a href="https://www.perlmanandperlman.com/covid-19-cyber-readiness-good-practices-remote-work/">https://www.perlmanandperlman.com/covid-19-cyber-readiness-good-practices-remote-work/</a></li>
<li>Implement and enforce remote work policy and employee agreement</li>
<li>Implement timekeeping system to ensure nonexempt employees are tracking and reporting hours worked each day, and advance approval for overtime; prohibit off-the-clock work; consider whether to implement time-tracking software</li>
<li>Determine whether worker’s compensation policy covers office workers working remotely</li>
<li>Consider how productivity and creativity will be maintained with all staff working remotely and how you will keep employees not used to working remotely, motivated and focused; schedule regular video-conference sessions and other means to keep team connected.</li>
</ul>
</li>
<li>Consider if you need to postpone or cancel events and review <em>force majeure</em> provisions of your contracts with event hosts to determine rights under the contract. (See more <a href="https://www.perlmanandperlman.com/coronavirus-event-happens-cancel/">here</a>).</li>
</ol>
<p><strong>III.     <em>What Should New York Employers Do Now?  </em></strong></p>
<ul>
<li>Institute business contingency plans in view of the Governor’s “PAUSE”</li>
<li>Review applicable insurance policies for coverage</li>
<li>Implement temporary remote work-from-home policies (and employee agreements) (see our earlier <a href="https://www.perlmanandperlman.com/doctors-orders-get-organization-prepared-handling-covid-19-workplace/">blog on COVID-19 and the workplace</a> for more on that topic)</li>
<li>Consider short-term and long-term staffing plans, reduction of hours, layoffs, including preparing for staff absences due to NY’s COVID-19 Quarantine Leave Law and federal Families First Coronavirus Response Act</li>
<li>Post mandatory <a href="https://www.dol.gov/sites/dolgov/files/WHD/posters/FFCRA_Poster_WH1422_Non-Federal.pdf">FFCRA poster</a> by April 1, 2020 in the workplace, through email and organization intranet for those working remotely. On March 25, 2020, the U.S. Department of Labor issued a Families First Coronavirus Response Act poster explaining employee paid sick leave and family leave rights and employer responsibilities under the law.</li>
<li>Confer with your legal counsel to review updated policies and agreements and any actions you are planning to take with respect to your staff during this period to ensure they comply with these new laws as well as existing laws like WARN (and State mini-WARN statutes), FMLA, ADA, wage/hour laws, and laws prohibiting disability discrimination, sex and/or caregiver discrimination.</li>
<li>Consider options for financial assistance being offered through various legislation, disaster relief loans and/or grants for nonprofits when needed.</li>
</ul>
<p><strong> </strong>You can subscribe to NYS’s website for updates on COVID-19 <a href="https://now.ny.gov/page/s/coronavirus-updates">here</a> and for NYC-specific guidance, you can check <a href="https://www1.nyc.gov/site/doh/index.page">here</a>.</p>
<p>If you have questions, need assistance determining whether you are an “essential business” in New York, need to prepare a temporary remote work policy or update your policies related to COVID-19, please contact Lisa Brauner, Esq., Head of Perlman &amp; Perlman LLP’s Employment Law Department, 212-889-0575, <a href="mailto:lisa@perlmanandperlman.com">lisa@perlmanandperlman.com</a>.  Our firm is here for you during this crisis and doing everything we can to support and guide you. (The above does not constitute legal advice and you should confer with your attorney for legal advice on your particular situation).</p>
<p>&nbsp;</p>
<p>&nbsp;</p>
<p><a href="#_ftnref1" name="_ftn1">[1]</a> As of the afternoon of March 29, 2020, in New York State&#8211;the pandemic’s epicenter in the United States, there were 59,513 confirmed COVID-19 cases and 965 deaths.  New York now has the dubious distinction of having half of all COVID-19 confirmed cases in the U.S., and 5% of all cases worldwide. As of March 29th, there were 33,768 confirmed COVID-19 cases and at least 192 deaths in New York City alone.  As of March 29th, in the U.S., there are 135, 502 confirmed COVID-19 cases and 2,384 COVID-19 related deaths.  The CDC has now issued an advisory to NY, NJ and Connecticut residents not to travel domestically in light of the doubling of the U.S. death toll in just two days.</p>
<p>&nbsp;</p>
<p><a href="#_ftnref2" name="_ftn2">[2]</a> Governor Cuomo’s Executive Order also:</p>
<p>&nbsp;</p>
<ul>
<li>Bans all non-essential gatherings of individuals of any size for any reason;</li>
<li>Enacts Matilda’s Law to protect New Yorkers age 70+ and those with compromised immune systems, requiring them to: Remain indoors, only go outside for solitary exercise; pre-screen all visitors by taking their temperature; wear a mask in the presence of others and stay at least 6 feet from others; not take public transportation unless urgent and absolutely necessary.</li>
<li>Requires closing of all barbershops, hair salons, tattoo or piercing salons, nail salons, hair removal services and related personal care services, effective Saturday, March 21 at 8:00PM.</li>
<li>Places a 90-day moratorium on evictions for residential and commercial tenants.</li>
<li>Closes all casinos, gyms, theaters, retail shopping malls, amusement parks and bowling alleys until further notice. Bars and restaurants are closed, but takeout can be ordered during the period of closure.</li>
</ul><p>The post <a href="https://dev.staging-perlmanandperlman.com/covid-19-workplace-ny-state-hits-pause-button-extends-april-15th-latest-information-organization/">COVID-19 and the Workplace:  NY State Hits the “PAUSE” Button, and Extends It to April 15th– the latest information for your organization</a> first appeared on <a href="https://dev.staging-perlmanandperlman.com">Perlman Sandbox</a>.</p>]]></content:encoded>
					
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		<item>
		<title>Event Contracts for Nonprofits – When to Push Back</title>
		<link>https://dev.staging-perlmanandperlman.com/events-contracts-nonprofits-push-back/</link>
					<comments>https://dev.staging-perlmanandperlman.com/events-contracts-nonprofits-push-back/#respond</comments>
		
		<dc:creator><![CDATA[Perlman &amp; Perlman]]></dc:creator>
		<pubDate>Fri, 26 Oct 2018 16:11:10 +0000</pubDate>
				<category><![CDATA[Contracts & Commercial Transactions]]></category>
		<category><![CDATA[Nonprofit]]></category>
		<category><![CDATA[Nonprofit & Tax Exempt Organizations]]></category>
		<category><![CDATA[Uncategorized]]></category>
		<guid isPermaLink="false">https://dev.staging-perlmanandperlman.com/events-contracts-nonprofits-push-back/</guid>

					<description><![CDATA[<p>Many nonprofit organizations host signature events that are fundamentally important for the organization’s mission. For some nonprofits, an annual fundraising gala provides the bulk of the nonprofits’ funding for the coming year.  For others, conferences may provide essential opportunities to further their mission. Regardless, many nonprofits by necessity enter into major event contracts with venues. [&#8230;]</p>
<p>The post <a href="https://dev.staging-perlmanandperlman.com/events-contracts-nonprofits-push-back/">Event Contracts for Nonprofits – When to Push Back</a> first appeared on <a href="https://dev.staging-perlmanandperlman.com">Perlman Sandbox</a>.</p>]]></description>
										<content:encoded><![CDATA[<p>Many nonprofit organizations host signature events that are fundamentally important for the organization’s mission. For some nonprofits, an annual fundraising gala provides the bulk of the nonprofits’ funding for the coming year.  For others, conferences may provide essential opportunities to further their mission. Regardless, many nonprofits by necessity enter into major event contracts with venues.  A working familiarity with an event contract’s core elements, and when to push for fairer terms, can help ensure your event is a success and your organization is protected.</p>
<p>In this post, we will take a bird’s-eye view of the contracting process, from identifying those items that are of essential importance to your organization to getting into the details of deposits, cut-off dates, and cancellation clauses.  Please be advised that this summary is not comprehensive, so I encourage you to seek an experienced advisor (event planner, attorney, development officer).</p>
<h5>An Agreement</h5>
<p>The first step is to identify the goals of the event.  Is it in celebration of a particular achievement? How many attendees are expected? Is it going to be formal or casual? Will there be activities, an auction, or dancing? What other criteria will help narrow down the search for a venue?</p>
<p>Once you identify a venue, you need to concur on the major points of the agreement.  If there are any “must-have” features or services for the event, be sure to identify and confirm that the venue provides them before delving into contracting. There’s no point in getting into negotiations only to realize the venue can’t accommodate the video presentation that is essential for the awards ceremony, for example.</p>
<p>Once there is agreement on the big-ticket items, in all likelihood the venue will send you a draft contract, based on a standard template. To lock down the booking, the venue may limit the time period to review and sign the contract. The venue wants a quick response because: a) it is holding that event space, hotel rooms, or other facilities for your organization, and b) the venue wants you to feel pressured to make a decision quickly and limit the negotiable items.</p>
<p>You should always make sure at the outset of negotiations that the venue provides sufficient time to talk to all of your organization’s decision-makers and have the contract reviewed by your advisor(s). For a major event, you might need to run the agreement by a board committee, the organization’s leadership, legal counsel, and an event planner.</p>
<h5>Analyzing the Agreement</h5>
<p><em>The Big Picture</em></p>
<p>Once you receive the contract, check that the big ticket items are correct – how much is the venue charging? If hotel rooms are being reserved, did the venue list the correct nights, number, and level of rooms? Were the correct conference rooms/event spaces listed? If you negotiated a discount for food/lighting/valet parking, did the venue include those items?</p>
<p>Never rely on a venue’s assurances that certain items or services will be provided if those items aren’t listed in the contract. Even if the venue has every intention to provide those items or services when you sign the agreement, there may be turnover in the venue’s event staff before your big event. All of a sudden you will get a whopping bill for the extra spot lighting that you thought was included, or your guests are asked to pony up for valet parking when you thought it would be comped. Make sure those items are explicit in the agreement to avoid misunderstandings down the road.</p>
<p><em>The Details</em></p>
<p>The big picture items are business decisions that anyone in a decision-making position should be able to review. Approval of those items will be driven by your sense of whether the terms are fair. The smaller details are equally important but require a closer review by someone with experience with events contracts.</p>
<p>Here are a few items that we frequently discuss with venues on behalf of our clients. While you may not always get the changes you ask for, it never hurts to ask, and often you can get the venue to budge from their initial offer.</p>
<h5>Deposit</h5>
<p>A venue almost always requires a deposit upon signing the contract. The further into the future your event, the less you should pay up-front. We recommend negotiating an initial deposit that does not exceed 10% of the overall cost. The venue may require additional deposits as the event date approaches.</p>
<p>A venue will typically frame the deposit as “non-refundable.” We try to remove such a reference, for a few reasons. If the venue has to cancel the agreement, it should refund your deposit. Similarly, if there is a “force majeure” event, something that makes the performance of the contract impossible, the venue should refund your deposit.</p>
<h5>Headcount &amp; Cut-Off Date</h5>
<p>When the venue’s charges correlate to the number of people attending, the venue will want an estimate of the number of attendees before you sign the contract. They will typically take your minimum headcount, figure out how much revenue that number of attendees will generate, and require that your organization guarantee that revenue (a “Guaranteed Minimum”). A Guaranteed Minimum provides down-side protection for the venue – if your attendance numbers disappoint, the venue can still plan on receiving a minimum amount of revenue.</p>
<p>A Guaranteed Minimum is great for a venue, but bad for your organization. If attendance changes for the worse, you are stuck with a bill for services you didn’t need. Therefore, we recommend including a subsequent “Cut-Off Date” in the contract, which is a date by which your organization may provide an updated headcount to the venue. Any updates to your headcount prior to the Cut-Off Date won’t incur liability for your organization – the venue will link the Guaranteed Minimum to the revised count.</p>
<p>Depending on the type of event, the Cut-Off Date may still be several months before the event date. You should try to negotiate for as much time as possible before you provide a firm number that the venue will link to your Minimum Guarantee.</p>
<p>The venue will likely tell you that any increase will be subject to availability (especially with hotel contracts), and that’s fine. You should be more interested in the ability to lower your attendance numbers, rather than increase them. The venue will (almost) always try to accommodate an increase in attendance, because it will be able to charge you more. But venues try to lock you into a minimum attendance number, and charge you a penalty if you fall below that number (see Attrition, below).</p>
<p><strong>Bottom line</strong> –ask for as much time as possible before you have to provide a firm headcount to the venue.</p>
<h5>Attrition</h5>
<p>The venue has to plan ahead – it may need to contract with vendors, enter into additional service contracts, and make other expenditures to prepare for a large event. That’s why the venue wants a Guaranteed Minimum (see above). But what happens if your event falls one person, or one percent, short of the Guaranteed Minimum?</p>
<p>Some contracts include “Attrition” clauses, which allow your event to fall within a certain number or percent below your Guaranteed Minimum before you suffer a penalty. We routinely see Attrition clauses ranging from no Attrition allowance to a twenty percent (20%) Attrition allowance. Depending on how confident you are in your attendance numbers compared to the Guaranteed Minimum, you may want to include the Attrition number as a top item for negotiation.</p>
<p><strong>Bottom line</strong> – negotiate the largest Attrition allowance you can.</p>
<h5>Cancellation</h5>
<p>A “force majeure” clause allows either party to cancel if something outside of your control makes it impossible to hold the event. Typical examples are natural disasters, power outages, etc. If the contract doesn’t have a force majeure clause, request one. Make sure that the venue doesn’t include anything within the force majeure clause that is actually within its control – for instance, some force majeure clauses include a “labor stoppage” provision. Make sure that the clause is written so that if the venue causes its own labor stoppage (i.e. it violates a CBA with its unionized workers), the venue is not off the hook from your contract.</p>
<p><em>Cancellation by your organization</em></p>
<p>Venues like to protect themselves against possible losses. Once your contract is signed, the venue will hold space for your event, potentially turning away other business that would have come its way. In exchange for missing out on those opportunities, the venue will ask that your organization pay a fee if you have to cancel your event (a “Cancellation Fee”).</p>
<p>Typically, the Cancellation Fee is computed on a sliding scale, increasing as you get closer to the event. Some contracts compute the Cancellation Fee as a percentage of the Guaranteed Minimum.</p>
<p>Regardless of the amount of the Cancellation Fee or how it is computed, we always require venues to include language in the contract that would diminish or eliminate an organization’s penalty if the venue is able to find a replacement event. It’s only fair that if you cancel three months out from the event, and the venue finds another organization to host an event on the same night for as much or more money, you shouldn’t have to pay anything. The venue didn’t suffer any loss, so it has nothing to recoup.</p>
<p>The contract should include language that if you cancel, the venue will use commercially reasonable efforts to market the event space to other potential customers. If the venue finds a replacement client, it should then credit any replacement revenues against what you owe in Cancellation Fees.</p>
<p>Finally, make sure that any amounts due as a result of a cancellation are due <em>after </em>the event date. Otherwise you may find yourself in the sticky situation of paying a cancellation fee, then asking the venue for a refund if they found a replacement event.</p>
<p><strong>Bottom line</strong> – minimize your exposure by limiting cancellation penalties and requiring the venue to seek a replacement event.</p>
<p><em>Cancellation by the venue</em></p>
<p>While you want to limit your exposure if your organization has to cancel the event, you also need to protect against a cancellation by the venue. Some venues like to retain the ability to cancel for any reason – others just want the ability to cancel for cause. Regardless, a cancellation by the venue can throw a huge wrench into your plans.</p>
<p>If the contract lets the venue cancel without cause, make sure the venue will cover your organization’s costs to secure a replacement venue in addition to returning any amounts you’ve already paid. To be fair, the contract can state that you will use your best efforts to limit any replacement venue to one that is similar in quality.</p>
<p><strong>Bottom line</strong> – if the venue cancels you should recover your deposits at a bare minimum, but push to get the venue to cover any additional costs your organization or attendees will have to bear if you have to book a replacement space.</p>
<h5>Tax-Exempt Status, Taxes &amp; Cancellation by Your Organization</h5>
<p>Make sure the venue acknowledges your group’s tax-exempt status in the contract. Depending on the state or locality, you may not have to pay certain taxes. If you are booking an event outside the state where your group normally operates, there may be certain registrations required before you’re able to take advantage of any exemptions. The venue may be able to walk you through what is needed – otherwise you should check with counsel to see what your options are.</p>
<p>We also suggest including a clause in the contract that allows clients to cancel if the venue’s actions would in any way jeopardize the organization’s exempt status or reputation. The chance that the venue’s actions would ever trigger such a cancellation is small, but it’s real. In addition, if your group is a values-based nonprofit, you may want to include language that allows an out if the venue violates such values. You may also wish to include a rider requiring the venue to acknowledge your group’s values and a covenant that the venue will not take any action which would materially violate, or cause your group to violate, your values.</p>
<h5>Indemnities and Insurance</h5>
<p>Venues always require that your group indemnify them against any damages caused by your group or attendees. This is standard is not worth fighting over, however, make sure the venue doesn’t overreach. The indemnity should not include anything which may have actually been caused by the venue’s actions or negligence. Exclude any indemnity for damages that are ordinary wear and tear.</p>
<p>You should also ask for a similar indemnity. You (and your attendees) should be protected from damages caused by the venue’s actions. Ideally, your indemnity should mirror that of the venue.</p>
<p>The venue will ask for your group to provide proof of insurance, or at least represent that you have adequate insurance. Be sure to ask the venue to provide similar proof or a similar representation. We recommend that you secure event insurance, which will help provide some relief if something happens to the event that isn’t foreseeable or fully covered by the representations and warranties in the contract.</p>
<h5>Compliance</h5>
<p>As with any contract, it’s a good idea to request a generic representation from the venue that it is in compliance with applicable laws and regulations. You may want to give some examples (building code, fire code, food handling, and ADA compliance are some common representations to ask for).</p>
<p>Nonprofits must always be aware of state fundraising regulations and whether the activities surrounding the event will trigger any registration obligations with a state charity official. Whether the nonprofit or its event planner are required to register will depend on the nature of the event, what the activities are in support of the event, and what the event planner does on behalf of the nonprofit.</p>
<p>For the event planner, it’s important to ascertain if they will be selling tickets or soliciting sponsors for the event and/or contributions on behalf of the nonprofit, or if they are just taking care of the logistics and providing tools to the nonprofit’s staff.  Are they providing fundraising advice? Depending on where the event is held and where solicitations are being made, the event planner and the nonprofit may need to register with one or more states. Their contract may need to have certain required provisions and may need to be filed with the state. It’s advisable to review this with legal counsel to ensure the nonprofit and the event professional are fully compliant with applicable law.</p>
<p>Finally, there are numerous IRS rules regarding how to treat the deductibility of ticket purchases for events or items won at auction. For instance, charities must notify purchasers what amount of the portion is considered a contribution versus a payment for goods and services.  There are rules regarding the deductibility of items <a href="http://www.perlmanandperlman.com/1399-2/" target="_blank" rel="noopener">donated for an auction</a>. Finally, nonprofits must always be aware of their obligations for <a href="http://www.perlmanandperlman.com/irs-regulations-for-substantiating-the-charitable-contribution/" target="_blank" rel="noopener">receipting donors</a>.</p>
<h5>Conclusion</h5>
<p>Events are complex. A good contract helps provide a framework for the logistics of the event, and protects you if something goes wrong. Make sure you take the time to carefully review the contract, and ask for expert advice whenever you are uncertain.</p><p>The post <a href="https://dev.staging-perlmanandperlman.com/events-contracts-nonprofits-push-back/">Event Contracts for Nonprofits – When to Push Back</a> first appeared on <a href="https://dev.staging-perlmanandperlman.com">Perlman Sandbox</a>.</p>]]></content:encoded>
					
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