Does the Supreme Court decision overturning the key provisions of the Defense of Marriage Act (“DOMA”) have any impact on nonprofits? It does indeed.
In his opinion for the Court, Justice Kennedy eloquently writes that the rights and benefits of marriage must be afforded to gay and lesbian couples who are legally married. He also writes that, with the demise of DOMA, “the duties and responsibilities that are an essential part of married life” are now invested in legally married same-sex couples, obligations “they in most cases would be honored to accept.” In other words, federal laws and regulations that apply to married couples that heretofore were not imposed on same-sex married couples now do apply to them.
This change in law has immediate application to nonprofits where a legally married same-sex spouse is a key person affiliated with a nonprofit. Section 4958 of the US Tax Code regulates transactions between a 501(c)(3) or 501(c)(4) organization and any of its directors, trustees, officers, executives, key contractors, and key donors, or any person related to them by blood or marriage (so-called “disqualified persons”). When DOMA was the law of the land, the IRS could not apply this law to married same-sex couples. Now it can.
It will behoove nonprofit boards to require disqualified persons to disclose whether their legally married same-sex spouses have any interest in transactions of the nonprofit. Ideally this will be done without delay. Likewise, conflict of interest and self-dealing policies need to be updated to ensure compliance with the new law of the land.