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Tax: Nonprofit Organizations

We have a well-established and extensive practice serving nonprofit and charitable clients. Our experience, coupled with our passion for and commitment to the nonprofit community, allows us to bring unique value to our representation of tax-exempt organizations.

Our lawyers in the United States and the United Kingdom advise private foundations, community foundations, public charities, supporting organizations, donor-advised funds, private operating foundations, health care providers, universities, private schools, religious organizations, trade associations, and other tax-exempt organizations on issues arising in all phases of a tax-exempt organization’s life cycle. 

In the UK, our lawyers liaise with the Charity Commission on behalf of charities on specific issues, such as registering with the Charity Commission, charitable status, constitutional structure, and on more general regulatory and compliance matters. We also deal with the issues that specifically arise in relation to Royal Charter bodies. 

All of our lawyers draw on experience from across the firm such as tax, intellectual property, employment, e-commerce, environment, property, and construction to offer charities and other nonprofit organizations advice on all aspects of their work. 

Creating a New Organization

Our counsel often starts at the beginning of a tax-exempt organization’s existence. We advise clients on the formation of new organizations, including selecting the appropriate type of exempt organization based on federal and state tax and other laws. We prepare organizational documents (including drafting articles and bylaws for incorporation or trust documents for charitable trusts); assist in obtaining necessary licenses and other state registrations; and secure tax-exemption for the organization. We also assist exempt organizations in complying with state and local tax obligations where exemption is unavailable.

Day-to-day Operations Counseling

For both newly created and long-established entities, our lawyers advise on a variety of day-to-day operations issues. We counsel organizations on maintaining their tax-exempt status, fundraising, applicable public support tests, permissible lobbying activities, avoiding excess benefit transactions, political activities, investment of endowment funds, nonprofit corporate governance, contracting, and other matters unique to exempt organizations. By drawing on the knowledge of our colleagues, we advise tax-exempt clients regarding a full range of legal issues, including employment matters, employee benefits (ERISA ), environmental and land use issues, insider trading, health law matters, real estate, litigation, and technology and intellectual property issues (website and Internet issues, trademarks, copyrights, technology licensing, and electronic commerce).

Transactions and Special Circumstances

Our experience with tax-exempt organizations extends beyond day-to-day operational issues. We advise on mergers and acquisitions, partnerships and other joint ventures with for-profit entities, formation of for-profit or limited liability company subsidiaries, conversion to for-profit status, formation of U.S entities to support foreign charitable activities, and creation of organizational and transactional structures to achieve complex fundraising and operational objectives both in the United States and internationally. In addition, we advise tax-exempt organizations regarding amendments to governance documents, IRS  and state audits, reinstatement of tax-exempt status, conservation easements, community and economic development projects, social enterprise ventures, public/ private partnerships, and private letter ruling requests to the IRS. Our experience also includes representation of tax-exempt organizations in connection with their investment programs, unrelated business tax income (UBTI), tax on excess business holdings (IRC 4943), and general tax issues.
 
Often working in collaboration with colleagues focused on estate planning, we advise donors on the design and implementation of charitable giving strategies to meet their charitable, financial, tax, and family objectives. We also advise corporate clients on ways to achieve their philanthropic goals. We have created numerous family and corporate private foundations, and we counsel these foundations regarding compliance with the private foundation excise tax rules on self-dealing, qualifying distributions, taxable distributions, excess business holdings, and jeopardizing investments. In addition, we advise on all aspects of grantmaking, including grants to individuals and supporting organizations, employer-related scholarship programs, disaster relief and emergency hardship grants, and issues specific to international grantmaking, such as compliance with the USA Patriot Act, preventing diversion of charitable assets to terrorism, expenditure responsibility, and foreign public charity equivalence procedures.

Nonprofit Governance

We advise clients on all aspects of nonprofit governance and helps to develop best practices, including whistleblower and document retention policies, conflict of interest policies, committee charters, and compensation practices for directors, officers, and employees, as well as advising on the exercise of fiduciary duties. We perform governance audits and assist clients, both in establishing appropriate governance policies and practices and addressing the consequences of previous problematic policies or practices.

Investment Activity

We counsel pension funds, universities, foundations, other tax-exempt organizations, and their investment advisers regarding a wide range of legal issues relevant to structuring and managing  the investment of endowment and other funds, including providing advice regarding compliance with the complex tax rules applicable to tax-exempt organizations and negotiating and drafting investment agreements. 

Federal Public Policy

We work in conformance with the laws governing tax-exempt organizations lobbying to affect public policy in Congress and the administration. Our appropriations team interacts on behalf of clients with the highest level of decision-makers in both the House and Senate. In addition, the firm works with a wide variety of administrative agencies to educate political appointees and career officials on policy issues relevant to our tax-exempt organization clients. We also gather intelligence, monitor, and analyze forthcoming policy events and trends.

United Kingdom Nonprofit and Charitable Organizations

In the UK, our practice gives practical legal advice to charities, those wishing to establish charities, and those dealing with charities, on all aspects of charity law and associated legal issues. 

The practice provides strategic legal advice on establishing charities and subsidiary trading structures and advises charities going through major changes, such as reorganizations, mergers, and acquisitions, both nationally and internationally. We liaise with the Charity Commission on behalf of charities on specific issues, such as registering with the Charity Commission, charitable status, and constitutional structure and on more general regulatory and compliance matters. We also deal with the issues that specifically arise in relation to Royal Charter bodies. 

We draw on experience from across the firm to offer charities and other nonprofit organizations advice on all aspects of their work. Our range of experience includes advice in relation to other areas such as tax, intellectual property, employment, e-commerce, environment, property, and construction. We provide advice to charities on the commercial aspects of their activities such as public and private partnering, commercial and property deals, sponsorship, outsourcing, and joint ventures of all kinds. We also advise on contentious matters that affect charities and not-for-profits, resolving trusts, tax, and charitable disputes and other kinds of litigation as a regular part of our practice. 

Charities have to achieve their objectives in the most economical way and as effectively as possible. They generally have slim management resources and need to strictly husband their finances. Increasingly, they also need to be aware of commercial issues. All the areas of their operation are now subject to increasingly complex regulations. Our aim is to empower our clients to meet their objectives speedily, efficiently, and cost-effectively. Our lawyers are always conscious of the objectives and particular requirements of our charity clients. Many of our staff and partners help charities through their personal activities, and several are themselves charity trustees. We therefore have a thorough understanding of charity issues and can see them from both sides. 

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