Nonprofit organizations have the dual challenge of doing good while coping with a legal and regulatory environment that at times can be overwhelming. They also steward the mission of their organization, the funds generously notated to their cause, the people they serve, and the reputation of their directors, board members, donors and other stakeholders.
Most nonprofit leaders are people of profound goodwill, and are surprised to learn of the novel ways they may run afoul of the law. For example, some are startled to learn that board members and directors may be held personally liable for their organization’s unpaid taxes. Or perhaps, they are unaware of the need to register their charitable solicitations with the attorney general’s office.
When a nonprofit builds a relationship with their attorney, they obtain a confidence and ability to more effectively focus on the services and good work they provide.
Creating a fully tax-exempt nonprofit organization is a complicated process and likely requires the founders to register and gain approval from multiple state entities as well as the IRS. Failure to comply with the matrix of state and federal regulations both affects your ability to raise deductible donations and may put the founders at risk of fines and unwelcome government attention.
A nonprofit attorney keeps you accomplishing your mission while staying within the law. Whether that means applying for 501(c)(3) exempt status or identifying and drafting agreements with the right fiscal sponsor, your nonprofit lawyer is a partner in the execution of your mission.
Blurring Lines between For-Profit and Nonprofit Activity
It is an exciting time to be a nonprofit leader. The advent of social entrepreneurship has many smart executive directors and boards looking to organizational models, activities, and practices more often associated with business. While this can be a force-multiplier for your mission, there are pitfalls of which every nonprofit leader must be aware. Even when an organizational mission is doing good (and not making a profit), there can be significant risks when organizations enter traditionally for-profit arenas.
Unintentionally, altruistic efforts can result in fines, corporate taxes levied against board members, and even the loss of tax exempt status.
This makes it essential that nonprofit organizations identify and engage an attorney who is familiar with the distinct features of nonprofit law, and who understands the changes taking place throughout the nonprofit landscape.
Here is a sample of some situations where a good lawyer may add value to nonprofit organizations:
- Selection of type of legal entity
- Obtaining tax-exempt status
- Structuring of tax-exempt organizations and transactions
- Public-private partnerships and other types of collaborative relationships
- Strategic planning issue
- Membership issues
- Risk mitigation for board members, directors, members, and constituents
- Representation before regulatory agencies
We represent a variety of nonprofit organizations, including:
- New “startup” nonprofit organizations
- Places of worship and other faith-based organizations
- Broadcast ministries
- Private schools
- Educational institutions
- Professional associations
- Public charities