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501(c)(3)

Section 501(c)(3) tax-exempt organizations – so designated because of  the section of the Internal Revenue Code that covers them – are dedicated to educational, religious, scientific and other charitable activities.  The federal and state laws governing charitable organizations and private foundations often vary widely and are increasingly complex.  The firm’s attorneys, who include some of the leading practitioners in nonprofit tax law, provide clients with a wide range of services whether the organization is just beginning or has been in existence for years.  We work with a variety of private foundations and public charities, ranging in size from small to the largest national organizations, and dedicated to issues ranging from human rights to environmental protection to education to health care and everything in between.

Tax-Exempt Status and Organizational Governance

Our attorneys have extensive experience in guiding nonprofits through the maze of federal and state regulations facing tax-exempt organizations.  We help incorporate organizations around the country and prepare organizational documents such as articles of incorporation, articles of association, constitutions and bylaws, operating agreements, conflict of interest policies, document retention policies, and affiliation and cost-sharing agreements.

We prepare tax-exemption applications, with proven success at obtaining favorable determinations from the IRS.  For both new entities and existing organizations, we help nonprofit managers ensure that their organizations comply with state registration and reporting requirements.  We review federal and state annual tax returns and other required reports.  When organizations face IRS audits, they turn to us for advice, and we help clients navigate the audit process as swiftly and painlessly as possible. 

As organizations grow, we assist them in drafting employment manuals tailored to their needs and in negotiating reasonable employment contracts.

Our attorneys also assist private foundations deal with legal matters specific to them, such as self-dealing, private inurement and mandatory disbursements.

Campaign Finance and Elections

Section 501(c)(3) organizations face an absolute prohibition on activities that support or oppose political candidates.  To avoid violating this ban, 501(c)(3)s must proceed carefully when engaging in activities related to candidates.  While public charities generally may engage in a limited amount of lobbying, the IRS may view lobbying during a pre-election period to be a thinly disguised attempt to circumvent the prohibition on political activity.  Public charities need not sit out the election season, though, and they need not relinquish their First Amendment rights to speak out on the issues that drive their work.  These organizations may spend donors’ tax-deductible contributions on extensive nonpartisan activities to register voters and to boost Election Day turnout by historically disenfranchised voters.  Our lawyers have helped clients understand voter registration rules in most states, and to develop robust get-out-the-vote programs.  With careful strategic planning, a public charity can turn an election from a blackout period into an opportunity to extend its reach and enhance its power.

Lobbying and Government Ethics

Public charities may engage in a limited amount of lobbying.  Nonprofit managers may find the lobbying limits confusing.  Our lawyers help organizations navigate these sometimes ambiguous rules so nonprofits may advocate for legislation necessary to advance their goals in compliance with applicable federal and state lobbying laws.  These may require registration of lobbyists and reporting of their activities, and we help guide organizations through these requirements.   Advance planning may help an organization consider the effects of these requirements might affect it, and what alternatives may be available.

Private foundations may not lobby, but they enjoy a “safe harbor” enabling them to provide unrestricted grants to organizations that conduct lobbying.  Unfortunately, far too few foundations take advantage of this ability.  Our lawyers help foundations structure grants that protect the foundation’s managers and its assets, while attaining the most influence possible.  Thoughtful grantmaking, with a sophisticated understanding of IRS treatment of foundations, enables grant recipients to make the most of each dollar they receive from foundations, without the unnecessary shackles that are too often written into grant agreements. 

 

 

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