Our Foundations and Exempt Organizations group assists clients in establishing and effectively operating nonprofit tax-exempt organizations including community foundations, private foundations, publicly supported charities, trade associations and taxable nonprofit entities. We advise clients on:
- tax and corporate planning for nonprofit organizations;
- formation of nonprofit entities;
- qualification of nonprofit entities for tax-exempt status;
- conversions to and from exempt status;
- structuring of joint ventures with for-profit entities;
- formation of LLCs among nonprofit and for-profit organizations; and
- corporate reorganizations and liquidations, including reorganizations of hospitals, arts organizations, museums, foundations and other exempt organizations.
We represent exempt organizations before the Internal Revenue Service and in connection with proceedings with or initiated by the offices of various states' attorneys general. Our group also requests formal and informal advice from the Internal Revenue Service on behalf of clients, including the filing of ruling requests, and represents them in connection with tax controversy work including Internal Revenue Service audits, appeals and tax litigation.
We regularly counsel clients on unrelated business income issues, unrelated debt financed issues, lobbying and political contribution tax compliance, transactions involving contributions to and from foreign entities, related party transactions, private inurement and private benefit issues and related regulatory matters. Our Foundations and Exempt Organizations lawyers regularly structure transactions to mitigate the impact of these rules and achieve the best practicable tax results for the client.
We also advise organizations on nonprofit corporate law issues and nonprofit boards on fiduciary duty issues, including best practices for corporate governance and Sarbanes-Oxley principles applicable to tax-exempt organizations.
Representative transactions include:
- Restructuring an exempt organization by forming a holding company, operating subsidiaries and taxable subsidiaries to align the corporate structure with the business objectives and shield the tax exemption for the organization from growing for-profit lines of business.
- Creating a fundraising foundation for a tax-exempt operating charity.
- Structuring the private use of a tax-exempt financed facility to comply with private use bond restrictions and avoid unrelated business income on certain uses.
- Negotiating and handling all aspects of the affiliation of a local hospital with a larger health care system.
- Assisting a corporate private foundation in creating and expanding programs that address charitable initiatives of its domestic and foreign employees.
- Developing a joint venture between a tax-exempt charity and a for-profit corporation for the operation of a new initiative of the charity in a new geographic location.
- Forming supporting organizations to a large tax-exempt institution to allow it to accept complex interests in other business entities as a charitable gift.
- Converting a for-profit home health care agency to a nonprofit entity and operation.
- Assisting a tax-exempt organization in implementing a strategic plan, including the consolidation of operations, the development of new operations and formation of other related entities, and a change in status for federal tax-exempt purposes.
- Structuring an LLC involving a tax-exempt charity and for-profit entities for the undertaking of educational operations for the tax-exempt charity intended to qualify as a charitable activity.