Nonprofit organizations face a wide range of unique business and legal issues, from tax exemption to governance and fundraising rules. Michael Best has significant experience regarding these special legal needs of nonprofit organizations.
Our clients include large organizations with national and international memberships; trade and professional organizations of all sizes; family foundations; colleges and universities; and charitable, educational, scientific, human services, healthcare, and cultural institutions. In addition to advising these organizations on a wide variety of day-to-day matters, we also have considerable experience in counseling organizations that have converted from tax-exempt to taxable status (and vice versa), including within regulated industries, such as insurance, and in mergers and acquisitions involving tax-exempt organizations.
Whatever their scope or industry, nonprofits constantly face the specter of losing their tax-exempt status. Often, this loss results from some inadvertent act on the nonprofit’s part. Among other issues, a nonprofit’s board of directors may be personally fined for actions the organization takes, even if the board is unaware of the noncompliant acts. We are closely attuned to the complexities of the Internal Revenue Code regarding exempt organizations, and to additional regulation by most states. We provide proactive planning advice to help nonprofit clients protect their tax-exempt status.
Our tax advisors regularly advise nonprofit clients in the following areas:
- Applying for and obtaining tax-exempt determination letters from the IRS
- Unrelated business income tax (UBIT)
- Taxation of lobbying and campaign activity
- Compensation of directors and officers
- Taxation of joint ventures with for-profit organizations
- Intermediate sanctions
- Tax matters related to private foundation classification, as well as the private foundation excise taxes
- Applicable operating requirements
- Disclosure of tax and information returns
Outside the tax realm, our lawyers also provide counsel to nonprofits in the following essential areas:
- Organization, including structuring of holding companies, for-profit subsidiaries, tax-exempt foundations, public/private partnerships, and other types of collaborative relationships
- Governance, including articles of incorporation and bylaws, corporate recordkeeping, principal roles, and conflicts of interest
- Fundraising and development, such as fund solicitation, charitable registration under state law, endowments, bonding, deferred giving, and estate planning
- Antitrust, including concerted action, standard setting and certification, and other competitive activities
- Labor and human relations, including executive compensation, tax, and ERISA issues; staff and employee contracts; workplace safety and accommodation requirements under OSHA and ADA; and employment issues such as harassment, discrimination, discipline, and termination
- Government relations, including participation in lobbying and rulemaking and interfacing with regulatory agencies in connection with compliance, grants, and funding
- Real estate and environmental issues such as site selection, acquisition, zoning, development, environmental and tax assessment, construction, financing, leasing, and sale of commercial property
- Intellectual property, including the protection of patents, trademarks, trade names, and copyrights