We work with nonprofit organizations to incorporate and obtain their tax exempt status under Section 501(c)(3) of the Internal Revenue Code. There have been recent changes to obtaining 501(c)(3) status and we have worked with organizations in submitting successful applications on the simplified track by filing a 1023-EZ and the more rigorous 1023 application for larger organizations. Nonprofits also face similar legal challenges to assure that they comply with business requirements and additional requirements to assure that they do not jeopardize their tax exempt status. As a law firm advising nonprofits, we work with nonprofit organizations to guide them through these issues.
Once we have helped you in the process of obtaining a tax-exempt status, we will help you through the process of establishing the proper corporate governance since a nonprofit organization and people operating a nonprofit must comply with same laws and regulations as a for-profit business must comply with, such as contracting, human resources law and trademark. We will help the nonprofit organization maneuver through the tricky waters of conflicts of interests between board members and the organization, particularly what is known as private inurement and private benefit transactions.
We provide guidance to non-profits that need legal guidance on fundraising for organizations, such as corporate sponsorships, grants, gifts from individual donors. We advise on restrictions on organizations’ political activities and governmental lobbying. We have more resource materials on non-profit law here.
FAQs – Non-Profit Law
What is the process for creating a nonprofit organization?
A non-profit may be organized as a corporation or as a limited liability company under state law. After the organization is formed under state law, you must file an application with the Internal Revenue Service under the Internal Revenue Code. The application is relatively short for small nonprofits. For larger nonprofits, the application is more cumbersome.
The tax-exempt status relates back to when the organization was created. There are other tax exempt organizations besides 501(c)(3), which pertains to organizations organized and operated exclusively for religious, charitable, scientific, educational, literary, or other specified purposes. Other tax-exempt organizations that founders may want to consider are 501(c)(4) (social welfare organizations) or 501(c)(7) (social and recreational organizations). As a nonprofit lawyer, we can help you setup and comply with the processes.
According to you as a Non-profit Lawyer, should a nonprofit have a conflict-of-interest policy?
Yes. A nonprofit organization must have a conflict-of-interest policy in place. A conflict-of-interest policy helps the organization maintain transparency, integrity, and accountability in its operations. It provides guidelines and procedures for addressing situations where individuals associated with the nonprofit may have personal, financial, or other interests that could potentially conflict with the organization’s best interests. We, as a nonproft attorney, can assist nonprofit organizations in developing and implementing a comprehensive conflict-of-interest policy tailored to their specific needs.
What steps should nonprofit organizations take to ensure they comply with applicable laws and regulations governing nonprofits?
To ensure compliance with applicable laws and regulations, nonprofit organizations should stay updated on relevant laws and regulations that apply to their operations. This can be done through research or engaging law firms or attorney who specialize in nonprofit law.
A nonprofit organization should also establish compliance policies and procedures. These policies should reflect legal requirements and best practices specific to the nonprofit sector. It is also important to maintain accurate and complete records of the organization’s activities, including financial records, board meeting minutes, tax filings, and donor records. It is also good practice to periodically conduct internal audits and assessments.
What is the difference between private inurement and private benefit transactions?
Private inurement means that the nonprofit’s board members and officers should not be able to enrich themselves at the organization’s expense. A tax-exempt organization is not allowed even a little private inurement without jeopardizing its tax-exempt status. Under the private benefit doctrine, an organization is not operated for an exempt purpose unless it serves a public rather than private interest. The private benefit doctrine typically arises when the organization has benefited a narrow class of individuals. In practice, the IRS will usually not take action against a tax-exempt organization unless the private benefit is egregious. Being a law firm for nonprofits, we ensure that you remain compliant with all the policies and regulations.