In the past few years, we have witnessed an increase in the number of reports of tax-exempt organizations which have experienced difficulties in the areas of corporate administration, fundraising procedures and prudent investing. In many cases, it has been determined that a lack of attention to corporate and legal formalities contributed to the problem.
In recent years, taxing authorities and other regulating government agencies have responded to concerns about corporate negligence and malfeasance by increasing the administrative responsibilities of operating a tax-exempt organization. One result of these measures has been to underscore the value of working with knowledgeable counsel, both during the formation and operational stages.
In our experience, the most successful tax-exempt organizations are generally the product of our client’s very personal vision and commitment. Accordingly, we believe that a significant part of our responsibility is to properly channel the client’s resources so that he or she can make proper choices to ensure that the organization will fulfill those objectives.
Whenever possible, our preference is to provide early assistance to tax-exempt organizations, starting from the ground up. We believe that the formative stage is critical for the long-term success of the organization. Typically, we work closely with our client to identify his or her goals, both financial and personal, and to determine whether the establishment of a tax-exempt organization is consistent with those intentions. If the answer is yes, we then identify the various challenges associated with establishing and maintaining a tax-exempt organization.
Once the client has settled upon a plan, we prepare the various corporate documents which form the foundation for the organization’s operations. In addition, we complete the tax exemption applications and other government filings required to qualify the entity as a tax-exempt organization.
If the taxing authorities approve an organization’s tax-exempt status, we then provide guidance on continuing reporting obligations, recordkeeping responsibilities and operational requirements.
We work closely with our clients in organizing their board meetings, establishing their administrative committees and developing their grant programs. If the tax-exempt organization will engage in fundraising, we provide the client with guidelines to ensure that its fundraising operations comply with federal, state and local law. We also assist the client in structuring gift agreements and in conducting the necessary due diligence to assure that the client’s goals will be met.
In addition to providing assistance to new tax-exempt organizations, we also provide counsel to long-standing organizations which rely upon us to assist them in the areas of tax compliance, corporate administration, business operations, investments, employee and volunteer interaction, fundraising, lobbying and community relations. In the area of charitable organizations, we have substantial experience and expertise in advising private nonoperating foundations, private operating foundations and public charities.
Not all tax-exempt organizations qualify as charitable organizations. We also have experience in establishing and counseling mutual benefit corporations, such as homeowners associations and business associations. We work with clients to determine whether the income tax and organizational advantages of establishing a mutual benefit corporation outweigh the expenses of establishing and administering such an entity.
- Assisted in establishing, obtaining tax-exempt status and advising public charities including charitable, educational, artistic and medical entities
- Advised prominent community organization in restructuring of corporate administration
- Assisted technology-based charitable organization in winding up and dissolving
- Assisted in establishing, obtaining tax-exempt status and advising private operating foundations
- Counseled charitable organizations in connection with IRS and Attorney General investigations
- Provide ongoing advice to over 40 family foundations including foundations supporting medical, educational, artistic and scientific endeavors
Our tax-exempt organization clients also benefit from the comprehensive legal coverage provided by our full-service law firm. Our Real Estate Group is able to assist in the acquisition, leasing or sale of real property. Our Employment Law Group works with our tax-exempt clients on employment agreements and other employee relations issues. And our Intellectual Property and Technology Groups assist clients in navigating complicated issues involving trademarks, copyright and use of the Internet.
For more information, please contact Darryl W. Cluster.