TAX-EXEMPT ORGANIZATIONS | Marc Cunningham LLC

Business Entities (Tax-Exempt Organizations)

Familiarity with the common types of Internal Revenue Code (IRC) 501(c) entities, such as 501(c)(3) – generally for charitable, educational, public safety, public welfare, religious, or scientific nonprofit purposes;

Experience advising 501(c)(3) organizations on the appropriate documentation, execution and structure of charitable giving vehicles (such as legacy gifts, charitable trusts, and donor-advised funds), complex transactions and collaborations (such as joint ventures, impact investments and strategic partnerships).

Advice regarding the general benefits of 501(c)(3) organizations: can be tax-exempt; more prestigious status for fundraising; ability to give donors tax deductions if they make charitable gifts to the organization; eligible for grants; discount postage rates and special non-profit mailing privileges; free or discounted rates for announcements and press releases from nonprofit organizations by media providers.

Experience advising section 501(c)(3) organizations on general tax compliance, nonprofit advocacy, and legal issues arising from international operations, programs, and fundraising activities.

Performed typical tasks related to 501(c)(3) startups, such as applying for an Internal Revenue Service (IRS) income tax exemption, compliance with any state requirements for nonprofits, defining the roles of board members and employees, drafting and adopting of corporate bylaws, drafting corporate policies, establishing best practices, filing Articles of Incorporation, registering with the Attorney General’s office.

Performed typical ancillary tasks related to 501(c)(3) startups, such as board governance, charitable solicitation registration, dispute resolution, employment issues, endowment policies, for-profit subsidiaries, incorporation, investment policies, lobbying and political activities, local and international affiliations, state and local tax consultation, tax-exemption applications.

Assisted consultation regarding tax issues that may apply to tax-exempt 501(c)(3) public charities.

Assistance with limitations on 501(c)(3) organizations, which are generally prohibited from lobbying or engaging in political campaigns.

Familiarity with the IRS application forms for various tax-exempt status requests, such as Form 1023, Application for Recognition of Exemption – for – either Form 8976, Notice of Intent to Operate, Application for Recognition of Exemption – for 501(c)(4) status – Form 1024, Application for Recognition of Exemption – for 501(a) status.

Participation in tax-exempt bond financing for projects sponsored by 501(c)(3) organizations.

Consultation regarding the difference between IRC 501(c) and 501(c)(3) status – both exempt organizations from paying corporate income taxes, but a 501(c) organization may not allow its donors to write off donations, while a 501(c)(3) organization allows its donors take tax deductions on their contributions.

Consultation regarding various tax issues, such as affinity license agreements and similar agreements to produce tax-exempt royalties, requirements for qualified corporate sponsorships within the meaning of IRC 513(i), the potential for private inurement, private benefit, and excess benefit transactions within the meaning of IRC 4958, lobbying limits and issues from the standpoints of IRC 501(h) and 4911, as related to the Lobbyist Disclosure Act (LDA).

Consultation regarding the revised IRS Form 990 (which are available to the general public through Freedom of Information Act – FOIA – requests), that considerably increases required disclosures, and the scrutiny of the general public, and the interest of state attorneys general in the operations and activities of tax-exempt organizations within their respective jurisdictions.

Legal reviews of returns for tax-exempt organizations, including IRS Forms 990 and 990-T, and legal reviews of returns for private foundations (Form 990-PF).

Assisted with the legal aspects of preparing and reviewing tax returns for exempt organizations and their taxable affiliates – such as IRS Forms 990, 1065, 1120 – and related filings, including IRS audit defense strategies and international filings.

Consultation for private foundations on avoiding IRC Chapter 42 excise taxes, including the prohibition on self-dealing.

Consultation regarding the formation of various structures of corporate entities – such as parent companies, for-profit subsidiaries, fundraising corporations, holding companies, supporting organizations – to help achieve tax avoidance goals of clients.

Assistance in structuring executive compensation programs, such as IRC 403(b) tax-sheltered annuity programs and IRC 457 deferred compensation plans.

Assistance setting up the Board of Directors for charitable organizations, ratification of the initial bylaws, oversight of budget management and the Board’s obligation to the donors to stay on target to achieve fundraising and giving goals, and to operate effectively.

Issues regarding the prohibition that family members and business associates cannot make up a majority of a public charity’s Board, and whether the Board members are willing to give their time, money, and resources to further the goals of the charitable organization, so that they may be productive Board members.

Compliance with IRS requirements regarding a minimum of three Board members, with Board meetings at least once each year, at which the annual budget is passed, and strategic decisions requiring votes would be discussed.

Recommendation for single-term limits and staggered terms for Board members.

Familiarity with the creation of donor-advised funds, field of interest funds, endowment funds, charitable remainder and lead trusts, gifts annuities and pooled-income funds.

Consultation regarding the guidelines for a tax-exempt organization to be allowed to spend certain amounts on legislative lobbying, although such amounts must not constitute a substantial part of such tax-exempt organization’s revenue, and such tax-exempt organization must not devote a substantial amount of time in performing such lobbying activates (particularly candidate election advocacy), or it may lose its tax-exempt status by being reclassified by the IRS as a political organization.

Consultation regarding the limitations on a tax-exempt organization’s fundraising activities.

Consultation regarding the legal aspects of various tax issues, such as intermediate sanctions and "excess benefit" transactions, IRS issues (audits, examinations, regulations, rulings), lobbying and political activities, private foundation rules (such as excess business holdings, jeopardy investments, mandatory distributions, self-dealing, taxable expenditures), private inurement and private benefit prohibitions, reasonable compensation issues, rules regarding donor-advised funds and supporting organizations, transactions between joint ventures, non-exempt organization, partnerships, tax-exempt organizations involving unrelated business taxable income.

Consultation regarding the use of tax credits to finance schools administered by tax-exempt organizations.

Consultation regarding unrelated business income (UBI) attributable for tax purposes to tax-exempt organizations (any income from a trade or business that is regularly carried on by the tax-exempt organization, but is not generally related to the exempt purpose of such organization).

Consultation regarding the difference between nonprofit status and tax-exempt status (nonprofit status refers to incorporation status under state law, whereas tax-exempt status refers to IRC income tax exemption).

Assistance in representing tax-exempt organizations in federal, state and local tax controversy matters, including various tax-exempt organizations in IRS examinations, from limited issue inquiries to comprehensive Coordinated Examination Program (CEP) audits.

Consultation regarding the legal aspects of various tax matters related to tax-exempt organizations, such as employment taxes, excise taxes, intermediate sanctions, private benefit, private foundation compliance, tax-exempt financing, unrelated business income tax.

Consultation regarding state laws governing charitable solicitation registrations by nonprofit entities before they solicit charitable donations (not only must the nonprofit register in its home state, but also in each state where it may wish to make solicitations, including any state in which donations may be given through the nonprofit’s internet website).

Consultation regarding capital gifts through bargain sales of real property, charitable gift annuities, charitable lead trusts, charitable remainder trusts, pooled-income funds.

Drafting of trusts, testamentary gifts and instruments related to charitable giving and gift acceptance policies.

Consultation regarding agreements for restricted gifts and endowments, within the meaning of the Uniform Prudent Management of Institutional Funds Act (UPMIFA).

Legal support for the efficient implementation of fixed income trades, including reviewing compliance against guidelines and portfolio strategies and new security set up

Legal support for the monitoring of portfolios, to ensure corporate guidelines compliance, performance reporting and analytics, portfolio integrity and security data accuracy.

Provided legal support for account closings and openings, and served as point person to address client requests involving portfolio management and sales.

Identified opportunities and partnered with technologists to re-engineer and automate legal processes, increasing operational efficiency and enhancing risk controls.

Researched various tax issues affecting tax-exempt organizations by using the IRC, regulations, rulings, case law, and other relevant authorities and guidance.

Drafted technical tax memoranda, client correspondence, and other various work products.

Prepared exemption applications and ruling requests.

Provided clients with legal insight regarding tax guidance and strategic planning, related to protecting tax-exempt status.

Consultation regarding the implementation of tax strategies that aligned with the client's business objectives.

Worked closely with International firms and consultants, to advise public charities, private foundations, and other tax-exempt organizations on a variety of tax issues relating to tax-exempt status and tax compliance, including charitable contributions, grant-making programs, impact investing, initial qualification, joint ventures, revenue-generating activities, unrelated business income taxation (UBIT), and other transactional matters.

Advised on legal aspects of charitable giving, joint ventures and structuring social impact activities with tax-exempt organizations, to individuals, family offices, corporations and others interacting with tax-exempt organizations

Conducted and documented tax law research necessary to support and substantiate tax advice, tax controversy, and tax return-signing positions and to monitor new developments in the tax law relating to tax-exempt organizations

Prepared and reviewed legal memoranda regarding tax positions, including those in tax memoranda and opinions, applications for exemption and foundation status, private letter rulings, responses to IRS inquiries and closing agreements, document requests, presentation materials, tax compliance tools, and other deliverables

Served as a subject matter expert (SME) for legal issues regarding tax-exempt organizations, including authoring articles related to the legal aspects of tax-exempt organizations, charitable giving and transactions between taxable and tax-exempt entities, client training sessions, developing and providing instruction for internal courses, nonprofit sector conferences, and participation in professional activities supporting the tax-exempt sector.

Responsible for managing the delivery of risk-informed legal counsel and legally-informed business counsel to program, operations, and cross-functional business units, regarding complex collaborations, gifts, grants, transactions, fundraising and philanthropy.

Consultation on laws relating to charitable solicitations, federal tax laws regulating charitable giving, nonprofit corporations, philanthropy, and public charities.

Served as liaison for legal matters between the enterprise and client entities.

Management of a specialist team of attorneys and tax professionals that supported the execution, negotiation, and structuring of complex transactions involving gifts, grants, institutional partnerships, and other fundraising matters.

Served as a SME for legal issues arising from donor engagement activities, including charitable solicitation, donor-advised funds, gifts in-kind, grants, philanthropic investing, and regulation of planned giving.

Structured and reviewed agreements, communications and other documents related to supporting management decisions, including charitable trusts, donor-advised funds, issue funds, planned giving structures, program-related investments, to assure compliance with applicable laws.

Reviewed documentation and provided advice related to information relating to fundraising collateral, press releases, and other documents intended for public dissemination on any type of media, as well as institutional policies, procedures and protocols related to fundraising and gift acceptance.

Provided legal advice to management, personnel and teams regarding the execution, financing, governance, and structuring, of complex institutional partnerships and programmatic collaborations with external parties.

Reviewed and drafted legal agreements in support of various joint ventures, partnerships and other legal entities.

Consultation regarding the disposition and spin-off of charitable assets, programs and projects.

Aided in the transition of funded projects to grantees or partners.

Drafted, negotiated and managed various administrative contracts, grant agreements and programmatic initiatives.

Served as the in-house counsel for internal business units conducting fundraising efforts.

Developed strategic partnerships for the enterprise, for the purpose of enhancing the enterprise’s domestic and international reputation.

Served as a SME for the legal aspects of tax laws applicable to bequests, charitable wealth transfer and gifts.

Identified and assessed business, legal and reputational risks to the enterprise.

Conducted legal research and analysis of specific legal questions from management and clients, and prepared memoranda and opinions setting forth research results, recommendations and conclusions.

Developed and implemented training seminars on relevant legal topics, as requested by management.

Monitored relevant developments in the areas of charitable and planned giving, contract law, non-profit advocacy, philanthropy, prohibited campaign intervention, and tax-exempt organizations.

Selected and managed outside counsel, consultants, experts and associated budgets, as required.

Managed the performance management process for direct reports and provided career development advice and counsel required.

Experience providing risk management advice to public charities and their donors on legal issues related to donor-advised funds, grant making, fundraising, planned giving, and tax-efficient charitable wealth transfer.

Structuring, negotiating and executing complex gifts, grants, impact investments, joint ventures, strategic partnerships, and other transactions on behalf of tax-exempt organizations.

Deference for clients and customer service orientation, identifying underlying legal issues in complex situations, recognizing patterns and trends in the law, resolution of concerns expeditiously.

Last updated 200515_2304