Legal Representation to Help Nonprofit Organizations Protect Their Interests
We guide nonprofits through the tax-exempt qualifying process, compliance issues, and business operation.
Starting and successfully running a tax-exempt non-profit organization presents special challenges. What is the proper federal tax exemption category for your organization? What are your nonprofit’s annual reporting requirements? What do you need to know about salaries and vendor contracts to not run afoul of prohibitions against conferring a private benefit? Can you sell products and make a profit? These are the kind of questions faced by non-profit founders, directors and officers.
Our non-profit attorneys help non-profit clients navigate the rules and regulations, including issues regarding fundraising, private inurement, and business income unrelated to exempt purposes. In addition, as business lawyers we assist non-profit clients with drafting and review of commercial contracts, intellectual property, and employment matters, as well as handling business disputes.
Tax exempt status
We help individuals form new organizations, including preparing proper organizational documents and assisting with submission of IRS applications for recognition of 501(c)(3), 501(c)(4), or other federal tax exempt status. We also counsel non-profit clients on corporate governance matters and assist them in maintaining tax-exempt status.
501(c)(3) of the Internal Revenue Code has the following key provisions:
- Charitable status.Charitable organizations are defined as entities designed to help provide relief for the poor, those who are underprivileged, and those in distress. Charitable organizations can also be formed for:
- Religious purposes
- The advancement of education or science
- Erecting or maintaining public buildings, monuments, or works
- Lessening the burdens of government
- Lessening neighborhood tensions
- Eliminating prejudice and discrimination
- Defending human and civil rights
- Combatting community deterioration and juvenile delinquency
Charities who meet these definitions can qualify for tax-exempt status.
- Nonprofit status.Organizations formed to test public safety, foster national or international amateur sports competition, and prevent cruelty to children or animals can also qualify for tax-exempt status even though they are not considered charities.
- Operating requirements.None of the nonprofit earnings should be earmarked for private interests such as for the creator of the nonprofit or for shareholders. 501(c)(3) nonprofits cannot attempt to influence legislation and cannot be involved in political election campaigns.
Section 501(c)(4) of the Internal Revenue Code covers two types of organizations that can qualify for tax-exempt status: organizations that operate solely for the promotion of social welfare, such as homeowners’ associations and volunteer fire companies; and qualifying employee associations that work solely for charitable, educational, or recreational purposes. Lobbying organizations may qualify as social welfare organizations.
Why legal advice is needed?
At Gertsburg Licata, our attorneys have first-hand experience serving on nonprofit boards, as well as advising nonprofits on a broad range of legal issues. Some of the many practical and legal issues we counsel nonprofits about are:
- State requirements in addition to federal requirements.Ohio has its own set of nonprofit laws that must be met in addition to federal laws.
- Compliance issues.A primary compliance requirement is showing that the entity did not use money to generate profits for shareholders or individuals. Nonprofits are also subject to many of the same laws on discrimination and disability as for-profit businesses. Federal and Ohio financial statements must be properly and timely filed. The roles of the members of the Board of the Directors and the corporate officers need to be reviewed.
- Business planning. Even though the aim of a nonprofit is not to earn profits, there are many legitimate aims. Proper aims that a Cleveland non-profit lawyer from our team will review include raising funds to provide for the people the charity or nonprofit aims to help, buying or leasing real estate so the business has a home, drafting and negotiating vendor contracts, and entering in business partnerships.
- Additional benefits. Nonprofits need to understand that tax-exempt status is more than just eliminating the requirement to pay income taxes. Tax-exempt status is a useful tool to encourage tax-deductible charitable contributions and for gift planning. Our lawyers understand the practical and legal benefits and what laws donors must meet in order to benefit.
Running a non-profit organization is complicated. It is important to have an experienced Chagrin Falls non-profit attorney on your side to help guide you through all of the legal issues that may arise.
Contact an experienced nonprofit attorney for help
You want to help your fellow citizens. You want to make a better community and a better world. At Gertsburg Licata, we have the experience, compassion, and reputation for helping you meet those noble goals. Our attorneys understand the legal challenges and emotional rewards of helping nonprofits grow and prosper. For proper guidance and caring counsel, please call our firm at (216) 573-6000 or complete our contact form.