Tax-Exempt Organizations Practice
The Tax-Exempt Organizations Practice Group is comprised of attorneys who work exclusively with tax-exempt organizations, as well as attorneys from many of the firm’s other practice groups who have pooled their experience to serve our tax-exempt clients. We offer complete legal services to all kinds of tax-exempt organizations: a) public charities, private foundations (both grant-making and operating foundations), and supporting organizations (501(c)(3)s); b) business leagues (501(c)(6)s); c) social welfare organizations (501(c)(4)s); and d) social clubs (501(c)(7)s). The Firm’s clients include educational, cultural and historical institutions, organizations affiliated with governmental entities, healthcare research organizations and providers, direct service agencies, churches and other religious organizations, professional and trade associations, and museums. We also represent directors and officers, members, and donors to exempt organizations on a regular basis.
Our goal is to help our tax-exempt clients operate smoothly, efficiently and creatively. We assist our clients with both matters that are specific to tax-exempt organizations and matters that generally affect all organizations, in each case bringing our knowledge of the particular issues and concerns of the non-profit sector to the matter at hand. We assist our clients with virtually all aspects of their organizations’ operations, at all stages of the corporate life cycle. We form and seek recognition of tax exempt status for new organizations, guide our clients through structural and programmatic changes, and advise on changes in the federal and state laws. Generally, we view our role as both legal expert and strategic advisor, and, as a result, we strive to give our clients legal advice that is coupled with a strong awareness of real-world practicalities, as well as a sense of the larger context in which each organization operates. Ongoing representation encompasses three main areas: tax compliance issues, governance compliance issues, and legal issues arising from particular aspects of the organization’s activities.
Representative Areas of Practice
Tax Compliance: We are conversant with both state and federal tax issues of exempt organizations, including: obtaining and keeping tax exempt status; questions about unrelated business income; real estate and sales taxes; charitable solicitation compliance and disclosure requirements; interpretation and advice on tax aspects of fund-raising; grant-making due diligence; and audits, penalties and sanctions. We routinely advise our private foundation clients on the requirements for international grants and negotiate grant agreements that ensure compliance with those requirements. We work with our clients to assure that they comply with restrictions on lobbying and political activities, self-dealing prohibitions, rules relating to excess benefit transactions, and other obligations of tax-exempt status. Where appropriate, we submit requests for private letter rulings from the Internal Revenue Service. We review our clients’ annual tax filings, including Forms 990, 990-PF, and 990-T (UBIT) to assure that transactions are properly reported. We have assisted both substantial financial institutions and smaller charitable organizations in setting up donor advised fund programs and have drafted form donor agreements and related documents in the course of this work. We have also helped many institutions structure and obtain the necessary governmental approvals to operate charitable annuities.
Governance Issues: We have a special interest in governance requirements for non-profit corporations and charitable trusts. We advise our clients on the fiduciary responsibilities of directors, trustees and managers, including their institutional, public and financial duties. We assist our clients in reviewing and updating their governance policies and procedures, and we offer our clients guidance in problem-spotting and avoidance, dispute resolution, leadership succession and the special problems affecting family foundations. With the passage of the New York Nonprofit Revitalization Act, we are working with our clients to revise their governance documents and practices to comply with the Act’s requirements. We are experienced in the state law governance requirements of jurisdictions across the United States, and the Chair of the Tax-Exempt Organizations Practice Group, Pamela A. Mann, is a nationally recognized expert in governance issues.
General Compliance Issues: In many other regulated areas, we are experienced in the requirements for federal and state filings and interstate activities, and counsel our clients on a variety of compliance matters. For example, against a background of increased federal scrutiny over the potential for the diversion of charitable funds to support money laundering and other illegal activities, we have advised a number of our clients on the best practices to follow to prevent their funds from being diverted for improper or illegal purposes. As relates to state law issues, we help our clients to understand and comply with rules governing management and investment of endowment funds and restricted-use assets, financial control issues, and charitable solicitation issues, among others. We often assist clients who have decided to terminate their private foundation’s exempt status and donate the proceeds to a donor advised fund with the mechanics of dissolving the entity and directing the remaining assets to an appropriate charitable entity; in many instances, this work has included coordination with community foundations that are the recipients of these funds.
Charitable Giving: Our attorneys are experienced in planning for charitable giving from the perspective of both the donor and the recipient organization. We are accustomed to designing sophisticated giving techniques and advising organizations on planned giving programs. We counsel individuals on sophisticated charitable giving techniques, including charitable remainder trusts, charitable lead trusts, donor-advised funds, and the like, and we can also efficiently monitor the legal status of gifts, bequests and trust distributions. We frequently work with clients to accelerate the charitable remainderman’s acquisition of its interest in charitable remainder trusts when, because of changes in the business or tax environment, this acceleration will benefit both the charity and the donors. We are experienced in representing estate and trust beneficiaries, including tax-exempt organizations, in all types of situations, including disputes and litigations. We routinely structure and draft complex grant agreements for our clients with an eye toward achieving our client’s goals and, at the same time, providing a practical solution for the charity receiving the gift. We are currently administering the estate of a recently deceased client that will pass over $3 billion to a number of private foundations and public charities.
Governmental Investigations and Internal Investigations: We often represent tax exempt organizations facing audits by the Internal Revenue Service, as well as those that are the subject of inquiry by state charities officials. We also conduct internal investigations to assess claims of wrongdoing and/or breach of duty, whether initiated by a whistleblower’s complaint or a state or federal regulator. In addition to assisting our clients in assessing and defending such claims, we provide strategic advice on structural changes and/or practical measures that enhance the operations of our clients once the inquiry is complete.
Real Estate: The Firm’s Real Estate Group has expertise in the full range of real estate issues that face tax-exempt organizations. We are able to provide one-stop advice with respect to all aspects of any transaction, as well as analysis of unrelated business income tax (UBIT) issues, the impact of applicable statutes, such as state laws governing nonprofit and religious corporations, and tax exempt bond financing.
We also have extensive experience negotiating leases for tax-exempt organizations. The Firm’s long-standing clients include tax-exempt organizations that are among the major landlords in New York City. We assist tax-exempt organization clients in buying and selling properties, with a focus on office, retail, residential and mixed-use buildings in the City of New York. Representative transactions include purchases and sales of actively-managed office buildings, net-leased office buildings, joint venture transactions, air rights transfers and transfers of controlling interests. To avoid recognition of gain on dispositions of debt-financed properties, we have structured such sales as 1031 like-kind exchanges. We are uniquely positioned to provide advice with respect to the tax treatment of sales, acquisitions and related financings generally and for tax-exempt organizations in particular. Among the Firm’s clients with ongoing real estate matters are several types of nonprofit corporations and royally-chartered entities.
Employment Law: We advise tax exempt organizations on all facets of employment law, including general employment counsel, advice on executive compensation and employee benefit plans, and development of employee policies and procedures for our clients. We frequently prepare and negotiate employment contracts and advise with respect to employee separations and employee leave programs. We are knowledgeable about federal, state, and local laws in New York, California, Delaware, and other states prohibiting discrimination, and advising our clients on compliance issues related to these laws is a significant aspect of our practice. We also have expertise in connection with Fair Labor Standards Act requirements relating to minimum wage, overtime, and the proper classification of employees and independent contractors. We frequently help clients with issues relating to restrictive covenants and trade secrets. We are expert in all aspects of the Employee Retirement Income Security Act (ERISA) and regularly work with our clients to design and administer the full gamut of tax-qualified retirement plans and other employee benefit plans they may maintain for their employees, including 401(k) plans and 403(b) annuity programs for our tax-exempt organization clients, as well as executive and deferred compensation arrangements under Sections 409A and 457(f) of the Internal Revenue Code.
Intellectual Property: The Intellectual Property Practice Group offers comprehensive services in all areas of intellectual property law. We are experts in identifying our clients’ core intellectual property assets (such as copyrights, trade secrets, trademarks, logos, slogans, trade dress, and domain, app and other social media names), clearing and documenting rights to those assets, and crafting cohesive registration and policing protection for them. We negotiate transfers, licenses, and co-existence and franchise agreements. We pursue and defend intellectual property claims in state and federal courts throughout the United States, before government agencies, and through mediation and arbitration.
Dispute Resolution and Litigation: Our objective is to resolve our clients’ controversies, both within the organization and with third parties, in a manner that avoids unnecessary costs, any escalation of the dispute, and the divergence of time and human resources from the organization’s mission. On the other hand, when litigation is appropriate, the Firm’s Litigation Department represents our tax-exempt organizations clients in the full range of litigated matters throughout the courts of the United States, including trusts and estates matters, disputes over artwork, intellectual property matters, issues related to disputed elections, and employment matters.
Our clients include American National Standards Institute, Battery Park City Authority, Beth Abraham Health Services, Blanton-Peale Institute, Carl Schurz Park Conservancy, Collegiate Church, Daniel’s Music Foundation, Engineering Information Foundation, Friends Against Violence Everywhere, Idol Gives Back Foundation, Isaac H. Tuttle Fund, Josiah Macy Jr. Foundation, The Life Raft Group, Lower Manhattan Development Corporation, NAACP Inc. Fund, National Academy of Design, National Association of Science Writers, New York Institute of Technology, Pierre and Maria-Gaetena Matisse Foundation, The Pollock-Krasner Foundation, Ralph E. Ogden Foundation, Roosevelt Island Operating Corporation, Santa Maddelena Foundation, The Surdna Foundation, T. J. Martell Foundation; Storm King Arts Center, Trinity Real Estate, The Trustees of Sailors Snug Harbor in the City of New York
- Pamela A. Mann - Chair
- Jerome J. Caulfield - Partner
- Rachel B. Coan - Partner
- H. Thomas Davis, Jr. - Partner
- Matthew D. Dunn - Partner
- Melissa J. Erwin - Associate
- Michael I. Frankel - Partner
- Alison Powers Herman - Counsel
- Macculloch M. Irving - Partner
- Austin D. Keyes - Partner
- Marc A. Kushner - Partner
- Jennifer MacDonald - Counsel
- Patricia Matzye - Counsel
- Daniel J. McSwiggan - Partner
- Justin L. Peters - Associate
- Karen T. Schiele - Partner
- Ronald D. Spencer - Counsel
- Jeremy S. Steckel - Associate