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Private Foundations & Public Charities

Private foundations and public charities are subject to a complex regulatory regime under the federal tax laws beyond that of many other types of tax-exempt organizations. Their activities are also subject to oversight by state charity regulators. We provide counsel and custom-tailored solutions to meet the particular needs of charitable organizations to help them achieve their programmatic goals while navigating their regulatory requirements.

Our Work

We work with a wide array of operating and grantmaking private foundations and public charities, including family foundations, company-sponsored foundations, health care organizations, colleges and universities, medical and scientific research organizations, cultural and humanitarian organizations, housing and neighborhood redevelopment organizations, and many other types public charities and private foundations. We advise on technical issues such as federal and state tax exemption and compliance matters, and we bring to bear our broad-based experience in critical areas such as organizational structures, governance, labor and employment matters, estate and finance, and intellectual property, among other areas.

How We Help

Formation, Organization, and Achievement and Maintenance of Tax-Exempt Status

Private foundations and public charities are subject to a complex regulatory regime under the Internal Revenue Code that informs a wide variety of their activities. We advise clients on structuring issues, including choice of entity structure and state of formation, applying for tax-exempt status, developing appropriate governance processes and procedures, and state and federal regulatory compliance and best practices. We have significant experience advising organizations on matters such as private inurement, public support requirements, executive compensation and the avoidance of intermediate sanctions, related party transactions, impact investments, charitable solicitation, unrelated business income tax (UBIT), lobbying and political campaign activities, and other matters that can impact an organization’s tax-exempt status or result in excise tax penalties. We also regularly advise private foundations on the special rules that apply to them, including self-dealing, qualifying expenditures, jeopardizing investments, excess business holdings, and taxable expenditures.

Governance

We develop a thorough understanding of an organization’s  objectives and operations, and counsel leadership on several governance issues, including the following: board composition and management; director, officer, and executive compensation; governance policies and best practices; conflicts of interest; board oversight of organizational activities; board self-evaluations; fiduciary duties; independent audits and whistleblower policies; and Diversity, Equity, and Inclusion (DEI) efforts.

Charitable Solicitation and Gift Acceptance

We advise on fundraising goals and activities, charitable games (such as raffle, bingo, etc.), state registration for charitable solicitation, donor acknowledgments, corporate sponsorships, fundraising events (such as auctions and galas), planned giving and major gift programs, and enforcement of charitable pledges. We also develop and advise organizations on gift acceptance policies, accepting non-standard gifts (such as closely held stock, cryptocurrency, and NFTs), and participating in cause-related marketing campaigns (such as commercial co-ventures or branding agreements with for-profit organizations). We also advise organizations that are entering into fiscal sponsorship arrangements as the sponsor or as the sponsoree to help ensure they achieve the goals of the arrangements while mitigating risks that can arise from sponsoring other organizations’ programs. 

Endowments and Grants

We advise organizations on new endowment programs, including governance and control of funds, creditor protection and use restrictions, accounting issues, and the Uniform Prudent Management of Institutional Funds Act. We also have substantial experience with naming opportunities for  endowment funds, including negotiating gift agreements.

We also help organizations structure grantmaking programs and grant agreements to meet their obligations under the tax laws and as stewards of charitable funds, including expenditure responsibility grants, grants to foreign organizations, and grants to non-charitable organizations. We have experience in the following: anti-terrorism rules implicated by grants (particularly to foreign organizations and individuals), special withholding rules,  formation of  charitable organizations in foreign jurisdictions, and formation of domestic “friends of” organizations.

Intellectual Property Policies and Protections

ArentFox Schiff has invaluable experience in intellectual property law, helping organizations to negotiate and maintain policies governing patent ownership, licensing, and other forms of IP management. Additionally,  organizations often own valuable trademarks (such as logos, wordmarks, websites, and other indicators), which require brand protection in the marketplace.  We assist with trademark registration and enforcement. We conduct trademark availability searches and register trademarks for organizations in the United States Patent and Trademark Office.

Employment Matters

ArentFox Schiff is a national leader in labor and employment law.  We can help ensure that employment agreements are carefully drafted and negotiated in keeping with the organization’s broader interests. We can also work to resolve highly sensitive and confidential employee disputes, grievances, and other situations.

Real Estate and Finance Transactions

We have significant experience in guiding organizations through development and leasing matters, including long-term ground leases, renting and selling properties, short-term and long-term debt financing and incentive programs, and ownership of real estate. We regularly advise organizations on structuring activities to avoid or mitigate potential UBIT liability from these activities, including UBIT from debt-financed property. 

Joint Ventures and Other Business Combinations

We assist in developing and implementing collaborations and intercompany agreements with both for-profit and other nonprofit organizations to comply with the requirements that apply to tax-exempt organizations. We have carefully structured for-profit subsidiaries, partnerships with for-profit and nonprofit entities, cost-sharing agreements, mergers of or into charitable organizations, and collaborations between charitable organizations in furtherance of their charitable purposes. We have also assisted organizations to convert from for-profit to tax-exempt status and vice versa, and to convert private foundations to public charities.

Lawsuits and Claims; Investigations; IRS Audits

We are adept at helping clients analyze litigation strategies with a specific focus on nonprofits. We have won verdicts for local, national, and international clients in trials and appellate courts throughout the country, including the United States Supreme Court. We also handle internal investigations and governance disputes, and have represented nonprofits on disclosure issues around civil enforcement and regulatory investigations and litigation. From time to time, tax-exempt organizations may also need to report certain types of transactions to the IRS. We help organizations comply with those reporting obligations and develop processes and procedures to help mitigate the risk of future occurrences. We also guide organizations through IRS audits and controversies if and when they do arise.

Continuing Compliance

We assist clients with annual tax filings, charitable solicitation registration, public disclosure requirements, accounting issues, and various required employment and state corporate filings.

Perspectives on Private Foundations & Public Charities