Tax Exempt Organizations & Charitable Planning
ArentFox Schiff provides comprehensive counsel and custom-tailored solutions to meet the particular needs of our tax-exempt organization clients.
We work with a wide array of public and private philanthropic, health care, medical and scientific research, housing, neighborhood redevelopment, cultural, artistic, civic, college and educational, and religious organizations, as well as social welfare organizations, trade associations and business leagues, business and housing cooperatives, and professional fundraisers.
These organizations benefit from our considerable experience in addressing income and excise tax rules, donation agreements, endowments, charitable trusts, and other fundraising activities, including state regulation of such activities. We create targeted solutions that address each organization's needs, including advice on technical issues such as federal and state taxation, regulatory compliance, tax disputes and litigation, while recognizing the practical limitations tax-exempt organizations often face. We counsel clients on:
Business Formation, Organization and Achievement of Tax-Exempt Status. We advise clients on structuring issues, including choice of entity structure and tax-exempt status filing, which directly affect an organization's future success. We also counsel clients on both state and federal compliance, as well as on governance structures and best practices, including applying Sarbanes-Oxley to the tax-exempt sector.
- Continuing Compliance. We regularly assist clients with annual tax filings, charitable solicitation registration, public disclosure requirements, accounting issues, and various required employment and state corporate filings. We advise on the impact of activities such as lobbying, providing services, proposed transactions and foreign expenditures to ensure continuing exemption qualification and public charity status.
- Real Estate Transactions. We have significant experience in guiding organizations through commercial and residential development matters -- including long-term ground leases — renting and selling properties, debt financing, and private foundation ownership of real estate.
- Governance and Operations. We frequently counsel on board composition and selection, director, officer and executive compensation, board oversight of organizational activities, board self-evaluations, and fiduciary duties.
- Private Foundation Rules. We counsel clients on the special rules for private foundations, including self-dealing, compensation and reimbursement, minimum distribution requirements, excess business holdings, jeopardizing investments and taxable expenditures.
- Fund-raising. We advise directors and management regarding fund-raising goals and activities, including unrelated business income tax (UBIT), charitable games (raffle, bingo, etc.), state registration for solicitation, professional fundraisers and fund-raising counsel, acknowledgment of gifts, public charity status, grant applications, corporate sponsorships, special events, cruises, affinity cards, planned giving and major gift programs, as well as enforcing charitable pledges. Our team has also reviewed and developed gift acceptance policies.
- Endowments. To help our clients attract new donors, we frequently advise on new endowment programs, including governance and control of funds, creditor protection and use restrictions, accounting issues, and the Uniform Management of Institutional Funds Act.
- Joint Ventures and Other Business Combinations. We have carefully structured for-profit subsidiaries of nonprofits, partnerships with for-profit and nonprofit entities, and mergers between nonprofits, including mergers of nonprofit and for-profit entities.
- Foreign Transactions. We are experienced in a broad range of foreign transactions, including overseas grant-making, overseas direct expenditures, anti-terrorism rules, special withholding rules, and in establishing charitable organizations in foreign jurisdictions, as well as domestic "friends of" organizations.
A commitment to charitable giving is an important part of the lives of many of our clients. For our multi-generation family clients, in particular, charitable giving can be a primary family value and a tie that binds family members together and creates a lasting legacy.
Careful planning and adherence to often complex tax laws are necessary to obtain the tax benefits of charitable transfers. We regularly counsel donors regarding charitable contributions, including substantiation of charitable gifts and valuation. We work with clients donating appreciated property, non-marketable assets, real estate (including environmental issues), donating to donor-advised funds, making pledges, establishing charitable gift annuities, and devising bequests. We also have substantial experience with gifts establishing endowment funds or which provide naming opportunities.
Charitable split-interest trusts (including charitable remainder and charitable lead trusts), can provide unique benefits as part of a client's charitable giving plan. These trusts combine a charitable commitment with the retention of financial interest for one's self or one's family. Charitable remainder trusts can provide significant tax benefits when funded with low basis assets, such as stock, artwork, or collectibles. Charitable lead trusts can provide a variety of benefits, such as the tax-efficient funding of an ongoing charitable commitment or placing a cap on the taxable value of an estate. We also have extensive experience with early termination of charitable remainder trusts.
Charitable giving often is an integral part of estate planning for business owners or clients who have held non-marketable assets for many decades and have minimal tax basis in the assets. We have considerable experience with the complex income tax rules that apply when business interests are transferred to a charitable entity before sale of the business. We also advise clients on the redemption of stock from charitable estates.