Structuring your exempt organization properly is crucial if you want to get and keep tax exemption and the other benefits that come with it, and meet your fiduciary obligations under state charity law. Your tax-exempt status affects all aspects of your organization, including how you raise funds, conduct activities, pay staff, and make investments. At Caplin & Drysdale we have focused on the special needs of charities and other organizations for decades, helping to get hundreds of new organizations off to a healthy start and then staying with them as they grow and develop. From the smallest charity working with all volunteer help to some of the largest and best-endowed private foundations and institutions, we have seen the special issues exempt organizations face and have planned the strategies to address them.
Representative Engagements
- A group of state officials from around the country need to establish a new charity as part of a litigation settlement.
Result: Caplin & Drysdale incorporates the new charity, establishes its federal and state tax exemptions on an expedited basis and works with the charity's board and new CEO to identify the most efficient way to build an endowment.
- A private foundation is having difficulty managing its minimum annual payout requirements.
Result: Caplin & Drysdale investigates, suggests that the problem can be relieved by having the foundation become an operating foundation, helps the foundation make the necessary operational changes and secures an IRS ruling confirming qualification for operating foundation status.
- A foreign charity wants to raise funds in the United States, but U.S. donors cannot deduct their contributions if they give directly to the foreign charity.
Result: Caplin & Drysdale establishes a U.S.-based "friends" organization to support the foreign charity. Contributions from U.S. donors to the friends organization are fully deductible, giving the foreign charity new capacity to raise funds in the United States.
- A national organization of war veterans with chapters in nearly every state and an operating budget of over $100 million is facing loss of its ability to receive deductible contributions as the composition of its membership changes.
Result: Caplin & Drysdale converts the national organization to exempt status under section 501(c)(3) and then obtains a group ruling for the chapters under the same section, thereby ensuring deductible contributions regardless of membership. Caplin & Drysdale then prepares detailed materials for the organization on compliance with the requirements of section 501(c)(3).
- A major human services group consisting of dozens of interrelated corporations and partnerships has historically reported to the IRS as a church. Having developed new programs in housing and health care, its Board of Directors desires reassurance that church status is still appropriate.
Result: Caplin & Drysdale reviews the organization's programs in several states and all of its organizational documents and provides a report to the board proposing that certain portions of the organization report separately as a church and that others begin reporting as freestanding public charities.
Our Services
If you are planning to establish a new exempt organization or are looking to make significant changes to an existing organization, here are some of the ways Caplin & Drysdale can help:
Creating a New Organization
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Incorporating the organization (including drafting of articles and bylaws)
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Designing a selection process and terms for board members and officers
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Establishing board committees to divide governance responsibilities
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Establishing sound policies for maintaining books and records
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Securing federal and state tax exemption
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Creating advisory boards and other means to expand the organization's network of supporters
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Establishing and implementing conflicts of interest policies
Daily Operations Counseling
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Employee benefit plans
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Leases
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Employment contracts
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Directors' and officers' liability
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Criteria for awarding grants or scholarships
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Record retention policies
Strengthening an Existing Organization
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Reviewing transactions for intermediate sanctions risks
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Improving leadership through changes to board structure and membership
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Identifying options for qualifying as a public charity or operating foundation, rather than a private foundation