Types of Clients Served
Every organization that qualifies for tax-exemption as an organization described in section 501(c)(3) is a private foundation unless it satisfies additional requirements to be classified as a public charity. Organizations that satisfy these additional requirements include institutions such as hospitals, universities and schools, or those that generally have broad public support or actively function in a supporting relationship to such organizations.
Fleming Petenko’s lawyers work with a diverse group of public charities including:
- Donor Advised Funds
- Supporting Organizations
- Publicly Supported Charities
- Corporate Foundations
All organizations that qualify as tax-exempt under section 501(c)(3) are classified as private foundations unless they also satisfy additional requirements to be classified as a public charity. Private foundations generally receive the bulk of their revenue from one or a few individuals, families, or corporations and do not receive a large amount of support from the general public. The majority of private foundations make grants rather than conducting direct charitable activities. Private foundations have stricter rules and restrictions than public charities. The consequences for not complying with these rules can be detrimental to a charitable organization.
Fleming Petenko’s lawyers can assist a private foundation with the following:
- Ensuring the necessary language is included in the organization’s governing documents
- Reviewing IRS Forms 990-PF, Return of Private Foundation
- Providing advice and guidance on permissible investments
- Satisfying the annual distribution requirement
- Calculating and reporting net income investment excise tax
- Understanding the restrictions on self-dealing
- Addressing private business holdings issues
- Complying with excise taxes and avoiding penalties
A donor-advised fund, or DAF, is a giving vehicle established at a public charity. It allows donors to make charitable contributions of cash, securities, or other illiquid assets and receive an immediate tax deduction. The contributed funds can be invested for tax-free growth and donors may recommend grants from the funds over time. Donors can contribute to the fund at any time, and recommend grants to their selected IRS-qualified public charities whenever they chose. DAFs are particularly attractive to donors with long-term appreciated securities because donating these assets may allow the donor to eliminate (or minimize) capital gains taxes, thereby reducing the donor’s overall tax liability and leaving more funds available for charitable causes.
Fleming Petenko’s lawyers assist both organizations that have DAFs and donors wishing to contribute to a DAF with the following:
- Conducting a due diligence review of illiquid assets to be contributed
- Preparing appropriate grant agreements
- Structuring and drafting transfer agreements
- Advising on strategic tax planning issues
Trade associations play a critical role in our economy by advancing the interests of various industry groups, educating the public, and advocating for the adoption of industry standards and legislation. Fleming Petenko’s lawyers have represented trade associations in industries as diverse as the blockchain industry, the jewelry industry, the automobile industry, the electrical industry, as well as miscellaneous chambers of commerce. Our lawyers regularly advise trade associations on matters related to:
- Structure, formation, and tax-exemption issues
- Articles of incorporation, bylaws, and other corporate documents
- Operation of boards of directors/trustees
- Dues structure and membership criteria
- Creation and operation of affiliates and subsidiary organizations, such as foundations and for-profit subsidiaries
- Form 990 and related compliance issues
- Conflict of interest and ethics policies
- Document retention policies
- Member programs and related agreements
- Affinity and other marketing programs
- Sponsorship arrangements
- Hotel, convention, and other event contracts and agreements
- Vendor and contractor agreements
Fleming Petenko’s lawyers work with philanthropic-minded individuals to help them develop their philanthropic plan and achieve their charitable goals. If you are considering your philanthropic alternatives, we can help you determine whether a foundation is the best option for you and your family or whether another charitable vehicle is more appropriate. Once you decide on the best option, we can help you implement your charitable plan in a manner designed to meet your requirements.
Other types of organizations
Churches and Religious Institutions
Churches and religious organizations are generally exempt from federal income tax under special rules and receive other favorable treatment under the current tax law regime. However, some of the income of a church or religious organization may be subject to tax, such as income from an unrelated business. We commonly assist churches and religious organizations with navigating these unique tax rules by: (i) obtaining recognition of their tax-exempt status; (ii) helping them understand their filing requirements; (iii) exploring ways to avoid jeopardizing their tax-exempt status; (iv) responding to IRS inquiries and audits; and (v) addressing UBIT issues and concerns.
Social Welfare Organization
Organizations that are operating primarily to further the common good and general welfare of the people of the community may be exempt from federal income tax under section 501(c)(4). We typically assist social welfare organizations with qualifying for tax exemption, lobbying issues, excess benefit transactions, and UBIT.
Certain social clubs may be exempt from federal income tax under section 501(c)(7). While these social clubs may be exempt from tax, they are still subject to tax on their unrelated business income, which includes income from non-members. We often assist social clubs with obtaining tax-exemption and UBIT issues.
HOAs, Condominium Associations, and Housing Cooperatives
Homeowners’ Associations, Condominium Associations, and Housing Cooperatives may be exempt as social welfare organizations provided that they are operated for the benefit of all the residents of the community and are membership organizations formed to own and maintain common green areas, streets, and sidewalks and to enforce covenants to preserve the appearance of the development. An HOA that does not qualify for exemption under section 501(c)(4) may still be eligible under sections 501(c)(7) or 528 to receive certain tax benefits that could allow it to exclude its exempt function income from its gross income. We frequently assist these types of organizations with Board governance training, policy drafting, and contract negotiation and drafting.
Fleming Petenko’s lawyers can assist with the formation of these entities as well as ongoing compliance. Areas we often encounter are:
- Board training
- Board elections
- Reviewing and revising governing documents
- Leading Board meetings
- Contracts drafting and negotiation
- Policy and resolution drafting
Other organizations we work with include Fraternal Societies, Employee Benefit Associations or Funds, Veterans’ Organizations, and Political Organizations to name a few.
Social Enterprises and Corporate Social Responsibility
A social enterprise is a business model that allows entrepreneurs to generate a profit while simultaneously pursuing an important social purpose. The dual nature of the business model permits entrepreneurs to seek a multiple bottom line, often by measuring their success in terms of financial, social, and environmental impact. While generating revenue is not typically the principal purpose of a social enterprise, it is, nevertheless, an important factor to ensure the sustainability of the business. The social purpose of the business may be anything that promotes the common good and can include providing jobs for the poor, developing clean drinking water resources, and establishing renewable energy systems.
Fleming Petenko’s lawyers can help you explore various social enterprise models to help you establish your cause-driven business including:
Our lawyers also assist other for-profit organizations that wish to engage in corporate social responsibility. They will work with your organization to determine the best approach to achieve the company’s goals.