Serving as tax counsel or special counsel, our practice encompasses a wide variety of tax-exempt organizations, from public charities and private foundations to trade associations, civic groups, unions, welfare plans, social clubs, cemetery companies, and title-holding companies, each of which has special rules. In addition to our securing tax-exempt status for literally hundreds of new organizations, existing exempt organizations often seek our guidance on their operations.
For public charity clients, we provide guidance with respect to governance, operations, and development efforts, including establishing development offices, advising boards of directors on the development of giving vehicles, and helping clients that engage in permitted lobbying deal with applicable limitations and reporting. We secure private rulings from the IRS and state or local agencies on special or controversial plans, convert advance determinations to final public charity rulings, and advise on Form 990 and attorney general issues and reports.
We also counsel exempt organizations that serve as trustees or beneficiaries of charitable remainder and lead trusts, and working with actuaries and outside administrators, establish charitable gift annuity programs and draft gift annuity contracts. In recent years, we have helped Type III supporting organizations analyze options in response to major legislative changes, including conversion to Type I. Intermediate sanctions rules continue to be of great importance, requiring guidance on the safe harbor rules for ascertaining that economic arrangements with insiders are fair and supported by proper documentation.
For private foundation clients, both family and business, we counsel directors and officers about self-dealing, excess business holdings, prudent investments and certain defined non-charitable activities such as lobbying and electioneering. In addition to monitoring distribution and expenditure responsibility requirements, we obtain advance approval of scholarship programs and assist with grant programs, including preparation of guidelines, applications and grant agreements.
Occasionally, we are called upon to split a private foundation into two or more new foundations so that family branches may exercise autonomy over separate entities. We have successfully converted a number of private foundations into publicly supported charities, and have incorporated associations and trusts to gain the advantages of limited liability. While most foundation clients are grant-making entities, we have established a number of private operating foundations as well.
For public charities and private foundations alike, we advise on governance, including fiduciary duties, internal controls, proper committee structure, conflicts of interest, and directors' and officers' insurance. For larger clients, we work closely with staff, in-house and outside counsel and investment managers, including those with expertise in real estate, corporate and employment law. We interact with an organization's accountants to ensure that certified financials are prepared when required. For clients with overseas operations, we help address terrorism funding concerns, and have created many “friends of” organizations to support particular foreign charities.
We have assisted with the merger of charitable entities, and have structured multi-entity and joint venture arrangements typically involving Section 501(c)(3)s, (c)(4)s and (c)(6)s. We provide guidance on unrelated business taxable income issues, including debt-financed income, and handle audits with the IRS and state agencies. On occasion, we are asked to support litigation positions. When necessary, we dissolve organizations under state law.
As an ancillary but integral practice area, we work with individuals on lifetime charitable gift planning, including remainder and lead trusts, pledges, trustee concerns and fiduciary duties, deduction limits, encumbrances, and gift substantiation and valuation.We also participate in structuring and administering large estates with sizeable and complicated charitable components.
Published: Estate & Gift Tax Planning Newsletter, August, 2016