Charitable and Nonprofit Planning, Formation and Administration.
Most laws governing the creation and administration of nonprofit organizations originate at the state level, while most laws concerning tax exemption are at the federal level. There is no particular entity structure required to be a nonprofit organization; such organizations include corporations, trusts, limited liability companies, and unincorporated associations. In addition, nonprofit organizations are not necessarily tax-exempt; rather, they must meet certain criteria under federal and state laws, including being organized and operated exclusively for charitable purposes as defined by federal tax statutory law.
The first step, procedurally speaking, in creating a nonprofit organization is to examine the type of organization being considered; choices may include a public charity, a private foundation, a supporting organization, or a number of noncharitable tax-exempt organizations such as social welfare organizations, social clubs, and political and fraternal organizations. Each of these organizations have their own characteristics and requirements for potential tax-exempt status.
After determining the type of organization, the entity structure should be considered, in part, by the application of proposed management and operational objectives. Thereafter, the requisite formational, organizational and state and federal governance documents are prepared.
Ultimately, application must be made to the Internal Revenue Service for tax-exempt status recognition. This is not a one-size-fits-all application process; rather, careful analysis should be made under the available sub-sections of Sections 501 and/or 509 of the Internal Revenue Code. A properly completed and timely filed application is essential for obtaining a Determination Letter from the Internal Revenue Service.
In North Carolina, before conducting any type of fund raising, or even contracting to fund raise, it is essential to consider the need for a charitable solicitation license. This involves an application process through the Office of the North Carolina Secretary of State. Failure to obtain a charitable solicitation license, or failure to timely obtain a charitable solicitation license, could be costly in the form of penalties imposed by the State of North Carolina.
Seidel Gamber, PLLC takes great pride in our work with nonprofit organizations and their management. We work with our clients to put them in an entity and operational structure tailored to their needs, and to personalize their Section 501 or 509 IRS applications to obtain the tax-exempt status they seek. As an ongoing participant in our clients’ charitable endeavors, we provide annual state and federal compliance services and governance services on issues of fiduciary responsibility, officer/director/trustee liability, charitable solicitations, and fundraising.
Seidel Gamber, PLLC will provide a free initial consultation to help you understand your legal needs. In order to set up a free consultation, please call us at 919.237.3405 or email us at [email protected].