Counseling a client about choice of entity for a nonprofit or charitable enterprise is a multilayered process. First, clients need to understand that not all nonprofits are charities. Even if the enterprise is nonprofit and charitable in nature that does not necessarily mean the enterprise is eligible for tax-exempt status. Once these distinctions are made, attorneys need to counsel clients about the subtle advantages and disadvantages of four major types of entities, all formed under state law. Second, there is the distinct issue of how that entity is classified for federal tax purposes. Each classification comes with its own subtle tradeoffs. This program will provide you with a practical guide to non-profit choice of entity and obtaining tax-exempt status.
• Framework of major choice of entity considerations for nonprofit and charitable organizations – corporations, LLCs and trusts
• Private foundations v. public charities – tradeoffs, costs, compliance
• Restrictions on the activities and investments of each type of entity, including joint ventures with profit-making organizations
• Considerations involving joint ventures between for-profit and non-profit entities
• Practical Process of obtaining tax-exempt status – eligibility, timelines, and costs
• Counseling clients about ongoing compliance reporting
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