Tax-Exempt Organizations

Our Tax Department represents tax-exempt organizations with numerous organizational and operational issues. We assist clients in selecting the initial structure of the organization, such as Section 501(c)(3) charitable organizations, Section 501(c)(6) trade associations, Section 501(c)(4) social welfare organizations and a variety of other categories of tax-exempt organizations. We also assist in evaluating the tax-exempt purposes of the organization, qualifying it as tax-exempt and complying with laws governing tax-exempt organizations.

Many tax-exempt organizations wish to qualify under Section 501(c)(3) of the Internal Revenue Code because contributions to these organizations are deductible to the donors. We assist our clients in determining whether the organization qualifies as a Section 501(c)(3) organization. Each Section 501(c)(3) organization is further classified as a public charity or a private foundation and we help our clients determine which status would be more beneficial to their organization.

Our lawyers also handle tax issues that surround the qualification, operations and transactions of the tax-exempt organization.  State law is an important consideration for tax-exempt organizations. We assist our tax-exempt organization clients in obtaining state law tax exemptions and complying with registration requirements for fundraising.  In addition, we provide legal services to tax-exempt organizations that are operating in combination with taxable entities. For example, tax-exempt organization clients may use a taxable subsidiary to house an unrelated business.

Dean Mead Representation – Section 501(c)(3) Tax-Exempt Organizations

Public Charities:

Dean Mead represents public charities with a wide range of revenues and assets.  Our larger public charity clients have assets in the range of $50 million to $90 million, and annual revenues of $35 million to $45 million.  Our larger mid-size public charity clients have revenues in the $20 million range, and assets in the $3 to $5 million range.  We also represent many start-up public charities.

Private Foundations:

Dean Mead represents private foundations in all phases of their lifespans, from the formation of new foundations to assisting with the operation of established private foundations.  Our private foundation clients are formed by families or in connection with corporations.  We represent private foundations with $12 million in assets, with assets in the $3 to $4 million range, and foundations with assets in the $1 million range.  We evaluate private foundations as an option for charitable giving for families (both for current giving and future planning).  We also assist corporate owners in evaluating the use of a private foundation and direct corporate giving (separately or in combination) in connection with their goals for corporate philanthropy.

Representative Experience (Private Foundations):

1)  Formation and Qualification

Dean Mead assists its clients in determining whether to use a private foundation.  When a client decides to use a private foundation, Dean Mead forms the private foundation, and assists the private foundation with compliance with state and federal laws.  After consultation with the client regarding its proposed activities, the options for its legal structure and choices for corporate governance, Dean Mead prepares Articles of Incorporation and Bylaws, provides relevant corporate policies and prepared corporate resolutions, for the formation of the private foundation.  Dean Mead prepares the application for recognition of exemption for filing with the Internal Revenue Service to establish the Section 501(c)(3) tax-exempt status of the organization.  Dean Mead also assists with grant-making procedures, required distributions, investment policy procedures (impacted by federal and state law), and tax form filing requirements.

2)  Private Foundation Requirements/Restrictions

Dean Mead advises its private foundation clients regarding the specific requirements and restrictions that are applicable to private foundations, and assists with corrective measures as necessary.  Common issues for private foundations involve transactions between the private foundation and its founders, most of which are prohibited, and ownership of business enterprises.  Compensation is also an important issue for many private foundations, and Dean Mead assists with compensation policies and compliance.

3)  Advance Approvals Required for Certain Private Foundations Activities

Private Foundations are required to obtain advance approval for certain programs, such as scholarship programs.  Dean Mead provides the guidelines for such programs and assists with obtaining the required approvals.