Tax-Exempt Organizations and Charitable Giving

Overview

BakerHostetler has been at the vanguard of nonprofit law for decades, providing comprehensive advice to help mission-driven organizations achieve their visions. We have long been respected for our knowledge, experience and innovative thinking regarding tax-exempt organizations and charitable giving. Half a century ago, BakerHostetler led the nonprofit sector through the watershed Tax Reform Act of 1969 which divided nonprofits into private foundations and public charities, the legal framework that continues to this day. In response, our late Partner, Norman Sugarman, invented philanthropic funds (now called donor-advised funds or DAFs), giving vehicles that have proven tremendously popular, holding over $140 billion in assets.

BakerHostetler carries forward Mr. Sugarman’s legacy to this day, leading the nonprofit sector through legal and legislative challenges with innovative thought leadership and advice that not only meets rigorous federal and state compliance requirements but also supports the high standards of excellence, integrity and ethics expected from tax-exempt organizations of all kinds and the fiduciaries who serve them.

We value the vital role nonprofits play in the United States economy and are proud of our role guiding the nonprofit industry. Nonprofits contribute more than $1 trillion each year to the U.S. economy, according to the Federal Reserve, and provide more than 11.4 million jobs, making nonprofit employees the third-largest workforce in the nation, behind only manufacturing and retail. The nonprofit sector is expected to grow rapidly over the next several decades as generational wealth is transferred. For example, The Wall Street Journal predicts donations to nonprofits to exceed $9 trillion over the next 20 years.

Most importantly, BakerHostetler, together with our clients – including hospitals and medical research organizations; colleges, universities and other educational organizations; private foundations, supporting organizations, DAFs and other grantmaking institutions; environmental, civil rights, and humanitarian organizations; performing art institutes, cultural organizations, and museums; congregations and other religious organizations; international, humanitarian, development, and peacebuilding organizations; disaster and hardship relief organizations; and many others – helps make the world a better place.

We provide advice regarding:
  • Tax matters, including formation, audits, regulations, tax litigation, and private rulings at both the federal and state levels.
  • Charitable contributions, donor-advised funds, development activities, grant-making.
  • Corporate governance, board relations, executive compensation, internal investigations, outside general counsel services.
  • Charitable investment funds, endowments, private equity, investor-side advice, mission-related and program-related fund formation, ESG investing.
  • Intellectual property, technology transfer and licensing, trademark.
  • Operational issues, including employment, contracts, M&A, joint ventures.
  • Privacy and cybersecurity.
  • Government relations, advocacy.
  • Bankruptcy or insolvency, combinations and consolidations.
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For tax-exempt organizations, we:

  • Advise a variety of organizations including healthcare systems, trade associations, private foundations, civic and social welfare organizations, community foundations, mission-focused public charities, universities, religious, and other organizations.
  • Help organizations obtain and maintain tax-exempt status.
  • Provide counsel on all operational aspects, including reporting, tax obligations, and regulatory compliance.
  • Address all interactions with tax authorities, including filing annual returns such as IRS Forms 990, 990-PF, and 990-T, and any controversies related to compliance with all relevant requirements.
  • Provide board training and help develop grant-making and other policies and procedures.
  • Train development professionals and other staff in giving options, proper documentation, and fiduciary issues.
  • Provide counsel in unique and complex situations, such as those concerning the relationship between non-profit organizations and their for-profit subsidiaries and sponsors joint ventures, and transactions with organization “insiders.”
  • Assist with compensation, bonus/incentive, and benefit plan matters.

Our team has experience in the healthcare industry. We have worked with non-profit hospitals and healthcare providers on matters as diverse as mergers and affiliations, sale of assets to investor-owned corporations, design and structure of joint ventures, and establishing “conversion” foundations from the sale of tax-exempt health systems. We also provide guidance to these entities during the IRS exemption application process, annual compliance cycle, and IRS and state audits and examinations.

For individuals and their families, we:

  • Help design and execute tax-wise charitable giving techniques which best suit their philanthropic goals.
  • Structure, form, and help administrate charitable trusts and family foundations.
  • Ensure family philanthropic vehicle compliance with all applicable state and federal regulations on private foundation investments and operations.
  • Advise family foundations with respect to the development of defined missions and ways to successfully plan for multi-generational governance and leadership succession.
  • Minimize estate taxes and protect family assets.
  • Emphasize creative planning and the use of trust vehicles to leverage tax exclusions and credits.
  • Augment the tax efficiency of large estates with sophisticated split-interest charitable trusts, including charitable lead trusts, and charitable remainder trusts.
  • Secure Private Letter Rulings and other guidance from the IRS to allow effective and secure income, gift, estate, and generation-skipping tax planning.

Select Experience

  • Deliver ongoing advice and services to health care systems and providers regarding various issues, including the structure of joint ventures, compliance with the requirements of the Patient Protection and Affordable Health Care Act, annual information return reporting and other business and operational issues.
  • Advise various corporations on company-related private foundation issues, including charitable contributions, self-dealing, excess business holdings, and employee assistance programs.
  • Provide ongoing advice to large private foundation engaged in sophisticated grant-making, including program-related investments and loans.
  • Counsel private foundations on international grant-making and public charity equivalency determinations.
  • Assist organizations with conflict of interest policies and procedures to ensure compliance with best practices and excess benefit transaction safe harbor procedures.
  • Assist community foundations and similar organizations with various planned giving matters, including conversion of private foundations to donor-advised funds and supporting organizations.
  • Counsel various tax-exempt entities regarding complex compensation and insider transaction issues.
  • Advise private foundations regarding operation of employee scholarship, disaster relief, and matching gift programs.
  • Provide advice to tax-exempt entities regarding managing and minimizing unrelated business taxable income (UBTI).
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Professionals

Name Title Office Email
Partner Washington, D.C.
Partner Washington, D.C.
Partner Cleveland
Staff Attorney New York
Partner Cleveland
Partner Washington, D.C.
Partner Cleveland
Partner New York
Associate Cleveland
Counsel Cleveland
Partner Cleveland
Partner Denver
Associate Cleveland

Experience

  • Deliver ongoing advice and services to health care systems and providers regarding various issues, including the structure of joint ventures, compliance with the requirements of the Patient Protection and Affordable Health Care Act, annual information return reporting and other business and operational issues.
  • Advise various corporations on company-related private foundation issues, including charitable contributions, self-dealing, excess business holdings, and employee assistance programs.
  • Provide ongoing advice to large private foundation engaged in sophisticated grant-making, including program-related investments and loans.
  • Counsel private foundations on international grant-making and public charity equivalency determinations.
  • Assist organizations with conflict of interest policies and procedures to ensure compliance with best practices and excess benefit transaction safe harbor procedures.
  • Assist community foundations and similar organizations with various planned giving matters, including conversion of private foundations to donor-advised funds and supporting organizations.
  • Counsel various tax-exempt entities regarding complex compensation and insider transaction issues.
  • Advise private foundations regarding operation of employee scholarship, disaster relief, and matching gift programs.
  • Provide advice to tax-exempt entities regarding managing and minimizing unrelated business taxable income (UBTI).
  • Counsel private foundations on international grant-making and public charity equivalency determinations.
  • Assist organizations with conflict of interest policies and procedures to ensure compliance with “best practices” and excess benefit transaction safe harbor procedures.
  • Assist community foundations and similar organizations with various planned giving matters, including conversion of private foundations to donor-advised funds and supporting organizations.
  • Counsel various tax-exempt entities regarding complex compensation and “insider” transaction issues.
  • Advise private foundations regarding operation of employee scholarship, disaster relief, and matching gift programs.
  • Provide advice to tax-exempt entities regarding managing and minimizing unrelated business taxable income (UBTI).

Recognition

  • Chambers USA: Tax
    • District of Columbia (2010 to 2018)
      • Band 3
    • Recognized Practitioner: Nationwide Tax: Controversy (2014 to 2018)
  • U.S. News - Best Lawyers "Best Law Firms" Non-Profit/Charities Law (2016)
    • Metro Cleveland, Tier 1
    • Metro Washington, D.C., Tier 1
  • The Best Lawyers in America© (2019)
    • 2 lawyers named in Non-Profit/Charities Law
  • Who’s Who Legal 2013 recognized two partners in the area of Corporate Tax.
  • Recognized as one of the top law firms for client service, BakerHostetler was named to the 2020 BTI Client Service 30 for the sixth consecutive year.

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