Non-Profits & Charities
The Firm was founded on the premise that it must give back to the community. We address the complete spectrum of needs of a non-profit organization. We assess the purpose of the organization, the donation infrastructure, as well as the operations. We apply for a non-profit status with the IRS and FTB and address any regulations by the DOJ. We pick up where you left off!
- Public Benefit. A public benefit corporation is a non-profit corporation that is designed to benefit the public at large. A public benefit corporation can be your local charity, a homeless shelter, a literary club, a cultural restoration center, a civil rights group, or another type of organization with the goal of public good at large.
- Mutual Benefit. A mutual benefit corporation is a hybrid between a for-profit and a non-profit corporation. It is designed to pursue both for-profit and non-profit objectives. Generally, it adds a “public benefit” component to a for-profit structure.
- Religious. A religious non-profit is a corporation that is specifically formed to achieve a religious objective. Most churches, missionary centers, and religious groups are formed as religious non-profits. There are certain benefits to being formed as a religious non-profit corporation, but is not for everyone.
- Private Foundation. A private foundation is a corporate non-profit that has a single or a limited number of donors. Unless it is a hybrid with a public non-profit, the foundation is typically not engaged in any non-profit activity. Simply put, it’s an expensive wallet for other non-profits. Of course, private foundations have additional and stricter taxation requirements.
- Church Law. Forming a church is one thing but addressing the church’s legal status is another. Whether a congregation wants to be registered with the state (i.e. incorporated as a non-profit), be an unincorporated organization, or be unaffiliated with the state (i.e. a free church) – we can help. This includes hiring employees, addressing their needs, as well as formalizing church operations.
- Non-Profit Election. While some non-profits are automatically considered as tax-exempt (such as churches and certain religious groups), most non-profits must apply for a non-profit status from the IRS and the FTB. Before forming a non-profit, the clients need to understand that the non-profit formation directly corresponds to the future tax-exemption application.
Do I need a non-profit?
A non-profit is used to further the public good and to allow donations to the organization to be income tax free. Whether a non-profit is needed depends on the purpose of the organization.
How complex is it to open a non-profit?
It all depends on the purpose of the non-profit. It is relatively easy to file articles of incorporation but not as easy to apply for and obtain the non-profit status from the IRS and the FTB. The purpose needs to be carefully presented in all formation and internal documents. If it is not, the chances of obtaining non-profit status are jeopardized.
Do I need a lawyer even if I know what I am doing?
Yes, you need to consult a lawyer even when you believe you have everything you need. There are certain caveats with non-profits that need special attention, and they are usually not obvious. For example, the election of the board of directors, international operations, and donation of funds to another non-profit are a few issues that are addressed.
How do I know if the non-profit is a public benefit or religious?
Many religious non-profits are engaged in public benefit activities and it is confusing. Generally, if the organization’s purpose is religious – religious non-profit is the way to go. However, if a religious non-profit also performs public benefit activities, such as homelessness relief, helping the poor, building something – or, something that has nothing to do with religion – public benefit is the way to go. These issues are important to discuss with a lawyer.
How long does formation take?
Generally, it takes around two weeks to form a corporation. IRS tax-exemption takes longer, depending on IRS backlog. In certain circumstances, it takes up to one year.
Can relatives be involved in non-profit work?
It depends in what positions. IRS frowns upon the board of directors and officer positions consisting of relatives and will generally deny non-profit status in such cases. However, anyone can volunteer (volunteers are not usually reported to the IRS). If you want your family members involved, there are certain steps that must be taken to ensure the application will be approved by the IRS.
Can I convert my business to a non-proft?
Some businesses can be successfully converted into a non-profit. It all depends on the “packaging” or how services are presented to the people and the IRS. Generally, however, for-profit businesses cannot be converted to a non-profit.