Davis Wright Tremaine’s Tax-Exempt Organizations (TEO) practice group understands the unique needs of not-for-profit and tax-exempt organizations. We provide the legal support that nonprofit organizations and their leaders need so that they can focus on furthering their missions.
Our depth and years of experience in the field are recognized nationally and our TEO team advises nonprofits across the country from offices in New York, Washington, Oregon, California, and Alaska. Our TEO attorneys provide advice that is practical, authoritative, and attentive to our clients’ goals.
Our clients encompass the full spectrum of the TEO world, including:
- Foundations and Philanthropic Entities: Corporate philanthropies, family and independent private foundations, Alaska Native and Native American philanthropies, community foundations, and private operating foundations, donor-advised fund (DAF) sponsors
- Operating Public Charities: Social service providers, schools and universities, museums and cultural institutions, global health and development organizations, performing arts institutions, advocacy organizations, religious organizations, retirement facilities, and CCRCs
- Healthcare Organizations: Nonprofit healthcare systems, hospitals, clinics and health plans, medical and scientific research institutes
- Other Tax-Exempt Organizations: Including Section 501(c)(4) organizations, PACs and other organizations involved in lobbying and political activities, and trade associations and business leagues under Section 501(c)(6)
With comprehensive knowledge and experience, we provide sophisticated, multidisciplinary advice on all matters of critical importance to nonprofits.
Areas of Experience
Federal Tax Exemption, Planning, Compliance, and Tax Controversies
Our TEO group counsels clients on the full scope of the federal tax laws that govern tax-exempt organizations. We have assisted hundreds of nonprofit organizations with initial formation and successful application for federal tax exemption, and have guided them through issues such as qualification for public charity status, compliance with private inurement and excess benefit rules and rules regarding lobbying and political activities.
Our attorneys regularly advise private foundations on a variety of complex matters, including the self-dealing, jeopardy investment, and excess business holdings rules. We assist private foundations in establishing compliant procedures for domestic and international grant-making, including obtaining IRS approval of scholarship and other grant programs to individuals; establishing expenditure responsibility programs; making foreign equivalency determinations; and advising on debt and equity program-related investments (PRIs) and mission-related investing.
We help clients navigate sophisticated tax issues, including tax planning under the unrelated business income tax (UBIT) rules, complex structures involving both tax-exempt and taxable organizations, compliance with the rules for supporting organizations and donor-advised funds, and a number of matters that arise in domestic and cross-border public-private partnerships and joint ventures. We help to facilitate international philanthropy through the creation of U.S. “friends of” organizations that support foreign charities.
We are at the forefront of finding innovative creative solutions to emerging issues for tax-exempt organizations involving uses of virtual currency, hybrid entities, and the federal tax implications of impact investing. Our team has extensive experience in assisting organizations in obtaining private letter rulings and other guidance from the Internal Revenue Service on cutting-edge questions.
Our attorneys have deep experience representing tax-exempt organizations in all phases of federal tax controversy. We handle IRS examinations (audits), administrative appeals, proceedings to revoke or deny tax exemption and tax litigation.
Corporate Governance and Compliance
As leading authorities on nonprofit governance, our lawyers are regularly consulted on questions of fiduciary conduct and liability. Our TEO team’s extensive experience in corporate governance and compliance matters allows us to serve the specialized needs of not-for-profit clients, including boards and management, on issues of fiduciary responsibility, conflict of interest, managing voting memberships, directors’ and officers’ liability insurance coverage, and indemnification. We prepare and help organizations update governance guidelines, bylaws, committee charters, conflict of interest policies and ethical conduct statements in keeping with best practices and evolving laws. Issues implicating fiduciary duties often develop into litigation among board members, voting members, officers and key executives (see Investigations and Litigation, below). Members of the TEO group have written a number of the leading authorities on governance, including conflicts of interest.
Compliance for Tax-Exempt Healthcare Organizations
Our TEO group works closely with our healthcare attorneys to provide coordinated, integrated advice on the complex range of regulatory issues that face today’s healthcare organizations.
We advise on a wide variety of issues, including nonprofit governance and conflict of interest questions, hospital compliance with Internal Revenue Code Section 501(r) and community benefit standards generally under federal and state law, joint venture and technology transfer agreements between nonprofit and for-profit enterprises, examinations by the IRS and State tax authorities, tax-exemption issues in connection with Accountable Care Organizations (ACOs) and executive compensation. We regularly serve as legal counsel to tax-exempt healthcare organizations in tax-exempt bond financing transactions and render legal opinions on the borrower’s Section 501(c)(3) status. We have successfully advanced property tax exemption claims for healthcare organizations beyond the outer edge of established state exemption policy.
Our attorneys represent nonprofit hospitals and health systems in investigations by government agencies, handle federal and state challenges to tax exemption, and advise on the voluntary disclosure of statutory and regulatory violations to appropriate government agencies. We have represented numerous nonprofit health systems in congressional investigations and class action suits challenging patient-charging practices and charity care obligations.
Outside General Counsel
As outside general counsel to many of our clients, we regularly advise on all issues of importance to organizations large and small, including employment, employee benefits, immigration, real estate, intellectual property, information technology, privacy, finance, government relations and other areas.
In the compensation and benefits arena we assist boards in developing compliant executive compensation approval processes. We provide the tools for public charities to establish a “rebuttable presumption” of reasonableness under the federal tax law and guide private foundations through traps for the unwary in executive compensation. Our attorneys have successfully represented exempt organizations, boards and nonprofit executives against IRS State Attorney General assertions of unreasonable compensation.
In addition, our nonprofit clients have access to a full range of coordinated legal services through the experience and skills of our practice groups throughout the firm.
As outside general counsel to many clients, we regularly advise on all issues of importance to organizations large and small, including employment, employee benefits, immigration, real estate, intellectual property, information technology, privacy, finance, government relations and other areas. In the compensation and benefits arena, we assist boards in developing compliant executive compensation approval processes. We provide the tools for public charities to establish a “rebuttable presumption” of reasonableness under the federal tax law and guide private foundations through traps for the unwary in executive compensation. Our attorneys have successfully represented exempt organizations, boards, and nonprofit executives against IRS State Attorney General assertions of unreasonable compensation.
Mergers and Acquisitions and Other Transactions
We represent our nonprofit clients in spin-offs, mergers, sales of assets (including the purchase and sale of real estate), joint ventures and complex reorganizations and restructurings. In states where such transactions require regulatory review, we assist clients in shepherding the transactions through the regulatory approval process (e.g., through the state attorney general’s office). Our attorneys assist nonprofit organizations in forming subsidiaries, affiliated 501(c)(3)/501(c)(4) organizations, partnerships and limited liability companies, and advise on the use of “hybrid” entities such as benefit corporations, social purpose corporations and "L3Cs."
Corporate Philanthropy and Cause Marketing / Commercial Co-Ventures
Our TEO attorneys advise companies ranging from publicly-traded corporations to start-ups in designing and implementing innovative platforms for corporate philanthropy, including corporate foundations, captive public charities, corporate donor advised funds, online giving programs, matching gift programs, and employee scholarship and disaster relief programs. In the area of cause-marketing or “commercial co-ventures,” we design compliant arrangements between commercial enterprises and charities and monitor state regulation of commercial co-ventures nationwide.
We assist charities in complying with state solicitation and fundraising laws, including resolving disputes with state agencies. Our TEO group structures corporate sponsorship arrangements, represents charities in cause-marketing campaigns and advises on the solicitation of endowment funds and restricted gifts.
Managing Charitable Assets
We counsel clients on their fiduciary obligations regarding the investment of charitable assets and endowment management, and assist charities in developing investment policy statements and endowment spending policies. We advise on the solicitation and use of restricted gifts, and on the application of cy pres proceedings.
We also assist charities with their unique needs concerning their investment portfolios, including review of private equity funds, hedge funds and financial instruments, and advising on legal compliance in connection with impact investing, and on mission-related and program-related investments (PRIs).