GPSOLO January/February 2008
I represent the good guys—you know, the ones wearing the white hats. Yes, my clients are nonprofit organizations. Almost everyone reading this is involved, one way or another, with a nonprofit—by participating in activities, receiving services, providing financial support, or serving as a director, officer, or volunteer. Nonprofits include your local chamber of commerce, the school you or your children attend, the little league team, the environmental organization you support, your church/synagogue/mosque, the hospital down the street, and perhaps even the theater that you attended last weekend. In fact, nonprofits remain one of the fastest growing sectors of the economy and, like all organizations, are in need of legal advice.
Many lawyers decide to give back to the community by representing nonprofits on a pro bono basis. Although this is admirable (and I do a lot of pro bono or reduced-fee representation myself), I get paid for most of my work. Why? Not only because I like to eat, but also because much of what I do cannot be done efficiently or effectively by someone who does not concentrate in the area. In fact, several lawyers who had agreed to provide free legal representation to their favorite charity eventually decided it was cheaper to pay me to do the legal work for them, rather than taking the time to learn the area themselves.
And time consuming it is. Representing nonprofits is a very specialized area, but at the same time it is very broad in scope. Perhaps the best description of my practice would be “specialized generalist.” For anyone who is seriously interested in representing nonprofits, I would encourage you to learn everything you can about every area of law—because it all can impact your client. The more you know, the easier it is to identify the areas in which your client can get into trouble.
Legal representation of nonprofits includes help with forming the organization (the first step is determining whether it should be a corporation, a trust, an LLC, or an unincorporated association and then setting up the correct governance structure), establishing its tax exempt status (in fact, most lawyers that focus on nonprofits are primarily tax lawyers), drafting and reviewing contracts and other documents, advising on employment and independent contractor issues, working with financing issues (securities law), securing intellectual property rights, raising money from donors (estate planning and tax issues), and the like. It also includes regular counseling with the board, helping prepare grant applications, negotiating with government entities, drafting leases and establishing property tax exemptions (real property law), and, when problems occur, representing the organization in litigation. A number of nonprofits are multiple-entity organizations; setting up the correct structure to ensure the desired control may result in arrangements that look very similar to franchise agreements.
So where do you start? The ABA Business Law Section’s Nonprofit Corporations Committee meets regularly, and the Section has published several good books on nonprofits, including the Guidebook for Directors of Nonprofit Corporations and The ABCs of Nonprofits. The ABA Tax Section’s Exempt Organizations Committee has three regular day-long meetings each year, to which IRS and Treasury officials are invited, often providing excellent insights to changes in the tax law. The ABA Real Property, Trust and Estate Law Section has a Charitable Planning Committee and a Charitable Organizations Committee. All of these committees are worthwhile; you may want to select one or more, depending on your emphasis. In addition, there is a free ABA listserve: TAX-NONPROFIT.
Another source that I would recommend to everyone involved with nonprofits is www.charitychannel.com. Charitychannel.com has more than 20 different listserves covering all areas of running a nonprofit (including a charity law listserve). You might want to sign up for one or more, again depending on your specific area of interest.
If you want to check out an existing nonprofit, go to www.guidestar.org. This site publishes all Forms 990 (the IRS informational filing required of most nonprofits), as filed with the IRS, and will include additional information provided by the charity.
Finally, I would recommend that anyone serious about learning and keeping on top of nonprofit law subscribe to Tax Analysts’ Exempt Organization Tax Review , which is published monthly.
Why represent nonprofits? Because they do good work. And because it is good business.
Lisa A. Runquist is a principal in the law firm of Runquist & Associates, in Los Angeles, California. She has 30 years of experience representing nonprofit organizations and is the first winner of the Outstanding Lawyer Award, a nonprofit lawyers’ award presented by the ABA Business Law Section. She may be reached at email@example.com.