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The attorneys at Katz Baskies & Wolf PLLC are professionals experienced in the organization and management of tax-exempt organizations. We can review your situation with you and help determine what type of tax-exempt organization will best help you achieve your philanthropic objectives.

Types of Tax-Exempt Organizations

Pursuant to the Internal Revenue Service (IRS), there are several different types of tax-exempt organizations. They include:

  • Charitable Organizations: If an organization is formed and operated solely for religious, charitable, scientific, literary, educational or other specified purposes it may be considered tax exempt. There are other criteria that must be met as well.
  • Churches & Religious Organizations: Churches and religious organizations are considered to be charitable in nature and therefore tax exempt.
  • Private Foundations: A private foundation generally has one major source of funding and their predominant activity is making grants to individuals and other charitable organizations.
  • Other Non-Profits: There are other types of organizations that may qualify for tax-exempt status if certain criteria is met. Included in this are social welfare organizations, civic leagues, business leagues, labor organizations, and social clubs.

Benefits of Tax-Exempt Organizations

In addition to not having to pay taxes (subject to certain rules applicable to private foundations and to “unrelated business” income), there are other advantages to having a tax-exempt status:

  • Deductible Contributions. When properly structured, contributions to certain tax-exempt organizations (typically, “501(c)(3)” organizations) are deductible for income tax purposes.
  • Limited Liability: Generally speaking, the law shelters the founders, directors, members, and employees from personal liability. There are exceptions to this, such as when a director or other party acts in a way that is contrary to the best interest of the organization causing the organization to be harmed. Directors have a fiduciary duty to act in the best interest of the organization.
  • Goal Centered Advocacy: Having a formal structure places the interests of the organization above the individual interests of any person associated with it.
  • Grant Eligibility: Many government agencies and private foundations limit their grant giving to tax-exempt charitable organizations.

Management of Tax-Exempt Organizations

There are a myriad of statutory and regulatory rules related to the operation and management of tax-exempt organizations, both at the federal and state level. These include certain tax rules that, if violated, can result in penalties being imposed on both the organization and its managers. At the state level, it is necessary to comply with laws related to not-for-profit entities, as well as those dealing with the solicitation of charitable contributions. We have the experience to help clients understand the many rules that can impact the operations of tax-exempt organizations.

We Can Assist In the Formation and Operation of Tax-Exempt Organizations

If you need help in forming or operating a tax-exempt organization, look no further than the attorneys at Katz Baskies & Wolf PLLC. With our extensive experience we are able to help you determine which type of organization you need, and once that has been determined, we will assist you in organizing and operating the organization. Contact our firm today to discover how we can help you reach your objectives.