Charities and Not for Profit

Overview

Nonprofit and tax-exempt organizations operate under a distinct set of legal rules that afford significant tax advantages but also present a complex and constantly evolving regulatory landscape. Carnegie Sterns’ Nonprofit and Tax-Exempt Organizations Practice is at the forefront of these developments, offering tailored legal counsel to help clients confidently navigate this intricate framework. Our team of seasoned attorneys provides comprehensive representation across a spectrum of matters unique to exempt organizations—including excise taxes, intermediate sanctions, and unrelated business income—as well as issues common to all businesses, such as employment law, intellectual property, and real estate.

We guide clients through the latest regulatory developments, including increased scrutiny from the IRS on governance and compliance, enhanced disclosure requirements on the revised IRS Form 990, and growing oversight by state attorneys general. From formation to day-to-day operations, Carnegie Sterns delivers strategic counsel to ensure our clients remain compliant while fulfilling their mission.

Comprehensive Legal Counsel for a Diverse Client Base

Carnegie Sterns draws upon the knowledge and experience of its multidisciplinary attorneys to deliver full-service legal support to nonprofit and tax-exempt clients. We curate customized legal teams tailored to meet the unique operational and compliance needs of each client.

Our practice serves a wide array of organizations, including:

• Public charities (domestic and international)

• Private foundations and operating foundations

• Community foundations and donor-advised funds

• Religious and faith-based organizations

• Colleges, universities, and private schools

• Healthcare institutions and research organizations

• Cultural institutions and museums

• Political organizations and advocacy groups

• Membership, trade, and professional associations

• Social service agencies and social clubs

• Student exchange and scholarship programs

We also have deep experience advising U.S.-based organizations conducting international operations, as well as foreign entities with U.S. activities or income sources.

Tax Law Guidance

Maintaining tax-exempt status requires rigorous adherence to IRS regulations. Carnegie Sterns’ tax attorneys have the technical depth and regulatory insight to help clients navigate this terrain, safeguard their tax-exempt status, and mitigate the risk of penalties. We regularly advise on:

• Intermediate sanctions and excess benefit transactions

• IRS audits, examinations, and compliance reviews

• Regulations impacting lobbying and political activity

• Joint ventures and partnerships between exempt and non-exempt entities

• Private foundation rules: self-dealing, excess business holdings, distributions, jeopardy investments, and taxable expenditures

• Private inurement and reasonable compensation

• Supporting organizations and donor-advised funds

• Unrelated business taxable income (UBTI)

Compliance Audits & Regulatory Strategy

Carnegie Sterns is committed to helping nonprofit clients maintain regulatory compliance across all operational facets—from fundraising and governance to human resources and licensing. We advise on endowment policies, conflicts of interest, and best practices in nonprofit governance, aligning organizations with state and federal guidelines.

We partner with clients to assess risk and design robust compliance and ethics programs tailored to the nonprofit sector. These programs educate leadership, establish internal controls, and provide procedures for responding to regulatory issues, ensuring operational transparency and legal soundness.

Corporate Governance and Organizational Structuring

From formation and exemption filings to ongoing governance, Carnegie Sterns advises clients on creating and managing tax-exempt organizations in compliance with best practices and IRS expectations. Given the public-facing nature of Form 990, governance disclosures carry reputational and donor-relations significance.

We assist with:

• Internal governance audits

• Bylaws and committee charters

• Conflict-of-interest and document retention policies

• Whistleblower and grantmaking procedures

• Officer and director fiduciary responsibilities

• Mergers, restructurings, and complex affiliations

• Relationships with professional fundraisers and sponsors

• Lobbying activity and political compliance

Finance, Fundraising, and Donor Relations

Carnegie Sterns advises clients on the legal aspects of fundraising, finance, and donor relationships, including:

• Charitable solicitation and registration compliance

• Endowment and investment policies

• Tax-exempt bond financings and 501(c)(3) opinions

• Use of tax credits for school and facility funding

• Donor agreements and complex gift structures

• Monitoring bequests and trust distributions

• Advising on permissible grantees and expenditure responsibility

• Structuring scholarship funds and giving circles

• Specialized and nontraditional gift acceptance

Our attorneys have worked closely with some of the largest supporting organizations and community foundations in the country, helping channel significant charitable contributions to mission-driven work.

Donor-Advised Funds and Community Foundations

We advise sponsors and administrators of donor-advised funds (DAFs) on regulatory compliance, governance, and strategic planning, including:

• Structuring DAFs under public charities or private foundations

• Advising on the Pension Protection Act of 2006

• Integration of DAFs into estate and philanthropic plans

• International grantmaking strategies through DAFs

Private Foundations

Carnegie Sterns advises private foundations on their unique operational and tax compliance requirements, including:

• Grantmaking (domestic and foreign)

• Annual distribution obligations

• Compliance with rules governing self-dealing, jeopardizing investments, and taxable expenditures

• Termination strategies and conversion to DAFs

• IRS compliance and audit defense

Trust Law

We provide counsel on trust-related issues for nonprofit organizations established as trusts or named as trust beneficiaries. Our team ensures fiduciary obligations are met and that the organization’s interests are protected in estate and trust proceedings.

Employment and Employee Benefits

Nonprofit organizations face increasingly complex employment law challenges. Our attorneys provide guidance on:

• Employment contracts and executive compensation

• Non-compete and confidentiality agreements

• Employee benefits and ERISA compliance

• Immigration and hiring of international staff

• Discrimination, whistleblower claims, and labor law compliance

We help clients avoid penalties related to excessive compensation and provide “safe harbor” planning to mitigate risk.

Intellectual Property

Carnegie Sterns assists nonprofits with identifying, protecting, and leveraging their intellectual property assets, including trademarks, copyrights, patents, licensing, and branding. This is especially critical for educational institutions, healthcare systems, and research organizations.

Litigation and Dispute Resolution

While nonprofits strive to avoid disputes, litigation is sometimes unavoidable. Our litigators defend organizations against regulatory claims, donor or beneficiary disputes, internal governance conflicts, and fiduciary liability matters. We also represent clients before the IRS and state charity regulators.

Public Policy and Government Relations

Our Washington, D.C.-based Government Law & Policy Practice offers strategic advocacy for nonprofit and tax-exempt clients seeking to shape policy and secure public funding. We bring:

• Deep relationships across Congress and federal agencies

• Bipartisan access and strategic insight

• Campaign-style coalition building

• Legislative drafting and advocacy strategy

• Grassroots mobilization and public affairs support

Carnegie Sterns acts as an extension of our clients’ advocacy teams—amplifying their voice in Washington and beyond.

Real Estate and Facility Transactions

Carnegie Sterns’ real estate attorneys support nonprofit clients with leasing, acquisition, zoning, and development matters, while ensuring compliance with property tax exemptions and UBTI rules. We help structure real estate transactions to meet both mission-driven goals and fiscal prudence.