Frequently Asked Questions

Not always, but organizations may benefit from legal guidance from inception regarding governance, multiple funding sources, or plans to seek grants. Learn more about our Nonprofit Governance practice.

Bylaws are often broad and flexible to include what a nonprofit can legally accomplish, but also provide specific guidance on board meetings, quorum requirements, officer roles, and management of conflicts of interest, built around how the board will operate in practice. Learn more about our Nonprofit Governance practice.

Unlike a for-profit merger, a nonprofit combination has to account for how each organization’s charitable assets and mission restrictions carry forward, sometimes with regulatory review. Learn more about our Nonprofit Mergers & Restructuring practice.

Typically dissolution involves board approval, formal state dissolution filings, a final IRS Form 990, and distribution of remaining assets to another tax-exempt organization. The dissolution process is state-specific and may depend on whether the organization is dissolving with assets remaining. Learn more about our Nonprofit Mergers & Restructuring practice.

While not an exclusive list, this typically requires ongoing adherence to IRS operational requirements, annual Form 990 or equivalent filings, and accurate governance records, not just a one-time filing. Learn more about our Tax-Exempt Organization Compliance practice.

Whether to register in a state where you operate or fundraise involves a state-specific analysis and investigating what activities you will be doing in that state. Learn more about our Tax-Exempt Organization Compliance practice.

Yes, nonprofits that have taxable income from an unrelated activity may sometimes isolate that activity in a taxable subsidiary, but the details of how to structure this are important. Learn more about our Mission-Driven Collaborations practice.

Among other differences, private foundations face additional excise taxes, minimum distribution requirements, and self-dealing restrictions that public charities generally don’t. Learn more about our Philanthropy & Grantmaking practice.

This is a process that includes a pre-grant inquiry, written grant agreement, and ongoing reporting, when a private foundation grants to an organization that isn’t itself a public charity. Learn more about our Philanthropy & Grantmaking practice.

Ideally, a grant agreement will address the funded activities, reporting requirements, permitted uses of funds, and clear language defining any restrictions on how the money can be used. Learn more about our Nonprofit Contracts & Agreements practice.

Nonprofit contracts often intersect with grant restrictions, donor intent, and tax-exempt purpose limitations that a purely commercial contract wouldn’t raise. Learn more about our Nonprofit Contracts & Agreements practice.

Whether restricted gift funds can be redirected depends upon the type of restriction and the specific facts and circumstances. Restrictions can sometimes be released with donor consent or, in some cases, a court process. Redirecting restricted funds without following proper procedure may carry legal implications. Learn more about our Trusts and Endowments practices.

Most states follow a version of UPMIFA, which sets standards for prudent investment and spending from endowment funds. Learn more about our Trusts and Endowments practices.

Executive compensation must be “reasonable” under IRS rules, and comparable to similar organizations, or it can trigger intermediate sanctions excise taxes on both the executive and approving board members. Learn more about our Employment & Executive Compensation practice.

A nonprofit can often use comparability data, approval by disinterested board members, and contemporaneous documentation together to create a rebuttable presumption of reasonableness. Learn more about our Employment & Executive Compensation practice.