Alexis de Tocqueville

Nonprofit and tax-exempt organizations have long been the backbone of civic engagement and social change in the United States. In 1831, during his historic visit to the United States, 
Alexis de Tocqueville observed:

Americans of all ages, conditions, and dispositions constantly unite together. Not only do they have commercial and industrial associations to which all belong but also a thousand other kinds, religious, moral, serious, futile…Americans group together to hold fetes, found seminaries, build inns, construct churches, distribute books… I have frequently admired the endless skill with which the inhabitants of the United States manage to set a common aim to the efforts of a great number of men and to persuade them to pursue it voluntarily.

Millions of registered organizations

One recent estimate showed over 1.5 million such registered organizations. And this number does not include many religious organizations (temples, churches, synagogues, mosques, etc.) that are tax-exempt but do not have to be individually registered with the Internal Revenue Service. The sector is also financially large, with a 2017 survey (the last year statistics are available) showing total assets of 501(c)(3) groups (only a portion of all tax-exempt organizations) at 4.3 trillion dollars.

While the concepts of nonprofits and tax-exempt organizations are related, they refer to different legal issues.

Nonprofit Corporations

State law provides for many formal business structures such as corporations, limited liability companies, limited partnerships, etc. A nonprofit corporation is a type of corporation whose purpose is to engage in charitable, education, service, religious, or social change. In Georgia, nonprofit corporations are either members nonprofits (where a separate membership votes on the Board of Directors) or non-members nonprofits (where the Board of Directors replaces itself). Georgia law now (as of January of 2021) also allows for a hybrid organization known as a social benefit corporation that enables social entrepreneurs to dedicate their organizations to more altruistic purposes than purely increasing shareholder value.

As a newly filed 501(c)(7), nonprofit social club, we needed assistance making sure that our release, waiver and covenant not to sue were legally sufficient. As a membership organization that organizes social events for our members, we were contemplating requiring proof of COVID-19 vaccination to attend our events and we needed legal guidance in making those decisions. Charles’s advice was timely and thorough and the information he provided was set forth in clear, understandable language which enabled our board to make educated decisions on how to move forward. He even carved out some time after hours to join our Zoom board meeting to answer questions. It enabled us to bring our practices in line with Georgia law, which is important since all of our events currently are held there and to avoid potential liability.

Client

Tax-Exempt Organizations

A nonprofit corporation usually, but not always, applies to the Internal Revenue Service to be recognized as “tax-exempt” under section 501(c) of the Revenue Code. The most common type is a 501(c)(3) is organized for the purpose of charitable, educational, or religious missions and does not turn a profit. However, there are 28 other forms of 501(c) organizations, including 501(c)(4) social welfare organizations, 501(c)(6) business leagues, 501(c)(7) social organizations, etc. Each type allows some variation of being exempt from the paying income taxes on revenue it receives and allowing gifts to the organization to be tax-deductible by a donor.

An organization applies for tax-exempt status using an IRS 1023 or 1024 form that varies in complexity depending on the amount of income the organization anticipates over the first few years of its existence. Typically, a tax-exempt organization (but not most religious institutions) then files an IRS 990 tax return yearly, which also varies in complexity depending on an organization’s yearly revenue.

Our Services

Like any other effective organization, a tax-exempt or nonprofit corporation must be built on a firm foundation with clear and trustworthy governance structures. To that end, we provide the following services:

• Formation of a nonprofit corporation
• Obtaining an EIN for the organization
• Registration with the IRS as an exempt organization (501)(c) organization
• Registration of the non-profit under the Georgia Charitable Solicitations Act (if the organization is not otherwise exempt)
• Creation of Governance Documents (for example, bylaws, continuing resolutions, constitutions, conflict policies, etc.)
• Registration of service/trademarks in the State of Georgia
• Employment policies if the organization will hire employees
• Review of business plans in support of donor accessibility

Not every organization needs all these services or may not need them at different points in its life cycle. But we are ready to work with you to determine the best path for your organization.

Members of our firm are not only versed in the laws of nonprofits but are active in them. For instance, Charles Bridgers is currently President of a multi-location camping ministry and served six years as Vice-Chair of a 12-million dollar social service organization in Georgia. Kevin Fitzpatrick has long been a member of the Board of Trustees of Oglethorpe College. Michael Caldwell served the Georgia Chiefs of Police Association as general counsel for decades. So we understand the legal and practical issues of these organizations both as lawyers and as volunteers.