Mid-Atlantic Non-Profit Attorney
Non-Profit Representation for Virginia, Maryland, District of Columbia, North Carolina and West Virginia
The Mid-Atlantic non-profit attorneys of Simms Showers LLP have extensive experience providing counsel to non-profit and tax-exempt organizations of every size and mission. From the initial stages of starting or incorporating, to managing every-day legal affairs, to protecting an organization against lawsuits and IRS scrutiny, our firm has dealt with almost every issue faced by tax-exempt organizations. We represent clients headquartered across Virginia, Maryland, the District of Columbia, North Carolina, and West Virginia, and we also serve many non-profit clients with a national and international ministry or charitable scope.
A non-profit organization, sometimes called an NPO, is an entity that reinvests revenue into its mission rather than distributing it to owners or shareholders. Federal tax exemption under Section 501(c) of the Internal Revenue Code is a separate determination from state-law nonprofit incorporation, and many of the most common pitfalls in this practice area arise from conflating the two. Our firm advises clients across the full spectrum of tax-exempt classifications, including 501(c)(3) public charities and private foundations, 501(c)(4) social welfare organizations, 501(c)(6) trade and business associations, and 501(c)(7) social clubs. The types of organizations we routinely represent include charities, cooperatives and collectives, foundations and donor-advised fund sponsors, religious organizations and faith-based ministries, trade associations and professional societies, educational and scholarship organizations, and advocacy and civic groups.
Incorporation and Formation
Our firm has extensive experience advising non-profit organizations and helping them through the incorporation process. We have worked with a range of non-profits, from the small start-up to the veteran organization, and everywhere in between. Our firm can provide the counseling needed to make your charitable organization a reality and help set your dream on solid footing. We can begin the process by incorporating your entity in the state where you will be headquartered, whether that is Virginia, Maryland, D.C., North Carolina, or West Virginia, and we assist in drafting and finalizing the governing documents that will direct how your organization will be run, including the articles of incorporation, bylaws, conflict of interest policy, document retention policy, and whistleblower policy. We can also facilitate the first organizational meeting with the board of directors, walk founders through the fiduciary duties of care, loyalty, and obedience that govern board service, and set your organization off on the right foot.
Complex, Affiliated Non-Profit Organizational and Tax Structures
Sometimes the goals of an organization are too broad, far-reaching, and ambitious to be effectively achieved and adequately protected within a single incorporated structure. Our firm has extensive experience helping clients assemble complex corporate structures that allow them to pursue unique goals without compromising tax-exempt status. We have helped clients design and maintain LLCs, affiliated unincorporated associations, sole-member non-profit property holding LLCs, integrated auxiliaries, subordinate ministries, sole-member stock corporations, supporting organizations, fiscal sponsorship arrangements, and other organizational vehicles. We routinely advise on the parent-subsidiary relationships and intercompany agreements necessary to maintain separation of liability and tax treatment, and we have also helped clients use organizational structures overseas and internationally where mission requires a global footprint.
Tax Exempt Status, IRS Regulations, and Tax Court Disputes
Our Mid-Atlantic non-profit attorneys have guided numerous organizations through the often tedious process of receiving tax-exempt status from the IRS. While the IRS has a significant backlog, our experience helps clients avoid unnecessary delays. We advise on whether to pursue the streamlined Form 1023-EZ or the standard Form 1023, the strategic implications of public charity versus private foundation classification, the public support test for ongoing public charity status, and the operational and grantmaking restrictions that apply to private foundations including self-dealing, minimum distributions, and excess business holdings. We also handle Form 1024 applications for non-501(c)(3) exempt organizations.
A successful tax exemption application begins long before Form 1023 is filed, which is why we encourage clients to engage us during incorporation and formation. Once tax-exempt status is granted, we help clients maintain it through proper Form 990, 990-EZ, 990-N, or 990-PF filings; compliance with unrelated business income tax (UBIT) rules; avoidance of private inurement and excess benefit transactions under Section 4958 intermediate sanctions; substantiation of charitable contributions; donor disclosure compliance; and adherence to limits on lobbying activity, including the 501(h) election that gives many public charities clearer lobbying safe harbors. We have represented numerous tax-exempt clients in front of the IRS and various tax courts, handling matters ranging from defending non-profits charged with alleged political activity to ensuring that the IRS preserves exemptions to which clients are entitled.
Legal Risk Management
Nowhere is the old adage that the best defense is a good offense more true than in the area of risk management. Many litigation matters and IRS disputes could have been prevented, or at least mitigated, with effective policies, wise counsel, and issue awareness. Non-profits are often surprised by the liabilities they incur, and what they do not know hurts them the most. Our firm’s litigation experience helps us identify weak spots in your risk management and work with you to create a strategy and make decisions that will shield your organization for years to come from avoidable litigation and disputes.
We provide risk management counsel across the issues that most frequently generate exposure for tax-exempt organizations, including corporate structure and asset protection, tax-exempt fundraising policies and strategy, employment and volunteer policies, hiring and firing decisions, employment non-discrimination including evolving issues around sexual orientation and gender identity under Bostock v. Clayton County, child sexual abuse prevention policies and training, background check and mandated reporter compliance, data privacy and donor record protection, social media and reputational risk, intellectual property and trademark protection of organizational names and marks, property tax and sales tax exemptions across each Mid-Atlantic state, board minutes and meeting documentation, conflict-of-interest disclosure and management, and director and officer (D&O) insurance review.
Charitable Solicitation Registrations (CSR)
Approximately forty states plus the District of Columbia require non-profit organizations to register before soliciting funds within their borders, and the requirements vary widely from state to state. This can be a tedious, time-consuming, and confusing task, especially for organizations that solicit donations nationally or use online giving platforms that reach all fifty states under the standards of the Charleston Principles. Organizations offering charitable gift annuities (CGAs) face an additional layer of state registration in the states where they offer to issue annuities. Our firm has extensive experience preparing initial registrations, managing annual renewals, securing exemptions where they are available, advising on registration triggers for online fundraising and peer-to-peer campaigns, and responding to state attorney general inquiries. We have established an efficient and cost-effective system to maintain our clients’ registrations wherever necessary.
International Law and Cross-Border Non-Profit Activity
In an increasingly globalized environment, non-profits are seeking ways to expand outside the United States to spread awareness, deliver aid, and partner with local communities abroad. International activity implicates a variety of regulations and restrictions, including IRS rules on grants to foreign organizations and required expenditure responsibility documentation, equivalency determinations for foreign grantees, sanctions enforced by the Office of Foreign Assets Control (OFAC), banking and reporting obligations under the Bank Secrecy Act and FinCEN, the Foreign Corrupt Practices Act, and import-export controls. Our firm has worked with clients to help them achieve goals overseas and comply with OFAC regulations, IRS rules on donations and fundraising for foreign non-governmental organizations (NGOs), and business activity in foreign countries. We have also advised on partnerships between domestic tax-exempt clients and foreign NGOs, including drafting joint venture agreements, memoranda of understanding, and grant agreements that navigate the complexities of sharing resources across international borders.
Non-Profit Employment
One of the biggest ways non-profits accomplish their goals is through the work of employees and volunteers. As a result, legal advice in this area is crucial, as employment practices and decisions can significantly and sometimes unexpectedly impact the organization’s tax-exempt status, corporate liability, and financial stability. Our firm has helped clients navigate the complicated waters of state and federal employment laws in a variety of matters, including hiring and firing decisions, executive compensation review under the rebuttable presumption of reasonableness, employee discipline, internal investigations of abuse or harassment allegations, ADA accommodations, FLSA overtime and minimum wage compliance, proper classification of employees, independent contractors, interns, and volunteers, severance package negotiation in sensitive termination situations, unemployment compensation proceedings, EEOC and state human rights commission responses, and settlement agreements. We also advise on employment policies in handbooks, non-compete and confidentiality agreements where permitted, and the unique considerations that arise for religious and faith-based non-profits asserting Title VII religious exemptions or the ministerial exception.
Mergers, Conversions, and Dissolutions
The non-profit lifecycle does not always run in a straight line. Mission drift, funding changes, leadership transitions, or strategic partnerships can prompt the need for restructuring. Our firm assists clients with non-profit mergers and consolidations, asset transfers between related organizations, conversions between tax-exempt classifications, voluntary dissolution and winding-up procedures, and the state attorney general notice and approval processes that often accompany these transactions. Each Mid-Atlantic state has its own statutory framework governing these events, and proper execution protects both directors and the charitable assets at stake.
Why Mid-Atlantic Non-Profits Choose Simms Showers LLP
Our firm offers a full-service non-profit practice anchored by deep experience across the entire organizational lifecycle, from formation through wind-down. We are admitted across the Mid-Atlantic and handle multi-state matters efficiently, sparing clients the cost of retaining separate counsel in each jurisdiction. We work as practical advisors, not just transaction processors, and we communicate in plain language about legal risk, cost, and strategy. We respect the mission orientation of our clients, and we have particular sensitivity to the governance and theological distinctives of faith-based non-profits.
Frequently Asked Questions About Mid-Atlantic Non-Profit Law
What is the difference between being a non-profit and being tax-exempt?
Non-profit status is created under state law when an organization incorporates as a non-profit corporation. Tax-exempt status is a separate federal determination by the IRS that the organization qualifies under one of the categories in Section 501(c). An organization can be a state-law non-profit without being tax-exempt, and vice versa, though most operating charities pursue both.
Should we file Form 1023 or Form 1023-EZ?
Form 1023-EZ is a streamlined application available to smaller organizations that meet specific gross receipts and asset thresholds and do not fall into excluded categories. It is faster and cheaper but provides limited room to explain the organization’s activities, which can create risk if the IRS later examines the application. Larger or more complex organizations, churches that wish to obtain formal recognition, and any organization with unusual activities should generally file the full Form 1023. We can help you decide which is appropriate.
How long does it take to receive 501(c)(3) status?
Timing varies significantly based on the form filed, the completeness of the application, and IRS backlog. Form 1023-EZ approvals often come within several weeks. Full Form 1023 applications can take several months or longer, and complex applications involving unusual fact patterns may take a year or more. Proper preparation up front is the single biggest factor in avoiding delay.
What is the difference between a public charity and a private foundation?
All 501(c)(3) organizations are presumed to be private foundations unless they qualify as public charities by passing one of the public support tests or fitting into a statutory category such as a church, school, or hospital. Public charities enjoy more favorable donor deductibility limits and fewer operational restrictions. Private foundations face additional rules on self-dealing, minimum annual distributions, excess business holdings, jeopardizing investments, and taxable expenditures. We help clients structure activities to maintain public charity status when that is the goal.
Do we have to register in every state where we fundraise?
Most states with charitable solicitation laws require registration before soliciting in that state, and online giving raises particular questions because a donation form accessible from any state can be considered solicitation in every state. The Charleston Principles offer guidance, and many organizations register in all states where they actively solicit. Exemptions exist for certain categories of organizations and certain types of activity. We help clients map their fundraising footprint and register accordingly.
What is unrelated business income tax (UBIT)?
UBIT applies to income a tax-exempt organization earns from a trade or business that is regularly carried on and not substantially related to its exempt purpose. Common examples include certain advertising revenue, debt-financed property income, and unrelated commercial sales. UBIT does not automatically threaten exempt status, but excessive unrelated business activity can. Careful structuring, including the use of taxable subsidiaries when appropriate, helps manage exposure.
Can non-profits lobby or engage in political activity?
501(c)(3) organizations may engage in some lobbying as long as it is not a substantial part of their activities, and many public charities make the 501(h) election to take advantage of clear expenditure-based safe harbors. 501(c)(3) organizations are absolutely prohibited from intervening in political campaigns on behalf of or against any candidate. 501(c)(4) social welfare organizations have broader latitude. We help clients structure advocacy that achieves their mission without crossing legal lines.
What are the fiduciary duties of non-profit board members?
Directors of non-profit corporations owe three core duties. The duty of care requires informed, attentive decision-making. The duty of loyalty requires that decisions be made in the best interest of the organization, free from conflicts of interest. The duty of obedience requires that the board act in accordance with the organization’s mission and governing documents and within the bounds of the law. Sound minutes, disclosed conflicts, and informed deliberation protect both the organization and individual directors.
Does our non-profit have to file Form 990?
Most tax-exempt organizations must file an annual return in the Form 990 series. Smaller organizations file the simplified Form 990-N (the e-Postcard), mid-sized organizations file Form 990-EZ, larger organizations file the full Form 990, and private foundations file Form 990-PF. Failure to file for three consecutive years results in automatic revocation of tax-exempt status, which is a common and avoidable problem. Churches are generally not required to file Form 990 but may have other reporting obligations.
Can our non-profit pay competitive salaries to executives?
Yes, within reason. The IRS allows reasonable compensation for services actually rendered, and the rebuttable presumption of reasonableness can be established by independent board approval, comparable compensation data, and contemporaneous documentation. Unreasonable compensation can trigger excess benefit transaction penalties under Section 4958, applied to both the recipient and the approving board members. We help clients establish a defensible compensation process.
When should our non-profit consult a non-profit attorney?
The most cost-effective use of legal counsel is during formation, governance design, and policy development, before any dispute or IRS issue arises. We recommend an annual or biennial legal check-up reviewing corporate filings, state registrations, governance documents, employment policies, and 990 accuracy. Engaging counsel early almost always costs less than fixing problems later.
Contact the Mid-Atlantic Non-Profit Attorneys at Simms Showers LLP
Our clients include non-profit organizations of every size and mission across Virginia, Maryland, the District of Columbia, North Carolina, and West Virginia, as well as national and international ministries and charities. If you are an existing non-profit or looking to start one, you need the legal knowledge and representation of an experienced attorney. Contact the Mid-Atlantic non-profit lawyers at Simms Showers LLP today to schedule an appointment to review your matter.
