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Non-Profit / 501(c)(3) Charities

Owen and Truban, PLC advises non-profits on a variety of matters, including formation of non-stock corporations, trusts or foundations, including advice on the application, IRS Form 1023, that must be filed to get IRS approval of exempt status.  Once you get IRS approval, you must follow certain rules to remain exempt.  Many strategic decisions need to be made in forming a non-profit.  For example, you need to decide if the entity is going to have voting members in addition to a board of directors, or if the board of directors is self-perpetuating which means the board appoints its successors and there are no members.  How many directors will there be?  Do you have an executive committee apart from your full board?  Will you be raising funds from the general public or will donations come from a few private donors?  What is your organization’s true purpose?  These are critical issues that need to be addressed as part of the formation and organization of such an entity.  We can assist with this process and ongoing operations of various types of charities, including, but not limited to, private foundations, charitable trusts, PTO’s, religious organizations, health care organizations, social clubs, museums, and “supporting organizations” for other charities and local governmental bodies.

Private Foundations.  There are charitable organizations that receive most of their support from a limited number of sources and those are referred to as “private foundations”.  It is necessary to consider the structure of regular and operating private foundations, including ways to minimize or avoid certain taxes and penalties that apply just to these types of entities.  It is important to know these rules and comply with them; otherwise, it can result in substantial penalties and possible termination of tax-exempt status.

Other Tax Exempt Entities.  Most people know about IRC Section 501(c)(3) charities, referred to as “public charities” and private foundations, but there are various other types of non-stock entities, such as trade organizations, business associations, and social clubs.  These types of organizations are subject to different IRS rules from typical public charities.

Tax Returns.  It is important that all exempt entities file tax returns.  Otherwise, the entity can lose its tax exempt status.  We can help you work with your accountant to make sure a return gets filed each year.  Note, sometimes the return for smaller entities can be what is referred to as a “post card” return, but nevertheless a return must be filed.  It is important the board of directors understand all these rules and have procedures in place to assure compliance.