Common Legal Issues Faced by Nonprofits and How a 501(c)(3) Attorney Can Help 

Nonprofit organizations like yours play a significant role in our communities and globally, working to address important causes and provide invaluable services to people. Yet, they often face unique legal challenges that require careful handling. Legal troubles can be costly and disruptive, diverting resources away from your impactful mission. 

In this blog, we’ll highlight some of the most common legal issues nonprofits encounter and explain how a 501(c)(3) attorney and legal support can help your organization resolve these challenges. With the right support from attorneys, such as those at Chisholm Law, you can ensure your organization remains compliant and focused on its important goals. 

Securing and Maintaining Tax-Exempt Status 

Achieving 501(c)(3) status is important for nonprofits as it allows organizations to receive tax-deductible donations and strengthens public confidence in charities. This nonprofit designation helps increase fundraising opportunities and establishes credibility with donors and grant-makers. 

The application for 501(c)(3) status involves a detailed process, including preparing necessary documentation and complying with IRS regulations. Maintaining this status requires ongoing funding as well as adhering to reporting requirements and other regulatory standards. 

A 501(c)(3) attorney can assist throughout this process, helping to ensure that your application is complete and accurate. They provide guidance on meeting IRS requirements for nonprofit organizations, filing, and staying compliant with regulations, allowing you to focus on your organization’s mission. 

Board Governance 

Board members of all nonprofit and tax-exempt organizations have significant legal responsibilities and fiduciary duties. They must act in the best interest of the organization, ensuring they make transparent decisions and manage resources wisely. Their roles involve overseeing financial matters, strategic planning, and compliance with laws and regulations.

Common issues of concern that can arise include conflicts of interest and self-dealing, where board members might benefit personally from decisions made on behalf of public charities. Addressing these concerns is important for maintaining trust and ensuring ethical practices within the organization. 

A 501(c)(3) attorney or law firm can assist in setting up effective governance practices. They help draft policies and procedures that guide board activities, address potential conflicts, and ensure compliance with legal requirements. Their support helps create a strong foundation for your organization’s operations and leadership. 

Fundraising and Donor Compliance 

Fundraising activities for nonprofits are subject to various legal regulations designed to ensure transparency and protect donors. These regulations cover aspects such as solicitation practices and how you handle donations. 

Nonprofits must navigate restrictions on solicitation, which can vary by state and locality, as well as maintain accurate records of donations and fundraising activities. Proper record-keeping is essential for reporting purposes and for demonstrating accountability to both regulators and donors. 

A 501(c)(3) attorney can assist with:

• Understanding and adhering to these regulations
• Providing guidance on compliance with solicitation rules
• Helping set up systems for accurate recordkeeping
• Applying to legally raise money in various states.

Their support helps safeguard your organization from potential legal issues, allowing you to focus on your fundraising efforts and mission. 

Employment Law 

Nonprofits must adhere to labor laws just like any other firm, business, or organization. These regulations govern various aspects of employment, including how employees are hired, paid, and managed. Common issues for nonprofits include making sure that they are following IRS guidelines as it relates to how to pay their employees and ensuring that their compensation is reasonable.  

A 501(c)(3) attorney can offer your nonprofit valuable assistance in understanding IRS regulations for reasonable compensation for employees. They help your organization’s practices align with legal requirements, and provide guidance on maintaining compliance with IRS requirements. Their knowledge helps reduce the risk of legal challenges and supports a well-managed employment framework.

Compliance with Other Regulations 

Nonprofits and private foundations must also adhere to various other legal requirements beyond the basics of tax and employment law. These include protecting intellectual property and ensuring that federal trademarks are registered for the key assets of the organization, including its name, logo, slogan, and names of signature programs are essential for safeguarding the organization’s interests. 

A 501(c)(3) attorney can offer comprehensive support to nonprofit clients in these areas, acting as a general counsel. They help ensure that your organization’s operations comply with all relevant regulations, including those related to intellectual property. 

The Benefits of Working with a 501(c)(3) Attorney 

Choosing to work with a 501(c)(3) attorney brings several advantages to your nonprofit organization. Their knowledge and experience in nonprofit law can make a significant difference in managing your legal responsibilities effectively. Here’s how choosing a 501(c)(3) attorney can help streamline operations, mitigate risks, and allow you to focus on what truly matters: advancing your mission. 

• Proactive Approach: A 501(c)(3) attorney helps anticipate potential legal challenges and address them before they become problems – a forward-thinking approach that helps prevent issues from impacting your organization. 
• Understanding of Nonprofit Organizations: With a focus on nonprofit law, a 501(c)(3) attorney or team is familiar with your organization’s unique needs and challenges. This familiarity allows you to receive tailored advice and solutions. 
• Efficient Handling: Working with a 501(c)(3) attorney can streamline the management of legal matters, helping you resolve issues quickly and effectively while saving you time and resources. 
• Managing Risks: They assist in identifying and mitigating legal and financial risks, protecting 501(c)(3) organizations, nonprofits, or business leagues from potential setbacks, and ensuring compliance with relevant regulations. 
• Confidence in Your Mission: By handling complex legal matters, a 501(c)(3) attorney allows you to concentrate on your nonprofit organization’s goals and activities and not on paperwork, giving you peace of mind that your legal issues are under control. 

A strong legal foundation contributes to your nonprofit organization’s success and stability. With the right guidance, you can confidently address legal matters, ensure compliance with regulations, and focus on your mission for social change.

At Chisholm Law, we’re dedicated to providing the support you need to help your organization thrive. We can assist your tax-exempt organizations navigate the legal landscape and achieve your goals. 

Contact Chisholm Law for Dedicated 501(c)(3) Attorneys for Tax-Exempt Organizations 

Having reliable and comprehensive legal services and support is key for nonprofits to manage their responsibilities and avoid legal issues. From maintaining compliance with regulations to handling specific legal matters, the right guidance and legal services ensure your organization operates smoothly and stays focused on its goals. 

Chisholm Law has a proven track record of success and is ready to assist and advise you with your nonprofit’s legal needs. With the tailored support of our nonprofit attorneys, you can handle various challenges and stay on track. 

To explore how we as nonprofit lawyers can assist your organization and provide the support you need, contact Chisholm Law for a free consultation now. Let us help you manage your legal affairs so you can concentrate on advancing your mission!

*Past results do not determine future outcomes