Why Your Organization Should Consult a Nonprofit Attorney Before Launching New Programs

Launching new programs can be an exciting opportunity for nonprofit organizations to expand their impact and innovatively serve their members and communities. However, with this expansion comes a range of legal considerations that you must address to ensure compliance with the law and the long-term success of your nonprofit. 

Navigating these requirements, from upholding tax-exempt status to minimizing potential liabilities, can be a complex process. Consulting a nonprofit attorney and seeking legal services early in the planning stages can clarify these obligations and provide the direction necessary to steer clear of issues that could impact your organization’s operations. 

In this article, we’ll discuss why seeking guidance from a nonprofit attorney is a practical and proactive approach when preparing to launch new initiatives.

Understanding the Legal Landscape of Nonprofit Programs 

Nonprofits, including public charities and private foundations, must adhere to a unique set of state and federal laws and regulations governing their operations to maintain their tax-exempt status, ensure transparency, and protect public trust. Each new program or service introduced by a nonprofit organization must comply with these laws, which often include reporting obligations, restrictions on political activities, and adherence to charitable purpose guidelines. 

Law firms with experience in nonprofit law can offer valuable insight into these legal obligations, helping ensure your org remains compliant and prevents unintended breaches. For example, they can help you assess whether a new program aligns with your organization’s stated mission, a requirement important for maintaining tax-exempt status under IRS regulations. Attorneys can also offer guidance on issues like intellectual property rights, which are often important to successful program implementation. 

Without this legal guidance, your nonprofit risks encountering common pitfalls, such as unintentional lobbying, misallocation of funds, or issues with grant compliance. These challenges, if left unchecked, can result in penalties, loss of tax-exempt status, or reputational harm. 

Consulting with a nonprofit attorney early in your program development process can provide you with the support needed to navigate these complex regulations and avoid costly missteps.

 

Ensuring Compliance with IRS Regulations 

Each new program your nonprofit launches brings additional requirements to ensure that activities remain within IRS boundaries. Even well-intentioned initiatives can unintentionally jeopardize tax-exempt status if not carefully planned and structured according to IRS guidelines. And maintaining 501(c)(3) status when launching new programs or services is paramount for all nonprofits. 

New activities, especially those that diverge from an organization’s core mission, can raise questions about whether the nonprofit is primarily pursuing charitable goals. If a program generates income, competes with for-profit businesses, or strays into unrelated areas, it could expose your organization to scrutiny and potential tax liabilities. The IRS also closely monitors whether funds are being used exclusively for tax-exempt purposes, a factor that nonprofit leaders need to keep in mind when planning each new initiative. 

If your organization or program engages in activities that don’t align with IRS guidelines, it could jeopardize your tax-exempt status and credibility with donors. This could result in your program losing the nonprofit incorporation ability to receive tax-deductible donations, important for fundraising and raising money for your program or mission.

Nonprofit lawyers can bring valuable oversight to this process by reviewing proposed programs and activities through IRS standards. They can identify if you’re running the risk of “unrelated business income,” guide the structuring of programs to align with the organization’s exempt purpose, and advise on maintaining transparent records that demonstrate compliance. 

Taking this proactive approach can protect your organization from unintentional violations and support long-term compliance with IRS expectations, preserving your tax-exempt status and public trust. 

Structuring Programs to Minimize Liability 

Launching new programs often involves a range of contractual relationships and operational changes that can introduce liability risks for a nonprofit. Whether forming new partnerships, entering contracts with vendors, or bringing on staff, each step requires careful legal consideration to protect your organization’s interests. Without proper safeguards, your nonprofit may face issues related to contract disputes, misunderstandings with collaborators, or employment-related challenges. 

Say your organization wants to expand services to offer one-on-one mentoring sessions between adult volunteers and minors. Nonprofit lawyers can help structure the program to minimize liability related to participant safety and volunteer conduct. While a program like this can provide great benefits to the community, it also introduces risks related to child protection, privacy, and volunteer accountability. An attorney can help mitigate these risks by: 

• Drafting Volunteer Agreements: Create comprehensive volunteer agreements that outline conduct expectations, confidentiality rules, waivers, disclaimers, etc.  
• Implementing Screening Protocols: Set up rigorous screening processes, such as background checks and reference checks for all volunteers who work with minors to help reduce risks. 
• Creating Clear Policies and Training Materials: Establish clear policies on child safety, mandatory reporting, and appropriate interaction boundaries, along with training materials to reinforce these rules with volunteers. 

Ensuring clear terms and conditions are in place for partnerships or collaborations like these helps reduce risks. If your nonprofit is working with other organizations to raise funds or involve volunteers in new projects, outlining the expectations and responsibilities of everyone involved is key. A nonprofit attorney can offer legal support to protect your organization and ensure everything is handled correctly.

Protecting Intellectual Property and Brand 

Launching new programs often involves creating unique program names, logos, and educational materials—assets that contribute to your nonprofit’s identity and differentiate its services. Protecting these forms of intellectual property is essential to prevent unauthorized use and ensure your organization retains exclusive rights to its brand elements. It also helps build trust and recognition with donors, clients, and community members that will pay dividends as your nonprofit grows. 

A nonprofit attorney who has experience with trademark registrations and copyright issues can help you safeguard your organization’s brand as you develop new programs and expand services. They can provide critical support by assisting with trademark registrations for program names and logos, as well as addressing copyright issues for original content, such as training materials, educational publications, and online resources. 

Registering trademarks with the U.S. Patent and Trademark Office (USPTO) gives your organization exclusive rights to use these assets, protecting your nonprofit’s identity and its ability to build recognition and trust with the community it serves. In cases where your nonprofit creates proprietary educational content, a nonprofit lawyer can also guide copyright registration to secure ownership and prevent unauthorized reproduction. 

This protection enhances your credibility and reinforces your mission as a nonprofit organization. Additionally, clear communication about your brand’s identity can help in fundraising efforts, as donors are more likely to support organizations and public charities that demonstrate strong governance and accountability in their practices. 

Securing Funding and Grant Compliance

 

Funding is a key factor in the success of any nonprofit incorporation or any new nonprofit program. Whether your organization raises money through grants, donations, or fundraising events, you need to understand the legal obligations tied to these funding sources and practices. 

Grants, in particular, play an important role in supporting nonprofit initiatives but come with specific terms and conditions that organizations must strictly follow. These requirements might include detailed financial reporting, designated spending categories, and program outcome metrics. Unfortunately, failure to adhere to these conditions can jeopardize your organization’s reputation and potentially disqualify it from future funding opportunities. 

A nonprofit attorney can be a valuable asset when it comes to grant compliance, funding, and reporting. They can carefully review grant agreements and help your organization understand each requirement, ensuring your nonprofit can meet its obligations and avoid compliance issues. For instance, an attorney can clarify allowable expenses under a grant, establish procedures for accurate financial reporting, and advise on documentation practices that satisfy grantor expectations. 

Noncompliance with grant terms—whether intentional or accidental—can lead to the obligation to repay funds, damage to the organization’s credibility, and difficulties in securing future grants. With the support of a nonprofit attorney, your org can confidently navigate grant compliance, allowing you to maximize funding opportunities while reducing the risk of negative impacts on financial stability and reputation.

In addition to being eligible for grants, nonprofits, and charities that engage their donors in fundraising campaigns to pay for new programs must also be aware of state and federal regulations related to fundraising activities. A nonprofit attorney can help ensure your nonprofit and tax-exempt organizations’ fundraising efforts meet all legal requirements, including state fundraising laws, preventing issues with state regulators or the IRS. 

See How Chisholm Law Can Benefit Your Nonprofit 

Launching new programs can be an exciting step forward for any nonprofit organization, but they also introduce new legal complexities. From navigating IRS regulations and minimizing liability to ensuring grant compliance and protecting intellectual property, consulting a nonprofit attorney before launching new programs can be a pivotal step in safeguarding your organization’s mission and resources. 

With the right legal guidance, your nonprofit’s leadership can structure programs for sustainable growth, maintain compliance, and build a strong foundation for long-term success. Chisholm Law is here to provide the focused support and insight your organization needs to move forward with confidence. 

If your nonprofit is preparing to launch a new initiative, reach out to Chisholm Law today to schedule a consultation with an experienced nonprofit attorney. Let’s work together to ensure that your programs are legally sound and positioned to thrive.

*Past results do not determine future outcomes