Many people want to share both their wealth and talents with their community. Porzio assists those endeavors by helping clients create public charities and private foundations. We also represent charitable entities. The tax code supports and favors charitable endeavors, but the rules and regulations are complex and precise. Our attorneys and staff draw on our experience so you can concentrate on helping your community or your continued qualification as a tax-favored entity.
Public charities range from multi-national non-profits, to local individuals banding together to promote a goal or support a group. In order for an organization to accept donations that qualify for a tax deduction to the donor, the entity must have applied for and received a “letter of exemption” from the IRS. These non-profits may additionally be tax-exempt entities in their state of formation.
Most anyone can form a charity, so long as it is organized and operated exclusively to benefit religious, charitable, scientific, testing for public safety, literary, or educational purposes; to foster national or international amateur sports competition; to promote the arts; for the prevention of cruelty to children or animals; or as a supporting "friends of" or booster club organization.
A public charity is commonly known as a 501(c)(3) organization, referring to the section of the Internal Revenue Code granting tax-exempt status for charitable goals. To be granted this status, a group must apply to the IRS via a Form 1023 application. To maintain this status, the entity must file a Form 990 each year.
Unfortunately, many organizations excel at achieving their charitable goals, but fall short in compliance. Porzio actively supports local and national charitable organizations in both their formation and compliance by establishing the charity with the state, filing an application for exempt status with the IRS, communicating with the IRS and the state to reach the goal of tax-exempt status, and then assisting the organization in maintaining that status in its annual operations.
A private foundation receives most of its support from a single family or corporation. To encourage philanthropy, the government, through the tax code, offers significant incentives for wealthy families and entities to divert their wealth to their community. These provisions of the tax code can be harnessed to achieve significant income tax and estate tax savings.
Porzio has a total client approach – our attorneys look beyond the project at hand to see how the issues intersect each client’s overall goals and needs. This is especially prevalent in establishing and maintaining a private foundation. Creating the charity is not the end of the engagement. Instead, we work with our clients year after year to maximize the investment they have made in the community.