NONPROFIT TAX MATTERS

Nixon Peabody provides comprehensive tax advice to private foundations and public charity grantmakers, helping to navigate the labyrinth of tax regulations that apply to either. Our constant contact with both grant-makers and grant-seekers assures familiarity with the most recent developments. This preventative approach to organizational management is sound legally, operationally, and financially, with an emphasis on strong structures providing predictable and desirable outcomes.

We advise on issues of unrelated business income, such as how to avoid it and/or minimize its impact, and defend transactions on audit. Several of our attorneys have lectured widely on these topics at national seminars.

We have successfully resolved tax issues surrounding:

• Tax exempt status
• Public charity vs. private foundation status
• Private benefit
• Political activity
• Lobbying
• The use of subsidiaries and joint ventures
• Excess benefits excise taxes (IRC Sec. 4958)
• Private foundation excise taxes (IRC Chap. 42)

Representative experience

• We have worked with private foundation clients to structure investments abroad and avoid the imposition of U.S. taxes. The firm successfully prosecuted a number of private letter rulings before the Internal Revenue Service National Office to approve one of these tax-saving approaches.
• After a number of national law firms and accounting firms had failed, we were asked to contest the revocation of the exemption of a multi-million dollar affiliate of a nationally-known health care system. Through difficult negotiations and inventive planning, we were able to structure a solution that met the requirements of the IRS and maintained exempt status.
• We engineered a novel relationship between a corporate funder and some local foundations to allow for enhanced giving in pursuit of corporate philanthropy. The arrangement has been funded at a level of over $70 million dollars over the past five years. The firm not only provided the funding plan, but assisted in the selection of the participating foundations.