There are over 1.5 million non-profit organizations registered in the U.S.
If you’re planning to start a non-profit or are already past the startup phase, thumbs up. Running a non-profit organization enables you to pursue a certain cause and make a difference in the society.
But as you’ll soon realize (if you haven’t already), non-profit organizations are heavily regulated. To navigate these regulations, a lawyer should be on your payroll.
In detail, here are 4 reasons you need a non-profit lawyer, especially if you’re based in Dallas, TX.
Understand the Non-Profit Tax Code
Not all non-profits are automatically exempted from federal and state taxes. This is a reason you might need a non-profit lawyer; to help you understand the relevant federal, state and local tax laws.
If your goal is to establish a tax-exempt non-profit, your lawyer will inform you about the steps you need to take to reach this goal. If you’re already a tax-paying non-profit looking to be exempt, the lawyer will help you apply for the right category of exemption. Note that is also possible to set up your non-profit as corporation and still be eligible for a federal tax exemption. You can also set up a non-profit as an endowment or trust. There are many options that are often non even considered due to lack of information.
A non-profit lawyer will also educate you on how to handle charitable contributions.
Ensure Compliance with Employment Laws
Are you hiring people in accordance with the applicable employment laws?
There are employment laws, such as anti-discrimination and wage laws all non-profits must follow. There are others that don’t apply to non-profits with certain characteristics.
Under Texas law, for instance, a tax-exempt non-profit with less than four employers is exempt from liability when facing an unemployment insurance claim.
What about hiring volunteers?
Many non-profits rely on volunteers as a source of free labor. However, you can only legally accept volunteer work when the volunteering is not coerced. If you require people in the community to volunteer, you could be incurring liability.
A non-profit lawyer will ensure the organization handles employment activities legally. In fact, we also specialize in nonprofit management, with a certificate in nonprofit management specifically addressing issues such as volunteer management.
Draft Vendor and Supplier Contracts
Non-profits often enter into contractual agreements with vendors and suppliers.
You need a lawyer to help you draft contracts that’ll define your relationship with these businesses. These contracts will also prevent the organization from fraud.
Without a contract, for instance, nothing stops a rogue supplier from delivering sub-standard goods. However, with a contract that stipulates the quality of goods, the supplier must meet your expectations.
Board Members & Corporate Governance
Is your organization keeping proper documentation of Board meetings? Are all of your projects and actions being approved and authorized appropriately by the board? Are your board members qualified and have you made sure they have no conflicts of interest with the organization? These are the types of steps when done properly can avoid future litigation. A nonprofit attorney can help you set up policies for running your organization that not only prevent litigation, but set up the organization to run smoothly and successful as it grows.
Handle Litigation Matters
Even when you are pursuing a noble cause, there is still a looming threat of lawsuits. Perhaps, a former employee is suing the organization for wrongful dismissal or a certain community project violates Dallas zoning regulations. Maybe disgruntled board members decide to sue the organization.
Regardless of the issue, a qualified nonprofit lawyer will handle the litigation matters the organization faces. Where necessary, they can seek out of court settlements or mediations. If a matter goes to court, you can count on the lawyer to defend the organization’s interests. In fact, we always recommend our clients get Directors and Officers insurance, general liability insurance and other types of policies for their nonprofit. These policies should contain coverage for a variety of lawsuits and can save organizations an enormous amount of money.
A Non-Profit Lawyer Will Help Propel Your Organization to Success
To run a non-profit organization, you need to understand the applicable tax laws and adhere to employment laws. You also must know how to maintain your organization’s tax-exempt status. There are other important tasks you need to keep tabs on, such as managing donor relations, managing volunteers, and practicing good corporate governance.
This can be an overwhelming task. However, with a competent non-profit lawyer on your team, you don’t have to worry about running into legal trouble.
At LaSusa and Deb, we help Dallas non-profits navigate the various special legal requirements they face. Whether you are at the formation stage or need help with day-to-day governance, we are here to help you.
Schedule a phone consultation today.