The nonprofit sector, integral to the US civic infrastructure, has taken substantial financial hits recently. Scaled-back donations have left these institutions, crucial for community building and service delivery, vulnerable. It appears that Americans are donating less of their incomes to charity than ever over the last three decades. The ongoing trend suggests a significant contraction in charitable giving according to Business Insider.
However, tax lawyers can provide much-needed support to nonprofits. Their specific skills are critical to organizations that rely on tax structures to encourage donations and deliver on their missions. From assisting with applying for tax-exempt statuses to helping navigate the labyrinthine rules for continued qualification for the same, their expertise proved invaluable.
One key area where tax attorneys can ease the burden of nonprofit organizations is through offering their consultations on a pro bono basis. This can encompass advice on bylaws, governance structures, and the necessary corporate formalities to align with tax-exempt regulations.
Additionally, tax attorneys can guide nonprofit organizations on understanding the tax implications of various fundraising activities. This ranges from organizing events to writing grant applications, as well as demystifying limits and reporting requirements tied to political lobbying and advocacy activities.
The American Bar Association offers a wide range of nonprofit programs including disaster relief, elderly, and service members for legal professionals looking to explore pro bono opportunities that align with their values, interests, and beliefs. An alternative first step for tax attorneys could be visiting local nonprofits, understanding their challenges, and communicating how their tax expertise could be utilized.
A notable instance is the involvement of the author with the Gary Sinise Foundation. Based on personal experience, the author advocates that providing pro bono counseling and serving on the board of directors of nonprofits not only fulfills a professional duty as described in Rule 6.1 of the American Bar Association Model Rules of Professional Conduct but also provides a sense of immense fulfillment and personal satisfaction.
This rule calls for every lawyer to aim to offer at least 50 hours of pro bono public legal services annually. Some states even require lawyers to keep track of these pro bono hours. In New York, law students must complete 50 hours of pro bono service as a prerequisite to receive a law license.
Given the vast number of registered nonprofits – over 1.8 million according to the National Center for Charitable Statistics Urban Institute and Candid.org – the opportunities for tax professionals to make a difference are boundless. Pro bono work not only aids nonprofits towards financial stability but also enables them to serve the populations most in need. Thus, fulfilling this professional and moral obligation provides a sense of purpose that far outweighs the time and effort invested.
Finally, the legal professionals, especially those specializing in tax law, should heed the motto of Gary Sinise: “While we can never do enough to show gratitude to our nation’s defenders, we can always do a little more.” They are uniquely positioned to aid nonprofits and reduce the effects of declining donations by offering their expertise.
Read more about this initiative here.