Mendrygal Law, PLLC advises clients on a broad range of structural, operating, and taxation matters. Representative matters and examples of our attorneys’ experience include:
- A large family foundation sought our guidance as the founders phased out day-to-day involvement and transitioned management to the second and third generations. We navigated family dynamics in the context of governance and donor control, revising the Bylaws and policies, drafting donor intent and legacy statements, and revising grant procedures to modernize and implement the new governance structure and best practices. Our work allowed the client to successfully prioritize and cement the intent of the founders for future generations while also incorporating flexibility as the family evolves in size and geography.
- A local private bank engaged us to advise regarding joint investments between a family foundation and other family members, including family trusts. We created a practical application notwithstanding minimal IRS guidance on this issue.
- A family with a recent wealth event sought our assistance to form a private foundation and structure grant and scholarship programs and procedures. In addition to forming the foundation, obtaining federal and state exempt status, and establishing grant and scholarship procedures, we established mechanisms to ensure the founders’ wishes would be respected as the foundation continues over generations and also addressed complex issues around the foundation’s holdings in the family business.
- A national corporation sought our assistance aggregating philanthropic giving. We established a corporate foundation, advised regarding financial and in-kind support from the corporation, and created grant-making policies and procedures for domestic and international grant-making, including drafting sample grant agreements.
- An international employer engaged us to establish a 501(c)(3) organization to provide crisis and disaster relief to its employees and independent contractors. We structured and incorporated the entity and obtained exempt status, including providing parameters for the crisis relief program domestically and internationally.
Public Charities/Operating Charities
- A local organization sought our guidance regarding exemption options. We explored various structures to pursue their charitable and non-charitable activities, including affiliated 501(c)(3) and (c)(6) organizations, fiscal sponsorship, and supporting organizations.
- An arts organization facing revocation of exempt status retained us to advise regarding potential solutions. We advised regarding the reinstatement process and proposed an interim solution involving a temporary fiscal sponsorship.
- An amateur sports league engaged us to effect the acquisition of another league. We worked closely with M&A specialists to facilitate the acquisition, advising on the unique issues related to tax-exempt status.
- A student housing corporation requested our guidance regarding proper approval of the distribution of its assets and potential dissolution. We advised over the course of two years to negotiate and authorize the transactions and transition of operations, including working with the affiliated organization that acquired the assets. In the process, we worked closely with bond counsel and the bond trustee to satisfy existing 501(c)(3) tax exempt bonds on the property.
- A school-related organization with volunteer-led activities at multiple school campuses requested our review of its governing documents and structure. We evaluated their activities, revised their governance structure, and implemented policies to reduce operational risk.
- A for-profit school seeking 501(c)(3) status retained us to advise on the transition and exemption application process. We worked closely with the client to structure the transaction and appropriately disclose and address all relevant issues to the IRS, ultimately obtaining recognition with minimal scrutiny.
- An organization requested our review and analysis of the impact of profit-generating activities such as real and personal property rentals. We advised on federal tax impact as well as the potential impact on the state property tax exemption.
- A local organization requested our comprehensive review of structure, activities, governance, and state and federal compliance issues with respect to a group of affiliated 501(c)(3) and 501(c)(6) organizations. We assessed areas of risk and revised the governance and leadership structure, drafted organizational documents and policies, advised regarding appropriate separation between the affiliates, and spearheaded a 3-year restructuring project, resulting in the elimination of two entities and streamlining of operations, financials, and governance.
- A group of affiliates sought our guidance regarding the transfer of assets between 501(c)(3) and 501(c)(6) organizations. We addressed federal and state regulatory issues and worked with M&A counsel to draft the transfer documents, as well as with tax preparers to address disclosure on federal information returns.
- Regional charity sought our guidance regarding permissible relationship with a for-profit corporation and appropriate disclosures in the Form 1023 exemption application. We worked closely with the client to structure the relationship to mitigate risk and coordinated with tax preparers to prepare the appropriate disclosure.
- A private school engaged us to review the interactions between the school, endowment, and property holding company. Over several phases, we revised organizational documents and restructured the Boards of Directors, addressing issues of federal tax-exempt status and appropriate separation between entities. In phase two, we advised regarding the embarkment of a significant construction project, including drafting resolutions and MOUs defining the interactions of the organizations.
Endowments/Donor Intent/Restricted Assets
- A regional organization requested our analysis of donor restrictions on its assets. We engaged in a detailed review of historical documents dating back to the early 1900’s, advised on the applicable donor restrictions and the potential vulnerability to claimants, and worked closely with leadership and the organization’s audit firm to ensure proper classification of the assets for all public and internal purposes.
- A church endowment requested our analysis of donor intent restrictions and legal options related to the expenditure or lending of endowment funds.
- An educational institution engaged us to perform a review to clarify rules and procedures related to a series of historical endowment funds held in myriad entities. We worked closely to clarify the applicable rules, including advising around UPMIFA and its application and assisting to draft new investment, spending, and distribution polices.
- A national alumni organization retained us to establish a new endowment fund in preparation for launching a fundraising campaign. We established an initial fund agreement, which included investment and spending parameters, while keeping procedures simple to allow for flexibility and growth.
- A religious institution requested our review of its endowment programs and documents, including its gift acceptance policy.
Donor Advised Funds/Sponsoring Organizations
- A donor advised fund sponsor required an analysis and interpretation of its current and legacy fund agreements. As the result of a detailed compliance review, dozens of funds were evaluated in light of the sponsor’s current business practices, treatment under GAAP rules, and the sponsor’s future business needs. The project resulted in substantial efficiency and cost improvements for the sponsor.
- A donor advised fund sponsor requested guidance regarding gift acceptance issues related to illiquid gifts.
- An organization operating pursuant to a fiscal sponsorship relationship with a community foundation sought advice regarding seeking exemption and operating independently. We worked closely with leadership and community foundation staff to address the terms and logistics of the separation.
- A community foundation requested advice relating to its fiscal sponsorship funds on a range of topics including the application of donor advised fund rules, intellectual property issues, commercial liability, and fundraising issues for activities carried out by volunteers and independent contractors in support of the fund’s charitable purposes.
- An existing private foundation sought assistance with the formation of a donor advised fund for purposes of ensuring it could meet its required minimum distributions under the Code. We negotiated revisions to the fund agreement and assisted in establishing the fund.
- The donor of an existing fund sought the revision of certain terms. We worked closely with the donor, the sponsoring organization, and the charitable beneficiary to revise terms and update the agreement.
- Internal training was provided for non-legal staff at a donor advised fund sponsor. The training sessions covered legal concepts that related to day-to-day interactions with donors, including federal law applicable to donor advised funds, endowments, UPMIFA, and donor intent.
- A donor sought our guidance regarding the best method to establish specific charitable objectives. After discussing myriad options, we advised proceeding with a donor advised fund instead of a private foundation.
- A nonprofit seeking a federal tax exemption presented an immediate need to accept a substantial gift from a major donor. We identified a willing fiscal sponsor and submitted an extensive fiscal sponsorship application to the sponsoring organization. The application was successful, and the major gift received.
- A community foundation required advice regarding a loan from an endowed designated fund to provide the fund beneficiary crucial liquidity during a period of reorganization.
- A family sought our guidance dividing a supporting organization into two operational entities. We advised regarding formation and exemption issues, established the spin-off entity, negotiated and revised the separation agreement, and assisted the new entity in getting up and running.
- A group of affiliated organizations engaged us to advise regarding a 501(c)(3) organization that no longer qualified as a public charity. We explored options and advised regarding the process to reclassify as a supporting organization with respect to an affiliated 501(c)(6).
- A scholarship foundation engaged us to pursue restructure of its two supporting endowment funds. In advising regarding 4945(g) and the impact of private foundation grants to other private foundations, we determined that private operating foundation status was viable, resulting in streamlined operations and reporting.
- A new entity requested our guidance regarding qualification and operation as a private operating foundation. We advised regarding both initial and continued qualification.
Churches and Religious Organizations
- An existing church engaged us to incorporate and formalize its structure. We drafted corporate and ecclesiastical documents and policies, and advised regarding why a church might apply to the IRS for affirmative recognition.
- A religious retreat requested our advice regarding qualification as a 501(c)(3). We advised regarding the proper structure to obtain federal exempt status, navigating an area of scrutiny by the IRS, and assisted with analysis of the contribution of significant real property.
- A trade association and series of affiliates requested our review of governance and operations, and we advised regarding appropriate separation of entities and protection of exempt status.
- A division of an existing trade association required our support in spinning off as a separate and distinct 501(c)(6) organization.
- An affiliated 501(c)(6) professional association and its related 501(c)(3) charitable foundation requested our guidance regarding the permissible relationship and transactions between entities. We advised regarding employee and space sharing and support of the association’s charitable and educational endeavors.
- A charitable and educational foundation sought our guidance regarding the build-out of its office space, to be leased to related and affiliated exempt organizations, including a trade association. We advised regarding appropriate use of the foundation’s sales tax exemption to purchase leasehold improvements for shared space, the impact of that analysis on construction contracts, and potential unrelated business taxable income or “UBTI” that could result.