Public Interest & Nonprofit Organizations
Overview
Hutchison & Steffen provides legal services to nonprofits, charitable organizations, and churches because the Firm is committed to serving its communities. Community-based nonprofits, charitable organizations, and churches have an important role to play in delivering education, serving the needy, and protecting the vulnerable.
The Firm provides a range of services to public interest groups and nonprofit organizations, including creation and legal establishment, direct service and legal advice, litigation support, crisis management, proactively keeping entities in compliance with government regulations, and pursuing legal action when necessary.
Hutchison & Steffen is a full-service, AV-rated law firm serving Nevada and the Southwest. The Firm has practiced in the State since 1996 and has grown to nearly 60 attorneys. Its nonprofit attorneys advise organizations statewide from offices in Las Vegas and Reno.
To discuss forming an organization, a tax exemption question, or a board matter with a Las Vegas nonprofit lawyer at the Firm, call 702.385.2500 in Las Vegas or 775.853.8746 in Reno, or contact Hutchison & Steffen online.
Understanding The Practice
What Is Nonprofit Law?
Nonprofit law covers the formation, tax status, governance, and disputes of organizations that exist to serve a mission rather than to earn a profit for owners. A nonprofit attorney works across state and federal law at once: Nevada law creates the organization and governs its fundraising and state tax treatment, and federal tax law decides whether it is exempt. Filing articles with the Nevada Secretary of State creates a nonprofit corporation, but that filing confers no federal tax exemption and makes no donation deductible.
On the state side, a Nevada nonprofit corporation is organized under NRS Chapter 82. Its articles must state that the corporation is a nonprofit corporation under NRS 82.086, and NRS 82.196 requires at least one director. NRS 82.193 requires a registered agent and applies the corporate list rules, so a list of officers and directors is filed with the articles and again by the last day of the anniversary month each year, with a $50 fee. A Chapter 82 corporation is not treated as a business for the state business license under NRS 76.020.
Matters of this kind are handled by attorneys including C. Michael Rasmussen, whose practice includes public interest and nonprofit organizations, for clients in Las Vegas, Henderson, Summerlin, North Las Vegas, Reno, Sparks, Carson City, and statewide. Members of the Firm also serve local charities, nonprofits, and churches as general counsel, board members, and volunteers. Partner Joseph R. Ganley has served on the boards of SafeNest, which supports people experiencing domestic violence in Southern Nevada, and Green Our Planet, a conservation nonprofit, and our article on 30 years of community involvement describes more of that work.
On the federal side, exemption under section 501(c)(3) of the Internal Revenue Code requires an organization to be organized and operated exclusively for exempt purposes, with none of its earnings inuring to any private shareholder or individual. Organizations apply on Form 1023, or on the shorter Form 1023-EZ if they pass the IRS eligibility worksheet, which caps gross receipts at $50,000 and total assets at $250,000 and excludes churches, schools, hospitals, and organizations formed as limited liability companies, among others. An application filed within 27 months after the end of the month in which the organization was legally formed, once approved, makes exemption effective from the date of formation. Filed later, exemption generally runs only from the filing date.
Churches follow a different federal path. The IRS considers churches that meet the requirements of section 501(c)(3), including synagogues, temples, and mosques, to be tax-exempt without filing Form 1023, and churches are excepted from the annual Form 990 series return. Nevada's charitable solicitation chapter, NRS Chapter 82A, excludes an organization established for and serving bona fide religious purposes from its definition of a charitable organization. A church may still file Form 1023 to obtain a determination letter, which gives donors and grantmakers written confirmation of its exempt status.
Employment questions for nonprofits are handled with our Employment & Labor Law attorneys, property matters with our Real Estate Law attorneys, and IRS disputes with our Tax Audits & Litigation attorneys. Organizations whose work touches elections or ballot measures work with our Election, Campaign, & Political Law attorneys.
How We Help Nonprofits and Public Interest Organizations
Nonprofit Legal Services in Nevada
Nonprofit Formation & Articles of Incorporation
The purpose language in the articles determines whether the IRS will find the organization organized exclusively for exempt purposes, which is why an attorney for nonprofit formation should review it before anything is filed. Correcting it later requires an amendment and a second filing. The Firm's nonprofit attorneys prepare the articles, bylaws, and initial list under NRS Chapter 82 and set up the board structure the organization will use.
Federal Tax Exemption & IRS Filings
The firm prepares and file applications for recognition of exemption on Form 1023 and Form 1023-EZ and respond to IRS questions during review. Filing within 27 months after the end of the month of formation makes an approved exemption effective from the date of formation, which reaches back to cover donations received before the application was filed. Organizations other than private foundations with gross receipts normally of $5,000 or less are not required to apply.
Churches & Religious Organizations
A church that meets the requirements of section 501(c)(3) does not need Form 1023 to be exempt, but it still needs governing documents and clear authority over property and staff. A church attorney at the Firm advises congregations and ministries on formation, property acquisitions, employment, and internal disputes. For Nevada's sales tax exemption under NRS 372.326, an organization qualifies as religious only if its sole or primary purpose is operating a church, synagogue, or other place of religious worship where services are regularly conducted, or it is an auxiliary or affiliate of one. Some older churches hold property through a corporation sole under NRS Chapter 84, a form that, with a narrow exception, cannot be newly created on or after June 9, 2009, under NRS 84.0065.
Board Governance & Director Protection
NRS 82.221 bars an action against a director or officer for failing to exercise due care in managing the corporation unless the conduct involves intentional misconduct, fraud, or a knowing violation of the law. The articles may impose greater liability, however, and NRS 82.536 allows the Attorney General to examine a public benefit or charitable trust corporation and sue to correct a departure from its purposes. Federally, an organization manager may owe an excise tax on an excess benefit transaction. The firm drafts bylaws and conflict of interest policies and advise boards on minutes and voting.
State & Federal Compliance
A charitable organization must register with the Secretary of State under NRS 82A.100 before soliciting in Nevada, and one that files an annual list submits its registration information and financial report with that list. Only narrow categories, such as an organization soliciting fewer than 15 people a year, may file an annual declaration of exemption under NRS 82A.110 instead. Most exempt organizations also file a Form 990 series return each year, and three consecutive missed filings revoke exemption automatically. A Nevada sales tax letter of exemption expires five years after issuance under NRS 372.348.
Litigation Support & Crisis Management
Nonprofit disputes involve former directors and members, vendors and landlords, employees, and government agencies. The Firm provides litigation support and crisis management when a dispute arises, and pursues legal action on an organization's behalf when necessary. Commercial disputes are handled with our Business Law & Commercial Litigation attorneys.
Choosing the Right Exemption
501(c)(3) and 501(c)(4) Organizations Compared
A 501(c)(3) organization can receive contributions that are generally tax-deductible, but it is absolutely prohibited from intervening in any candidate campaign and may lobby only as an insubstantial part of its activities. A 501(c)(4) social welfare organization may lobby as its primary activity and engage in some political activity, but contributions to it are generally not deductible as charitable contributions. The comparison below reflects IRS guidance as published at the time of writing and is a starting point, not advice for a specific organization.
| Factor | 501(c)(3) Charitable Organization | 501(c)(4) Social Welfare Organization |
|---|---|---|
| Core Requirement | Organized and operated exclusively for exempt purposes, with no earnings inuring to any private shareholder or individual | Operated primarily to further social welfare, with no earnings inuring to any private shareholder or individual |
| Donor Contributions | Generally deductible as charitable contributions | Generally not deductible as charitable contributions |
| Political Campaign Activity | Absolutely prohibited, directly or indirectly, although voter education and registration conducted in a nonpartisan manner are not treated as campaign activity | Permitted only so long as it is not the organization's primary activity, and political expenditures may be taxed under section 527(f) |
| Lobbying | Permitted only if it is not a substantial part of the organization's activities | Permitted where germane to the organization's purposes, and may be its primary activity |
| How Status Is Established or Reported | Application on Form 1023 or, if eligible, Form 1023-EZ, effective from formation if filed within 27 months after the end of the month of formation | Notice to the IRS on Form 8976 within 60 days after the organization is formed, with a penalty of $20 per day up to $5,000 for failing to file. A determination letter, if wanted, requires a separate application |
| Annual Reporting | Form 990 series. Form 990-N is available where gross receipts are normally $50,000 or less, but not to private foundations or most supporting organizations, and churches are excepted from filing | Form 990 series, with Form 990-N available where gross receipts are normally $50,000 or less |
| Consequence of Not Filing | Automatic revocation after three consecutive years without a required return or notice | Automatic revocation after three consecutive years without a required return or notice |
Protecting the Mission
When to Involve Nonprofit Counsel
Bring in a nonprofit attorney before the articles are filed. The founding documents determine whether the organization qualifies for the exemption its donors are relying on, and they cost less to draft correctly than to amend. Bylaws should be drafted at the same time, because they control how contested board votes are decided.
Calendar the federal exemption deadline from the day the articles are filed. An organization that applies more than 27 months after the end of its month of formation is generally exempt only from the filing date, which leaves donations received before then outside the exemption. Most charitable organizations must also register with the Secretary of State before their first solicitation in Nevada.
Involve counsel as well when leadership changes or a dispute surfaces. A departing executive director, a divided board, a donor questioning how a gift was used, or an inquiry from the Attorney General each carries more risk when the minutes are thin and the bylaws are out of date.
This page is educational and is not legal advice. Reading it does not create an attorney-client relationship with Hutchison & Steffen, and the statutes and IRS guidance cited reflect the law as published at the time of writing.
Common Questions
Frequently Asked Questions
Do I Need an Attorney to Start a Nonprofit in Nevada?
Nevada does not require an attorney to start a nonprofit, and the Secretary of State will accept articles of incorporation filed without counsel under NRS Chapter 82. A nonprofit attorney drafts the articles and bylaws so the IRS will recognize the organization as exempt. Counsel also files the exemption application within 27 months after the end of the month of formation, so that exemption runs from the start.
Does Incorporating as a Nonprofit in Nevada Make an Organization Tax-Exempt?
No. Filing articles with the Secretary of State creates a nonprofit corporation under state law, while federal tax exemption is a separate determination made by the IRS, usually on Form 1023 or Form 1023-EZ. Nevada sales tax exemption requires its own application to the Department of Taxation under NRS 372.348, and the resulting letter of exemption expires five years after it is issued unless renewed.
Does a Church Need to File for 501(c)(3) Status?
No, if the church meets the requirements of section 501(c)(3). The IRS considers such churches, including synagogues, temples, and mosques, tax-exempt without filing Form 1023, and churches are excepted from the annual Form 990 series return. A church may still file Form 1023 to obtain a determination letter, but it cannot use the shorter Form 1023-EZ.
What Annual Filings Does a Nevada Nonprofit Have?
A Nevada nonprofit corporation files a list of officers and directors with the Secretary of State by the last day of its anniversary month, with a $50 fee under NRS 82.193. A charitable organization that solicits contributions also files its charitable solicitation registration and financial report with that list under NRS 82A.100. At the federal level, most exempt organizations file a Form 990 series return, and an organization that fails to file a required return for three consecutive years loses its exemption automatically.
Can Nonprofit Board Members Be Held Personally Liable in Nevada?
Yes, in limited circumstances. NRS 82.221 bars an action against a director or officer for failing to exercise due care unless the conduct involves intentional misconduct, fraud, or a knowing violation of the law, but the articles may impose greater liability and the Attorney General may sue under NRS 82.536 to remedy a breach of charitable trust. Unpaid directors and officers also count as volunteers under NRS 41.485, which protects them from liability for the acts of the organization's agents but not for their own duties as directors, and under NRS 41.480 the organization itself is generally not immune. Federally, an organization manager may also owe an excise tax on an excess benefit transaction.
The information on this page is educational and is not legal advice. Reading it does not create an attorney-client relationship with Hutchison & Steffen. For guidance on a specific matter, contact the Firm at 702.385.2500 in Las Vegas or 775.853.8746 in Reno.