Help for Churches and Nonprofits
There are over a half million private, non-governmental organizations (NGOs) in the United States, focusing in the fields of religion, charity, education, scientific research, sports and literary activities. They range from national church denominations, research centers, professional associations and major foundations to local congregations, museums, institutions, Police Athletic Leagues, Private Buyers Clubs, schools, "Y's" and Book Clubs. All have similar legal concerns. As a lawyer with 34 years experience in the field, I provide legal consulting for established and emerging Churches and other NGOs, with information for internet legal and fund raising resources, including institutional and private financing.
Many people in the
nonprofit arena are not aware of the financial resources available for
organizations to meet the Goals of their Missions.
Private Association Status
Private associations, such as Churches and other NGOs express their First Amendment speech and association rights through their activities. This is what the U.S. Supreme Court affirmed in the recent Boy Scouts case and thereby "expressive association" became a legal by-word in the New Millennium. The organizations that the International Community calls Non-Governmental Organizations (NGOs) and Anglo-American Common Law regards as private associations, play a significant role in the world today. In the United States, the exemptions and privileges of such organizations is a status to be achieved and maintained by understanding the legal, accounting and financing circumstances accruing to them.
Primarily, there are three levels or grades to achieving full status. First, Non-Profit Status. Most such organizations authorize their Trustees to form nonprofit corporations in the state wherein they are active. Some, especially religious organizations, choose to remain purely private, unincorporated associations (at least two US States do not permit churches to form state-sanctioned corporations). In any event, the "not for profit" aspect of the organization's status is determined by the organizing documents and the laws of the State.
Second, Tax Exempt and Tax Deductible Status. In the United States such status is conferred through the IRS Code (and the limits on taxation in the Constitution). While churches are "mandatorily exempt" (Code Section 508) all others must apply and be approved under Section 501(c)(3) which says that any organization organized and operated exclusively for religious, charitable, educational, scientific research, sports or literary purposes can be exempt. Such organizations may also accept Tax Deductible Donations and foundation grants. Local organizations are often concerned about Sales Tax status; my experience has been that a Sales Tax Exemption will be allowed for organizations that have had their Federal Exempt Status recognized.
Finally, the relatively new status as
a UN recognized "NGO" has become coveted. Individual agencies and councils
within the UNO system separately qualify such organizations which are typically
exempt organizations under national law.
Federal tax law favors tax exempt organizations, permitting them to earn funding tax free through passive investments, such as interest, dividends, royalties, commissions and capital gains. Churches, for example, can own income producing property, and the income is tax free, to the extent not debt financed.
There are a number of programs available for Churches and other nonprofits, allowing them to borrow funds for such beneficial activities as setting up day care centers, facilities for the elderly and infirm and other related activities.
Find loans for - Church building purchase or re-financing, expansion, addition, remodeling, a Church camp, a classroom, new school, a retreat, new sound system, furnishings, construction loans, financing for church and school equipment -- practically everything needed to achieve your Exempt Purposes. Often, Church and other association members can also benefit when the organization to which they belong establishes a good credit relationship with a top level lender or financing broker. It has been my experience that loans can be arranged for between $100,000 and $5 million, up to 75% LTV, fixed rates, 20 year term, with no personal guarantees, no prepayment penalties!
What to Do
If you are the Pastor, a Trustee or Officer of a Church or other private association and you want your Exempt and NGO status secured or maintained, you need to seek the advice of legal, accounting and fund raising experts. I've listed some web sites I've found informative below. Some are organizations that offer help to NGOs or small entities, some are exempt organizations themselves. Of course, I don't endorse these organizations (though I am associated with a couple) and due diligence and discretion are always appropriate. I practice law in New Jersey and am available elsewhere for legal consultations. Through my associate Tony Sikora of Concord Mortgage, I can recommend excellent financing brokers in any State or area.
You can contact us through firstname.lastname@example.org. When you contact us at that email address, you will receive back an "auto-responder" email from me, asking you for some basic information about your organization, or you can go to this page: Loan Questionnaire -- print it, fill out the information and fax it to us at the fax number on the page. With that information, I can recommend appropriate sources of funding. You can also take a look at my article on Fund Raising for NGOs about raising funds through donations. Often, a combination of institutional borrowing and a donation program can generate needed funding. Your members' pledges of future giving can support the financing you may need to realize your Mission Goals expeditiously.
WHAT DO DO? Please check Tony's information page, Tony Sikora.
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Articles & Links
| My Links -
The Nonprofit Lawyer Web Site -
Articles by the NonProfit Lawyer
Sample Clients -
Institute for Health Research –
|Some other links
NGO Global Organization - http://www.ngo.org/index.htm
The NGO Network - http://www.ngos.net/
Direct Marketing Association - www.the-dma.org
Professional Fund Raisers - http://www.professionalfundraiser.com
Federal Trade Commission - www.ftc.gov
SBA on making decisions - ten step
process and common mistakes -
Exempt Status Information, www.5o1c3.org
Nonprofit Mergers, Co-op, restructuring, etc.
Tony Sikora of Concord Mortgage
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© 2004 LSC