Best Nonprofit & Charitable Organizations Lawyers in Tennessee

About Nonprofit & Charitable Organizations Law in Tennessee, United States

Nonprofit and charitable organizations in Tennessee play a vital role in supporting communities, advocating for causes, and providing important services. The legal framework for these organizations combines aspects of state law, such as the Tennessee Nonprofit Corporation Act, and federal requirements, especially those set by the Internal Revenue Service (IRS) for tax-exempt status. Operating a nonprofit in Tennessee involves specific processes for creation, management, fundraising, and compliance. Whether supporting the arts, health, education, or social issues, organizations must adhere to established legal guidelines to maintain good standing and maximize their impact.

Why You May Need a Lawyer

Legal advice is useful for anyone considering forming or managing a nonprofit in Tennessee. Common situations where you may need a lawyer include choosing the right legal structure, drafting the organization's bylaws, applying for tax-exempt status, handling employment law issues, managing governance disputes, and ensuring compliance with fundraising regulations. Lawyers can help prevent costly mistakes, resolve conflicts, and ensure your organization operates within the law. For existing nonprofits, legal assistance may also be required during mergers, dissolutions, tax audits, and when responding to government inquiries or donor questions.

Local Laws Overview

Tennessee has specific laws and regulations that affect nonprofit and charitable organizations. Here are a few key aspects:

• Tennessee Nonprofit Corporation Act: This law establishes how nonprofits are formed, governed, and dissolved within the state. It covers the requirements for articles of incorporation, bylaws, annual meetings, and records maintenance.
• Charitable Solicitations Act: Tennessee requires most charities and certain fundraising professionals to register with the Secretary of State before soliciting donations from the public. There are reporting and renewal obligations annually.
• Tax Exemption: Nonprofits must apply separately for federal tax-exempt status with the IRS and may also seek exemption from Tennessee state and local taxes, such as sales and property tax, depending on their activities and structure.
• Board Governance: The state law outlines minimum requirements for boards, including fiduciary responsibilities, meeting protocols, and conflict-of-interest policies.
• Dissolution and Asset Distribution: If a nonprofit dissolves, state law controls how remaining assets are distributed, usually requiring they go to another charitable organization.

Frequently Asked Questions

What is the difference between a nonprofit and a charity in Tennessee?

A nonprofit is any organization formed for purposes other than generating profit for owners. A charity is a type of nonprofit that operates for public benefit, usually eligible for federal and state tax exemptions. All charities are nonprofits, but not all nonprofits are charities.

How do I start a nonprofit in Tennessee?

To start a nonprofit, you must file Articles of Incorporation with the Tennessee Secretary of State, adopt bylaws, appoint a board of directors, obtain an Employer Identification Number (EIN), and apply for tax-exempt status with the IRS and, if desired, the state.

Does my nonprofit need to register to fundraise in Tennessee?

Yes, most organizations must register with the Division of Charitable Solicitations and Gaming before asking for donations. Some organizations, such as religious institutions, may be exempt. Annual renewal and financial reporting are also required.

What tax exemptions are available for nonprofits in Tennessee?

Nonprofits may qualify for federal income tax exemption through the IRS. They may also qualify for state sales tax exemption on certain purchases and property tax exemptions for land or buildings used for exempt purposes, but they must apply separately.

Does Tennessee law require a minimum number of directors?

Yes, Tennessee requires at least three directors for nonprofit corporations. Directors must act in accordance with their fiduciary duties as set forth by state law.

Can a nonprofit pay its directors or officers?

Nonprofits may pay reasonable compensation for services rendered, but cannot distribute profits. All compensation should be carefully documented and justified to avoid possible conflicts of interest or tax issues.

What are the annual filing requirements for Tennessee nonprofits?

Most nonprofits must file an annual report with the Secretary of State and renew their charitable solicitation registration if applicable. They may also need to file financial reports with the IRS (such as Form 990) and the state.

What happens if a Tennessee nonprofit closes down?

Upon dissolution, state law requires the organization's remaining assets to be distributed to another nonprofit. The board must comply with formal dissolution procedures and file the necessary paperwork with state and federal agencies.

Are donations to my Tennessee nonprofit tax deductible?

Donations are only tax deductible if your nonprofit has IRS 501(c)(3) status. Donors may request documentation of your tax-exempt status when making contributions.

How can a nonprofit amend its bylaws or articles of incorporation?

Amendments typically require board approval, and sometimes a vote of the members if the nonprofit has voting members. Changes to the articles of incorporation must be filed with the Secretary of State, and certain amendments should also be reported to the IRS and other authorities.

Additional Resources

For those seeking more information or assistance, the following resources can be helpful:

• Tennessee Secretary of State Division of Charitable Solicitations and Gaming: Provides forms and guidance for charitable registration and compliance.
• Internal Revenue Service (IRS) Exempt Organizations: Offers federal tax exemption applications, forms, and resources specific to nonprofits.
• Tennessee Department of Revenue: For information about state sales and property tax exemptions for qualified nonprofits.
• Center for Nonprofit Management (Nashville): Offers educational workshops, consulting, and community resources for Tennessee nonprofits.
• Pro bono and legal aid organizations: Provide legal assistance for eligible nonprofit startups and existing organizations facing legal questions.

Next Steps

If you are considering starting, managing, or troubleshooting a nonprofit or charitable organization in Tennessee, consider these steps:

• Clarify your organization's mission and goals to choose the most appropriate legal structure.
• Collect relevant documents, such as articles of incorporation, bylaws, and IRS correspondence.
• Research applicable state and federal laws that apply to your activities, or consult reputable guides and resources listed above.
• Reach out to a lawyer with experience in Tennessee nonprofit law for personalized guidance, especially for incorporation, tax issues, or compliance concerns.
• Stay current with annual reporting and registration obligations to maintain good standing and protect your nonprofit's reputation.

Legal requirements can be complex. Timely legal assistance helps ensure your organization meets its obligations and thrives in its mission to serve others.