Overview
The Landscape
Nonprofit and charitable organizations have unique legal needs — from governance and compliance to commercial activities and employment. Shah Grossi helps charitable organizations build strong legal foundations so they can focus on their mission.
Key Legal Challenges
- —Establishing the right legal structure for mission and tax purposes
- —Maintaining governance compliance and board documentation
- —Managing paid and volunteer employment relationships
- —Negotiating commercial leases, service agreements, and vendor contracts
- —Structuring commercial activities and earned income in compliance with IRS requirements
Common Scenarios
Problems We Solve
- 01
A nonprofit generates significant earned income from activities not substantially related to its exempt purpose — creating UBIT exposure and potentially jeopardizing exempt status.
How we help: Business Law
- 02
Board minutes, conflict-of-interest disclosures, and annual compensation review documentation are not maintained consistently — creating governance and tax-compliance risk.
How we help: Risk & Compliance
- 03
Volunteers are treated like employees in practice (scheduled shifts, required attendance, supervisory direction) — creating potential wage and workers' compensation claims.
How we help: Labor & Employment
- 04
The organization's brand, logo, and original program content are used freely by partners and affiliates without a written license or quality-control framework — eroding trademark rights and creating brand-management issues.
How we help: Intellectual Property · Brand Protection
Our Work
How We Help
Nonprofit entity formation and governance documentation
Employment agreements, volunteer policies, and HR compliance
Commercial lease and real property negotiation
Vendor contracts and service agreements
IP protection for organizational brand and content
Dispute resolution and litigation support
Legal Services
Related Practice Areas
Common Questions
Frequently Asked
Q.How do I form a 501(c)(3) organization?
Form a California nonprofit public benefit corporation, draft bylaws and conflict-of-interest policies that satisfy IRS expectations, file IRS Form 1023 or 1023-EZ for federal exemption, file Form CT-1 with the California Attorney General's Registry of Charitable Trusts, obtain a California Franchise Tax Board determination, and register with the Secretary of State. The process typically takes 3 to 12 months depending on which form is used and whether the IRS has questions.
Q.Can a nonprofit run a commercial business?
Yes, with caveats. Activities substantially related to the exempt purpose generate tax-exempt income. Unrelated business activity generates Unrelated Business Income Tax (UBIT), and excessive unrelated activity can jeopardize exempt status. A for-profit subsidiary is sometimes the right structure for significant commercial activity, keeping the nonprofit's exempt status protected. The analysis is fact-specific and should be done before commercial activity is launched.
Q.What governance documents does my nonprofit need?
Articles of incorporation, bylaws, conflict-of-interest policy, document-retention policy, gift-acceptance policy, whistleblower policy, and annually reviewed executive compensation documentation (rebuttable presumption procedure). Board minutes must document significant actions. California also requires specific audit-committee procedures for organizations above certain revenue thresholds. Good governance documentation protects the organization in both IRS and Attorney General examinations.
Related: Business Law
Q.How should I classify and manage volunteers vs. employees?
True volunteers must receive no compensation (or only nominal stipends that do not reflect the value of services), must not be required to work specific hours, and must not replace paid staff. Volunteer coordinators should have written volunteer agreements, appropriate insurance (including volunteer workers' compensation), and clear protocols. Crossing the line between volunteer and employee can create significant wage and benefits liability.
Related: Labor & Employment
Q.Can my nonprofit merge with or dissolve into another organization?
Yes, with Attorney General oversight. California requires notice to and often approval from the Attorney General's Registry of Charitable Trusts for mergers, asset transfers, and dissolutions of charitable organizations. The assets of a dissolving nonprofit must go to another 501(c)(3) or governmental body with compatible purposes. Mergers and dissolutions should be planned well in advance to satisfy the procedural requirements and avoid asset-distribution issues.
Ready to Discuss
Your Nonprofits Matter?
We respond to all inquiries within one business day.