Pro bono and community service are an essential duty for Indiana lawyers, but helping out does not have to feel like work. Assisting new and existing nonprofit organizations allows attorneys to merge their legal expertise with their personal interests and hobbies, all while making a notable difference in their communities. Many firms offer billable credit for nonprofit pro bono work, and many employers also offer paid time off for community service and volunteer days.
Nonprofits come in many forms and can support a wide array of services, making it easy to find one that aligns with a particular interest or goal. Whether it’s your favorite amateur sports league, your children’s day care or a museum you love to visit, local nonprofits all require some level of legal services.
The need for pro bono nonprofit representation, as well as board and committee service, is especially high now as new charities emerge to solve problems and existing nonprofits combat the economic hardship caused by the pandemic. Although lawyers may certainly serve nonprofit clients through pro bono work, they are also uniquely positioned to work and serve on nonprofit boards, committees or in some other capacity that may not fall within the scope of “pro bono” legal work. Under Indiana Rule of Professional Conduct 6.7, pro bono legal services are legal services provided directly to individuals reasonably believed to be of limited means. Although this article focuses primarily on pro bono efforts relating to the formation and organization of Indiana nonprofit organizations and the experiences of attorneys serving on nonprofit boards and committees, many pro bono and community service opportunities exist for attorneys who are interested in serving nonprofits some other way.
The legal process involved in setting up a new nonprofit organization often requires some amount of legal analysis.
Clients forming a nonprofit often lack funds to hire a lawyer but still require assistance with the technical aspects of starting a nonprofit corporation and applying for tax-exempt status. To start up a nonprofit organization (specifically, an organization seeking exemption under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended), the organization should draft and file its articles of incorporation with the appropriate state authority. In Indiana, nonprofit corporations incorporate with the Indiana secretary of state. In order to qualify for code section 501(c)(3) status, certain provisions will need to be included in the articles of incorporation, including language related to the purposes of the nonprofit corporation and what will happen to its assets at dissolution.
The organization should also draft its bylaws and any policies to be approved at the organization’s first board meeting. Once the articles of incorporation are certified by the Indiana secretary of state and the organization’s bylaws and policies are drafted, the board of the organization can meet to adopt organizational board resolutions. Through these resolutions (adopted by majority vote at the meeting of the board or signed by all board members via unanimous written consent) the board may adopt the bylaws, any organizational policies, authorize submitting an application for an employer identification number, or EIN, from the IRS, appoint officers of the organization, authorize the officers to take the steps to complete the formation of the organization and tend to similar organizational matters (e.g., opening a bank account).
After the organizational meeting (or after the organizational written consent is executed) the organization can move forward with obtaining an EIN, opening a bank account and beginning the exemption application process.
The most time-consuming part of the process is to apply for exemption from federal income tax by completing and filing the Form 1023, Application for Recognition of Exemption Under Section 501(c)(3) of the Code with the IRS, which has a $600 filing fee. Certain small to mid-sized nonprofits may choose to file Form 1023-EZ, Streamlined Application for Recognition of Exemption Under Section 501(c)(3) of the Code, which costs much less to file and requires less information to complete.
Heather Moore, counsel at Faegre Drinker Biddle & Reath LLP, has helped stand up many Indiana nonprofits through Faegre Drinker’s pro bono program. Moore described several challenges relating to setting up nonprofits, including the time it takes for the IRS to review and approve an organization’s tax-exempt status, which can take up to seven or eight months after a Form 1023 application has been submitted for review (unless the IRS grants expedited review). As far as time commitment, Moore explained that drafting the documents to incorporate and set up a nonprofit can take a couple of hours or more, depending on whether the attorney has templates to use as a starting place or is developing organizational documents from scratch. Moore further noted that drafting the Form 1023 application can take up to 10 hours or more, depending on an attorney’s familiarity with the application and the activities the organization plans to engage in. Once an organization receives a determination letter from the IRS confirming its tax-exempt status, the organization should file an NP-20A, Nonprofit Application for Sales Tax Exemption, with the Indiana Department of Revenue as soon as possible, seeking exemption from Indiana sales tax. Other states have similar state-level exemption application processes.
In addition to legal representation, attorneys may also help nonprofit organizations by serving on boards or participating in committees, where they often provide a unique perspective.
“Attorneys are really good at helping a group move the ball forward, creating action items and keeping deliverables really concrete,” Sarah Thompson Parks, litigation associate at Quarles & Brady LLP, said.
Parks serves on the Indianapolis Art Center’s Young Professionals Advisory Board, which helps elevate the mission of the Indianapolis Art Center, prepares programing events targeting young professionals to increase engagement and volunteers with the art center. Parks also serves on the Children’s Organ Transplant Association Miracle Maker Committee, which plans the organization’s annual fundraising event.
COTA is a charity that facilitates funding for families of children who need organ transplants, including covering the donors’ expenses. Parks first learned about the organization when they covered her expenses as an organ donor herself.
“I personally care a lot about the mission and have seen the impact it can make on a family and a community, being there for people in a tangible way when they’re going through a really hard time and alleviating some of that burden,” Parks said.
In addition to making a positive impact on the community, participating on a committee can be a great way to try out board service as a young professional even if you don’t have the experience necessary to sit on a board. Regarding the time commitment, “it can be whatever you make of it,” Parks said. “There is so much more you can do over the minimum requirement of being on a committee.”
Elaena Harris, an associate at Faegre Drinker, serves on the Fort Wayne Metro Board for the YMCA, chairs its Christian Emphasis Committee and participates on its Board Development Committee. Harris joined the organization’s board after being recruited by the board president. Harris volunteers at least four or five hours of her time per month to participate in board and committee meetings and spends additional time planning events and presenting at organizational workshops or other public forums.
Harris explained her favorite part about being a board member: “I am a problem-solver in my local community doing several projects that could have a really big impact, and I’m really proud of that.” Harris further described several initiatives and programs conducted by the organization, including a large capital campaign project to build an enterprise zone that is expected to provide technical training and alternative educational opportunities for members of the community.
Harris described the programs of the organization further: “They identify a need in the community, and want to be at the center of it — providing opportunities for members of the community. … Our Y is more than just a gym, it’s one of the largest child care providers in the community, it offers many health initiatives, it supports education in the state of Indiana and offers programs like financial literacy training, lifeguard services and swim lessons.”
Harris believes the organization is optimally situated: “The Y is not a church, it is not a for-profit entity and it is not politically affiliated. … Its outreach and community programs are really powerful, and it conducts and accomplishes its work very quietly.”
Harris strongly encourages other lawyers to serve on nonprofit boards and/or committees, noting that it has helped her make connections and integrate into the Fort Wayne community, but the best part is making a difference: “I feel good after leaving our board meetings. I feel like I’m being helpful. I feel like I’m doing good.”•
Rachel Phillips is an associate at Faegre Drinker Biddle & Reath in Indianapolis and Zena Braish is associate counsel at EVERSANA. Opinions expressed are those of the authors.