Cultural Institutions and Other Nonprofits
Lower interest rates and flexible terms. When patron revenues and traditional fundraising methods such as capital campaigns, annual giving funds and auctions cannot provide enough reliable funds in a timely manner, nonprofit organizations can turn to Peck Shaffer for advice on tax-exempt financing. Tax-exempt financing typically offers nonprofit organizations the opportunity to borrow at lower interest rates than conventional taxable debt with the flexibility of longer repayment terms, less restrictive financial covenants and more favorable conditions for borrowing smaller amounts. These advantages are available to nonprofits of all sizes, including those which are newly formed.
Extensive experience. Peck Shaffer attorneys have assisted nonprofit organizations in the process of obtaining a determination letter from the Internal Revenue Service (the "IRS") under section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the "Code"), which enables a nonprofit organization to borrow using the proceeds of tax-exempt bonds. Peck Shaffer attorneys have served as bond counsel, underwriter's counsel and borrower's counsel on financings for many types of nonprofit organizations, including museums and cultural centers, public radio stations, recreational organizations, large and small hospitals (
see "HEALTHCARE"), private schools and universities (see
"EDUCATION") and owners of senior living facilities (
see "LONG-TERM CARE FACILITIES") and multifamily rental housing facilities (see
"HOUSING - Multifamily"). Peck Shaffer tax attorneys are experienced in handling the unique and complex tax issues created by these varied financings (see
"TAX AND FINANCIAL ANALYSIS").
Initial determinations. Peck Shaffer attorneys can assist with the initial determinations of the eligibility of the nonprofit organization and the proposed uses of the tax-exempt bond proceeds. Peck Shaffer tax attorneys have developed an extensive questionnaire, which is distributed to prospective borrowers when our services are initially requested, in order to establish the relevant factual background of a nonprofit organization, the proposed project and the proposed financing. For example, a plan for tax-exempt borrowing by some specialty museums may raise questions of what constitutes a museum as opposed to a trade organization facility. Questions of private use under the Code arise when projects involve facilities such as parking garages, gift shops and restaurants. Such facilities may be managed by a for-profit service provider and thus require careful compliance with IRS guidelines. A thorough, initial analysis can be quite time consuming, but since Peck Shaffer bills by the project, not by the hour, our partners and associates can devote the time necessary to address issues upfront, without the risk to a nonprofit organization of facing unexpected costs.
Structural issues and tax considerations. When a nonprofit organization decides to proceed with tax-exempt financing, Peck Shaffer attorneys offer assistance with all aspects of the issuance. Peck Shaffer attorneys have years of experience in matters ranging from the selection of the issuer (including an analysis of state law provisions) to structural issues such as fixed rate or variable rate options and the myriad of tax issues, such as naming rights and the permissible uses of the nonprofit corporation's other funds (donations, pledges and endowment funds) in light of the tax-exempt debt.
Taxable financing alternatives. For a discussion of taxable financing alternatives,
see "ECONOMIC DEVELOPMENT - Taxable Obligations."
