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Diara M. Holmes, co-chair of Loeb & Loeb’s Nonprofits and Tax-Exempt Organizations practice, discusses the significant growth of the team. She also explains how Loeb’s strategic investment in this practice builds on a strong base of collaboration at the firm to provide the group’s nonprofit clients with the full spectrum of legal support around transactions, compliance and litigation.
Tell us about the growth of Loeb’s Nonprofits and Tax-Exempt Organizations practice.
Over the past 18 months, our dedicated EO team has doubled in size, with 10 lawyers now practicing full time in this area. This growth reflects a concerted effort to reinforce our strengths in nonprofit tax, transactional, governance and investigations and to expand our capabilities to meet our nonprofit clients’ emerging needs. During this period, we have welcomed three new partners—Kim Eney, Yael Fuchs and Meghan Biss—and two associates—Ana Maganto Ramirez and Vivienne LaBorde—to the firm. In early 2024, Talia Metson was elevated to partner, and Kensi Wolgamott was promoted to senior counsel. It is an honor to lead this talented group along with my co-chairs, Marc Owens and Jason Lilien, who bring their perspectives and the gravitas of senior government service to our work.
I am proud that we have assembled a diverse and collaborative “dream team” of thought leaders, former federal and state regulators, and trusted advisors to serve the nonprofit sector. Our bench is deep in essential areas of exempt organizations, including tax planning and controversies (IRS audits and appeals), nonprofit mergers and other transactions, grant-making and program-related investments, corporate governance, investigations, and litigation.
To be clear, supporting individual, corporate and family philanthropy is not new for Loeb & Loeb. The firm represented a wide variety of nonprofit clients and donors before Marc Owens and I joined the firm in 2015 and formalized what we now call the EO group. For example, in our LA office, Leah Bishop and Paul Frimmer and others have long advised some of the nation’s most prominent philanthropists, family foundations and cultural institutions. Colleagues in our Entertainment and Sports practices have advised athletes and artists on their off-the-field and off-screen legacy planning through philanthropy. I could go on with examples from our Corporate, Advertising and Media, and other transactional practices, where nonprofit associations, corporate sponsors and funder clients abound. What excites me is the degree to which we are now intentionally, strategically integrating with these other practices.
What distinguishes Loeb’s Nonprofits and Tax-Exempt Organizations practice?
Beyond our size, Loeb’s practice is distinctive in several respects.
Perhaps most notably, our clients benefit from the insight and experience of four former government officials. Marc Owens spent 25 years at the IRS, including 10 years as the director of the IRS’ Exempt Organizations Division. Meghan Biss spent a decade at the IRS, including serving as a senior technical advisor to the Exempt Organizations Division Director. Jason Lilien served as the Bureau Chief of the New York State Attorney General’s Charities Bureau, and Yael Fuchs served as the co-chief of the Bureau’s Enforcement Section. This breadth of regulatory experience is so valuable to a nonprofit organization or to a donor or board member who is facing an IRS audit, a state attorney general investigation, or an internal issue that could lead to attention from regulators, donors or the press. Because of this collective insight, clients often engage members of our team to perform mock audits or compliance reviews to ensure that they can withstand legal scrutiny. Clients also turn to us to conduct internal investigations and for crisis management.
Another distinctive feature is the way our group complements and coordinates with the firm’s other leading practices—including Private Client, Entertainment, Employment, Sports, Litigation, and Advertising and Media. As a result, we are able to support not only the institutions but also the founders, donors, family offices, C-suite executives, governing boards and corporate sponsors. This collaborative culture and the ability to provide a full range of legal services are what attracted me to Loeb & Loeb 10 years ago. If a public charity client with a global brand needs a licensing agreement, I can call a colleague in our AMT group to assist. We work with colleagues in our Corporate department routinely on mergers, acquisitions and joint ventures involving nonprofit organizations. We partner with colleagues in our Labor and Employment practice to advise nonprofit boards through the process of approving reasonable compensation for senior executives and to help them navigate sensitive investigations.
Our lawyers are frequent speakers and contributors to nonprofit conferences throughout the year. As an example, Kim Eney and Meghan Biss serve as vice chairs of the Exempt Organizations Committee of the ABA Tax Section. This continuous engagement with our peers in the nonprofit tax bar ensures that we are aware of legal developments, IRS and AG guidance, proposed legislation, and trends in structuring philanthropy.
For some of our nonprofit organization clients, we serve as outside general counsel. In this role, our clients view us—and rely on us—as partners in their mission. We’re on the leadership team’s speed-dial for day-to-day advice across a full range of legal compliance and operational issues, and we are the first ones they call in a crisis. They trust us to engage specialists in our network—such as valuation experts, crisis communications advisors, compensation consultants, or forensic accountants—as needed for investigations or complex cases.
What kinds of transactions does the team support?
I can’t think of a transaction involving a nonprofit organization that we don’t support. To put it simply, we advise our clients from setup to sunset on every imaginable kind of transaction involving nonprofit organizations, their funders and their affiliates, whether nonprofit or for-profit.
On the “startup” desk, we help clients establish new private foundations, public charities, social welfare organizations and trade associations—from incorporation to applications for tax-exempt status to launching with the appropriate governance infrastructure. We also represent both fiscal sponsors and fiscally sponsored projects.
For private foundations, we advise on complex grant agreements and on a variety of program-related investments. We support family offices more broadly by advising on the deployment of assets through multiple entities—including donor-advised funds, private foundations, LLCs and 501(c)(4) organizations—to achieve the family’s philanthropy and advocacy goals, all with a view toward compliance with the federal tax rules.
For public charity clients, we often advise on corporate sponsorships, ensuring that an agreement does not confer substantial return benefits to the sponsor. We also provide support to public charities that are collaborating with for-profit retailers in cause marketing or commercial co-venture transactions. We help charities structure joint ventures, set up wholly owned for-profit subsidiaries, license their brands, invest in real estate and engage in venture capital.
Through our long-standing relationships with the Canadian charity bar and with the charity bar in the UK, we advise on cross-border transactions and other matters for charities and private foundations interested in a broader perspective of charity.
Recently, we’ve seen an uptick in strategic alliances and nonprofit mergers and acquisitions on our docket, driven in part by current economic challenges. Sometimes the motivation to combine nonprofit entities is cost savings or efficiency or to streamline operations. We also advise on dissolutions, which may happen for a number of reasons, including when a nonprofit’s funding streams dry up or its sources of earned revenue have waned. In other cases, the charity has declared victory, having achieved its goals. In all of these cases, we enjoy advising nonprofit boards from the concept through execution. We prepare all of the necessary documents, agreements and state filings, in some cases working closely with colleagues in our corporate, IP and data privacy practices.
What non-transactional support do you provide?
We provide a full range of legal, compliance and strategic support to nonprofit organizations. If audit, state regulatory or litigation matters arise, we advise on resolving those actions. As I mentioned, four of our partners are former regulators—two from the IRS, and two from the New York Attorney General’s Office. This gives our team authoritative insight into what the regulators care about and how to address investigations and audits as efficiently as possible. We have experience in crisis management for nonprofits so that if a crisis arises, we can help manage the investigation, public relations concerns, accounting issues and remediation.
Our Washington, D.C., office is also particularly poised to assist with those “inside the Beltway” issues—meetings with the Internal Revenue Service and Department of Treasury to discuss the potential impact of proposed regulations, areas where guidance would be particularly useful to clients as they conduct their day-to-day operations and private letter ruling requests. We also work closely with clients when there are congressional investigations or hearings, particularly on issues that are before the Senate Finance and House Ways and Means committees.
We also represent 501(c)(4) organizations, which are social welfare groups that conduct lobbying and advocacy work. During election cycles, we advise these groups and their donors on compliance issues that can arise with partisan political activities. We review their messaging to ensure compliance, helping them strike the right balance of social welfare versus political activity, and sustaining their bases’ support after elections, regardless of outcome.
We also provide orientation for new nonprofit board members and training for boards, program teams and leadership teams on a variety of nonprofit compliance issues, such as grant-making, lobbying, unrelated business activities and corporate sponsorship. We’ve also developed a series of webinars for foundations with complex grant-making dockets to train their staff and grantees on compliance issues.
Finally, we work together with our litigation colleagues to represent tax-exempt organizations involved in disputes. For example, whether the nonprofit is subject to employment claims, bankruptcy clawbacks or other litigation, there are unique issues involved, requiring knowledge of the nonprofit sector. We also help large charities manage their litigation docket as a type of outside general counsel service.
What are some of the legal challenges that your clients seem most concerned about right now?
Clients, especially high net worth individuals and family foundations, always have questions about what state regulations may be on the horizon as well as about the ever-present risk of IRS audits. So, for example, the IRS has announced it’s focusing on the transactions between and among high net worth donors and their charities to look for potential abuses. Similarly, congressional committees have publicized that they are interested in high net worth individuals and the various nonprofits and other organizations surrounding them as well as the political activities of nonprofits. In response, we’re supporting our clients by conducting compliance checks and mock audits to help clients prepare for that kind of scrutiny should it come to pass.
In the wake of the U.S. Supreme Court’s decisions last summer regarding affirmative action in college admissions and the Fearless Fund settlement, nonprofit organizations that focus on racial equity as part of their charitable and educational activities have been grappling with how to remain true to their social justice missions and values while complying with the law and avoiding costly litigation. In response, we are seeing some private foundations setting aside significant funding for technical assistance and training programs. In this way, funders are helping ensure that grantees and potential grantees have access to timely and tailored legal advice during this uncertain time. We have been pleased to present topical webinars and education sessions for groups of grantees as well as customized guidance for foundation boards, along with colleagues in our Litigation and Employment practice groups.
Our clients also seek our help with legal reviews of their public-facing materials, since any representation of a program that is coupled with a request for donations becomes a regulated communication. In this highly polarized environment, public-facing material can also subject an organization to attack and—in the worst case—litigation, and we work with clients to assess and mitigate risk.
Tell us about the growth of Loeb’s Nonprofits and Tax-Exempt Organizations practice.
Over the past 18 months, our dedicated EO team has doubled in size, with 10 lawyers now practicing full time in this area. This growth reflects a concerted effort to reinforce our strengths in nonprofit tax, transactional, governance and investigations and to expand our capabilities to meet our nonprofit clients’ emerging needs. During this period, we have welcomed three new partners—Kim Eney, Yael Fuchs and Meghan Biss—and two associates—Ana Maganto Ramirez and Vivienne LaBorde—to the firm. In early 2024, Talia Metson was elevated to partner, and Kensi Wolgamott was promoted to senior counsel. It is an honor to lead this talented group along with my co-chairs, Marc Owens and Jason Lilien, who bring their perspectives and the gravitas of senior government service to our work.
I am proud that we have assembled a diverse and collaborative “dream team” of thought leaders, former federal and state regulators, and trusted advisors to serve the nonprofit sector. Our bench is deep in essential areas of exempt organizations, including tax planning and controversies (IRS audits and appeals), nonprofit mergers and other transactions, grant-making and program-related investments, corporate governance, investigations, and litigation.
To be clear, supporting individual, corporate and family philanthropy is not new for Loeb & Loeb. The firm represented a wide variety of nonprofit clients and donors before Marc Owens and I joined the firm in 2015 and formalized what we now call the EO group. For example, in our LA office, Leah Bishop and Paul Frimmer and others have long advised some of the nation’s most prominent philanthropists, family foundations and cultural institutions. Colleagues in our Entertainment and Sports practices have advised athletes and artists on their off-the-field and off-screen legacy planning through philanthropy. I could go on with examples from our Corporate, Advertising and Media, and other transactional practices, where nonprofit associations, corporate sponsors and funder clients abound. What excites me is the degree to which we are now intentionally, strategically integrating with these other practices.
What distinguishes Loeb’s Nonprofits and Tax-Exempt Organizations practice?
Beyond our size, Loeb’s practice is distinctive in several respects.
Perhaps most notably, our clients benefit from the insight and experience of four former government officials. Marc Owens spent 25 years at the IRS, including 10 years as the director of the IRS’ Exempt Organizations Division. Meghan Biss spent a decade at the IRS, including serving as a senior technical advisor to the Exempt Organizations Division Director. Jason Lilien served as the Bureau Chief of the New York State Attorney General’s Charities Bureau, and Yael Fuchs served as the co-chief of the Bureau’s Enforcement Section. This breadth of regulatory experience is so valuable to a nonprofit organization or to a donor or board member who is facing an IRS audit, a state attorney general investigation, or an internal issue that could lead to attention from regulators, donors or the press. Because of this collective insight, clients often engage members of our team to perform mock audits or compliance reviews to ensure that they can withstand legal scrutiny. Clients also turn to us to conduct internal investigations and for crisis management.
Another distinctive feature is the way our group complements and coordinates with the firm’s other leading practices—including Private Client, Entertainment, Employment, Sports, Litigation, and Advertising and Media. As a result, we are able to support not only the institutions but also the founders, donors, family offices, C-suite executives, governing boards and corporate sponsors. This collaborative culture and the ability to provide a full range of legal services are what attracted me to Loeb & Loeb 10 years ago. If a public charity client with a global brand needs a licensing agreement, I can call a colleague in our AMT group to assist. We work with colleagues in our Corporate department routinely on mergers, acquisitions and joint ventures involving nonprofit organizations. We partner with colleagues in our Labor and Employment practice to advise nonprofit boards through the process of approving reasonable compensation for senior executives and to help them navigate sensitive investigations.
Our lawyers are frequent speakers and contributors to nonprofit conferences throughout the year. As an example, Kim Eney and Meghan Biss serve as vice chairs of the Exempt Organizations Committee of the ABA Tax Section. This continuous engagement with our peers in the nonprofit tax bar ensures that we are aware of legal developments, IRS and AG guidance, proposed legislation, and trends in structuring philanthropy.
For some of our nonprofit organization clients, we serve as outside general counsel. In this role, our clients view us—and rely on us—as partners in their mission. We’re on the leadership team’s speed-dial for day-to-day advice across a full range of legal compliance and operational issues, and we are the first ones they call in a crisis. They trust us to engage specialists in our network—such as valuation experts, crisis communications advisors, compensation consultants, or forensic accountants—as needed for investigations or complex cases.
What kinds of transactions does the team support?
I can’t think of a transaction involving a nonprofit organization that we don’t support. To put it simply, we advise our clients from setup to sunset on every imaginable kind of transaction involving nonprofit organizations, their funders and their affiliates, whether nonprofit or for-profit.
On the “startup” desk, we help clients establish new private foundations, public charities, social welfare organizations and trade associations—from incorporation to applications for tax-exempt status to launching with the appropriate governance infrastructure. We also represent both fiscal sponsors and fiscally sponsored projects.
For private foundations, we advise on complex grant agreements and on a variety of program-related investments. We support family offices more broadly by advising on the deployment of assets through multiple entities—including donor-advised funds, private foundations, LLCs and 501(c)(4) organizations—to achieve the family’s philanthropy and advocacy goals, all with a view toward compliance with the federal tax rules.
For public charity clients, we often advise on corporate sponsorships, ensuring that an agreement does not confer substantial return benefits to the sponsor. We also provide support to public charities that are collaborating with for-profit retailers in cause marketing or commercial co-venture transactions. We help charities structure joint ventures, set up wholly owned for-profit subsidiaries, license their brands, invest in real estate and engage in venture capital.
Through our long-standing relationships with the Canadian charity bar and with the charity bar in the UK, we advise on cross-border transactions and other matters for charities and private foundations interested in a broader perspective of charity.
Recently, we’ve seen an uptick in strategic alliances and nonprofit mergers and acquisitions on our docket, driven in part by current economic challenges. Sometimes the motivation to combine nonprofit entities is cost savings or efficiency or to streamline operations. We also advise on dissolutions, which may happen for a number of reasons, including when a nonprofit’s funding streams dry up or its sources of earned revenue have waned. In other cases, the charity has declared victory, having achieved its goals. In all of these cases, we enjoy advising nonprofit boards from the concept through execution. We prepare all of the necessary documents, agreements and state filings, in some cases working closely with colleagues in our corporate, IP and data privacy practices.
What non-transactional support do you provide?
We provide a full range of legal, compliance and strategic support to nonprofit organizations. If audit, state regulatory or litigation matters arise, we advise on resolving those actions. As I mentioned, four of our partners are former regulators—two from the IRS, and two from the New York Attorney General’s Office. This gives our team authoritative insight into what the regulators care about and how to address investigations and audits as efficiently as possible. We have experience in crisis management for nonprofits so that if a crisis arises, we can help manage the investigation, public relations concerns, accounting issues and remediation.
Our Washington, D.C., office is also particularly poised to assist with those “inside the Beltway” issues—meetings with the Internal Revenue Service and Department of Treasury to discuss the potential impact of proposed regulations, areas where guidance would be particularly useful to clients as they conduct their day-to-day operations and private letter ruling requests. We also work closely with clients when there are congressional investigations or hearings, particularly on issues that are before the Senate Finance and House Ways and Means committees.
We also represent 501(c)(4) organizations, which are social welfare groups that conduct lobbying and advocacy work. During election cycles, we advise these groups and their donors on compliance issues that can arise with partisan political activities. We review their messaging to ensure compliance, helping them strike the right balance of social welfare versus political activity, and sustaining their bases’ support after elections, regardless of outcome.
We also provide orientation for new nonprofit board members and training for boards, program teams and leadership teams on a variety of nonprofit compliance issues, such as grant-making, lobbying, unrelated business activities and corporate sponsorship. We’ve also developed a series of webinars for foundations with complex grant-making dockets to train their staff and grantees on compliance issues.
Finally, we work together with our litigation colleagues to represent tax-exempt organizations involved in disputes. For example, whether the nonprofit is subject to employment claims, bankruptcy clawbacks or other litigation, there are unique issues involved, requiring knowledge of the nonprofit sector. We also help large charities manage their litigation docket as a type of outside general counsel service.
What are some of the legal challenges that your clients seem most concerned about right now?
Clients, especially high net worth individuals and family foundations, always have questions about what state regulations may be on the horizon as well as about the ever-present risk of IRS audits. So, for example, the IRS has announced it’s focusing on the transactions between and among high net worth donors and their charities to look for potential abuses. Similarly, congressional committees have publicized that they are interested in high net worth individuals and the various nonprofits and other organizations surrounding them as well as the political activities of nonprofits. In response, we’re supporting our clients by conducting compliance checks and mock audits to help clients prepare for that kind of scrutiny should it come to pass.
In the wake of the U.S. Supreme Court’s decisions last summer regarding affirmative action in college admissions and the Fearless Fund settlement, nonprofit organizations that focus on racial equity as part of their charitable and educational activities have been grappling with how to remain true to their social justice missions and values while complying with the law and avoiding costly litigation. In response, we are seeing some private foundations setting aside significant funding for technical assistance and training programs. In this way, funders are helping ensure that grantees and potential grantees have access to timely and tailored legal advice during this uncertain time. We have been pleased to present topical webinars and education sessions for groups of grantees as well as customized guidance for foundation boards, along with colleagues in our Litigation and Employment practice groups.
Our clients also seek our help with legal reviews of their public-facing materials, since any representation of a program that is coupled with a request for donations becomes a regulated communication. In this highly polarized environment, public-facing material can also subject an organization to attack and—in the worst case—litigation, and we work with clients to assess and mitigate risk.
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Co-Chair, Nonprofits & Tax-Exempt Organizations; Co-Chair, Loeb & Loeb's Attorneys of Color and Ethnic Diversity Affinity Group