“How Hurwit & Associates Helps The Non-Profit Sector” with Valerie Sussman of Hurwit & Associates

Jonathan (1s):
Welcome back to Radio Entrepreneurs. I’m Jonathan Freedman. Our next guest joining us is Valerie Sussman, Legal Counsel for Philanthropy and non-profit sector with Hurwit & Associates. Welcome to Radio Entrepreneurs.

Valerie (11s):
Hi Jonathan. Thanks for having me today.

Jonathan (13s):
Hey, it’s a pleasure to see you again. Why don’t you tell us a little bit about your firm and what Hurwit & Associates does and where you guys focus?

Valerie (20s):
Sure, absolutely. So Hurwit & associates may have kind of a long, a long history of serving all types of nonprofit organizations and our founder, Jeff Hurwit. He actually worked at the attorney General’s office in Massachusetts. So he has this background is served from the regulatory perspective as well as in his work for a nonprofit organization. So he’s sort of seen the sector from both sides and we kind of use that to inform our practice. You know, we really think about the needs of nonprofits, all of the regulatory needs that they may have. You know, we also think about their areas of growth. So things like mission shift, you know, what they want to do in the future, as well as of course, all of the nonprofits start-up as well as dissolution items.

Valerie (1m 2s):
So we handle basically a really wide array of nonprofit matters.

Jonathan (1m 6s):
So nonprofits representing a huge segment of the marketplace. I think we sort of lose sight of that, you know, in the, in the grand scheme. And you know, obviously when difficult economies, you know, our attention turns a little bit towards nonprofits and they come in all shapes and sizes and you guys work with groups that are from conception, you know, beginning of formation all the way up through large established nonprofits. So tell us if you will inform our listeners for those people that are sitting out there saying I got a great idea. What’s, what’s sort of the, the Genesis of developing an idea and working in Nona and making a decision to, I guess, establish a nonprofit.

Jonathan (1m 50s):
What, what, what, where, where does it start for that, you know, person who has a thought?

Valerie (1m 54s):
Absolutely. That’s, that’s such a great question. So, you know, a lot of it has to do with thinking about the mission. So that would be sort of first and foremost, you know, what are you trying to do and who you’re trying to help? So once you have that in place, you know, and we can definitely work through ideas there, you know, it’s also thinking about certain factors that will affect the legal formation. So for example, you know, do you want to sit assist individuals abroad or your, is your activity going to be focused solely in the U S or, you know, are you going to be primarily a grantmaking organization sort of giving to other charities that are in existence or are you going to be doing a lot of programs yourself and have sort of the structure and groundwork to do that? And then lastly, you know, one really important initial item is just thinking about that board of directors, sort of, you know, who can you pick and what are their different skill sets.

Valerie (2m 38s):
So we try to talk through all the various, you know, governance issues that arise at the beginning of an organization’s life, but the main goal is to really help you figure out, you know, what’s going to be the most time efficient, you know, tax advantageous way to make the impact that you want to make.

Jonathan (2m 54s):
So are there different, you mentioned structures, are there different structures for nonprofits, you know, depending on, on, as you said, are they a organization that’s going to be providing funding to others or are they going to be delivering goods and services of their own? Is that, is that a distinction that, that how they organization is structured based on that?

Valerie (3m 14s):
Yeah. Well, there are different types of ways to organize these. So some of it has to do with governance and some of it has to do with, you know, more of the mission and structure. So in terms of types of organizations, you know, some, some folks prefer to form a public charity. Those can be a little bit more tax advantageous from a donor perspective in terms of, you know, deductibility. And so that really goes to, you know, what is the mission of the organization is the board of directors representative of the general public. And we also talk about something called the public support test, which organizations may have to meet over a period of time. So we kind of go over all the different options. You know, public charity is one option. Certainly some individuals may choose to form a private foundation, especially if they want to keep the mission a little bit more close to home.

Valerie (3m 58s):
And perhaps family focused, perhaps they want to have a family centered board of directors to really make sure they maintain a certain level of, of control over the organization. So all of those factors are what we take into account when we decide the entity type with a client.

Jonathan (4m 13s):
So, you know, I hope this is a reasonable question, but you know, what, what do we see in this country? Because we’ve obviously heard over the last couple of years with the pandemic, that there’s been a lot of wealth creation, a lot of families that have, you know, very wealthy individuals who have created even greater wealth, are we seeing a, an increase in establishing foundations? And is there, is there a whole ecosystem of sorts that exists that, that realm of the market where people say, if they reach out to their peers and say, Hey, you guys have a family foundation, what are I want to do the same? I want to do good. R D how does that world sort of operate?

Jonathan (4m 55s):
And what are we as, as people that are not engaged in it, what are, what do we need to know about how that happens?

Valerie (5m 2s):
Absolutely. Well, at least in my own individual practice, I’ve definitely seen an increase in clients coming to us with some ideas, perhaps their friends, you know, have formed a foundation and they want to do something similar. We actually just had a client who thought about there was a T a sports tournament that they had, that a friend of theirs was running as a charitable organization. And they decided they wanted to do something in honor of their family member who had passed away to do a similar types of work. So, yeah, we definitely see that trend, you know, individuals seeing others doing good in the world’s coming to us and saying, Hey, what can we do here? You know, is it wise to form a nonprofit organization or to keep running this organization in a different way? So we definitely see that a lot. And I would say even with the COVID impact, you know, we originally thought perhaps no people would be less charitably inclined.

Valerie (5m 47s):
You know, obviously certain, certain folks are suffering in terms of, you know, what’s going on in their families and around the world potentially, you know, with their income as well. But we have noticed, you know, at least in our sector, there’s been sort of an increased desire to give charitably and we’ve had to sort of help folks kind of think about that mission and what they can do right now to make a positive impact in the world.

Jonathan (6m 7s):
It’s interesting. You mentioned that because one of the things that I see often are sort of these feel-good news stories, and, you know, obviously, you know, the tragedy part, typically isn’t a feel good, but what families do after suffering some sort of tragedy. And it seems to me that it’s quite a commonplace today to have, you know, a go fund me, you know, initiative that starts after some sort of tragedy. And I would say, and I’m not a huge consumer of television news, but almost every time I tune in, I see one of these feel-good stories of, of, you know, the family took tragedy and created a GoFundMe page. And next thing you know, they have a foundation that’s set up. Is that something that, that, that you’re seeing more of because there are vehicles to be able to accelerate funding and to, to raise funds for these things.

Jonathan (6m 54s):
And, and I guess the second part of that question is are those people that typically do their homework first or they jump in and then, you know, figure it out after the fact. And does that create complication

Valerie (7m 5s):
Also great questions. Yes. We definitely do find, you know, especially with GoFundMe that you’re not really getting the benefits, you know, potential tax benefits that you could get with a charitable organization. So, you know, certainly there are people who start with GoFundMe and then say, wait a minute, we could be doing this differently. This, this project is sort of really growing and people are really interested in, in making contributions. So then they sort of, you know, might come to us and say, okay, you know, how do, how do we do this? What are other people doing? And, you know, in addition to the foundation trend, you know, definitely there are folks who want to use a donor advised fund. That’s become sort of an increasingly popular way of giving charitably. You know, we’d sort of advise them about the advantages and disadvantages of that, but sort of to go to your second question, I do feel people are really doing their research.

Valerie (7m 48s):
You know, so our clients usually do come to us. You know, the internet is full of information about charitable organizations and, you know, sometimes that can be great and they learn a lot and they come to us very well informed other times, perhaps, you know, they’ve drafted some documents, they need a little assistance because perhaps, you know, they filed something before the IRS through, you know, certain legal service and maybe, you know, there are sort of, sort of edits that have to be made before the IRS will accept that. So then they come to our help sort of further down in the process. So basically, you know, it’s, it’s totally fine to come to an attorney with no idea of what you want to do, but it’s also fine to do some research. And it’s always great when clients are well-informed.

Jonathan (8m 29s):
It is, you know, just following up on that theme, it just it’s mind boggling to me how people in the midst of grief can figure out how to set up a, go fund me page and raise, you know, tons of money. And I don’t know how they’ve navigated through what their organization’s actually going to do other than, you know, taking something tragic and turning it into something positive. So I would imagine in those cases they would be well-advised to sort of do things correctly from, from not only a tax advantage perspective, but there’s a lot of compliance in the nonprofit world, correct. There’s a lot of government oversight. And

Valerie (9m 3s):
So, yeah, you do have those ongoing, you know, tax filings and at least in Massachusetts, you also have some attorney general oversight over charities, which a lot of folks aren’t aware of. So, you know, one of the great things about her is we also have a lot of expertise with the other attorneys and paralegals in keeping those ongoing filings maintained. So a lot of our clients will come to us, sort of leave it in our hands to kind of, you know, keep things going past the initial formation, make sure they’re meeting all their deadlines so that, you know, especially if they’ve gone through a terrible situation or dealing with grief, you don’t have to also be concerned with making sure that all of these ongoing compliance and filing requirements are met

Jonathan (9m 40s):
In a sort of a macro question, I guess, do you see in your practice sort of the trends that exist in traditional industries with nonprofits where there’s a lot of mergers consolidation of organizations and is that a very different and complicated affair within the nonprofit? Well,

Valerie (10m 0s):
That’s also a great question. Yes. So we do, we do handle quite a number of mergers or reorganizations. They’re not always, you know, formalized as a merger. It definitely, we have seen a lot more of that since the COVID pandemic. I think a lot of smaller organizations are sort of rethinking their fundraising and thinking about, well, maybe, you know, if we partnered with a larger organization, they could help us fundraise. They could, you know, align with our mission so that we would be stronger together. So, you know, we have seen a lot of that. I would say, you know, especially more in 2020, I think in 2021, not as much, but I, I wouldn’t say that to over. I would say a lot of organizations are really thinking about that. Especially as the pandemic Les a little bit longer than perhaps people originally anticipated.

Jonathan (10m 42s):
Excellent. Our guest has been Valerie Sussman, legal counsel for philanthropy and the nonprofit sector with Rodin associates. If people want to get in touch with, you want to talk to you a little bit more about either an idea they have, or about their, their non-profit formation, ongoing operations, what’s the best way for them to reach out to you?

Valerie (10m 59s):
Sure. Happy to have anyone reach out. So my email at Herbert and associates, it’s B assessment. So just my first initial and then S U S S M a n@herwitassociates.com

Jonathan (11m 12s):
I guess again, has been Valerie Sussman of her associates, but a pleasure having you on radio entrepreneurs.

Valerie (11m 17s):
Thank you so much for having me.

Jonathan (11m 19s):
And we’ll be right back with another segment on radio entrepreneurs.