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Tax Exempt Organizations

Bracewell’s tax-exempt organizations team regularly advises a wide range of nonprofit corporations and charitable trusts about the applicable complex rules and regulations. We routinely advise clients about various federal tax issues, such as compliance with the private inurement proscription, the private benefit limitation, excise taxes applicable to private foundations and related persons, the lobbying and electioneering rules, structuring investments to avoid unrelated business income tax, IRS examinations and rulings, and tax-exempt finance. In addition, we provide legal guidance to nonprofit corporations in connection with a variety of business transactions, such as mergers and acquisitions, sales and purchases of physician practices, and debt offerings. Finally, we help clients comply with board governance issues, such as drafting and interpreting governance documents and policies, and negotiating gift and naming rights agreements with donors.

Our nonprofit clients include hospitals and healthcare organizations, colleges and universities, independent and parochial schools, museums and arts organizations, conservation organizations, advocacy groups, student loan organizations, and grant-making foundations and charitable trusts.

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Recent Notable Matters

The Robert A. Welch Foundation creation and funding of The Welch Institute, a $100 million joint venture with Rice University that will combine fundamental chemistry and materials science with the latest in machine learning and artificial intelligence to accelerate the discovery, design and manufacture of the next generation of materials with applications to new energy systems, sustainable water, space systems, telecommunications, manufacturing, transportation, security and more

East Texas Medical Center Healthcare System — sale of substantially all assets to Ardent Health Services, including a network of 9 hospitals, 39 clinics, 2 inpatient facilities, 13 regional rehabilitation facilities, physician clinics, 2 emergency centers, regional home health services covering 41 counties, a comprehensive seven-trauma center care network, and an EMS fleet of more than 45 ambulances and 4 helicopters. In connection with the acquisition, Ardent and The UT Health Science Center formed a partnership and will invest more than $125 million in the new UT Health East Texas health system to support operations and fund improvements.

Parkland Center for Clinical Innovation (PCCI) — sophisticated and complex spin-off transaction involving the licensing of software to Pieces Technologies, Inc. (Pieces Tech), an innovative healthcare analytics entity that deploys cutting-edge technology to improve clinical and community health outcomes; Pieces Tech officially launched with a $21.6 million Series A funding round led by Pacific Advantage Capital (PAC Partners) and Jump Capital, with participation from various healthcare systems and select Dallas family offices, among others

Texas Medical Center — development of a 28-acre biomedical innovation and commercialization campus known as TMC3 which will be a cooperative development between the medical center and four public or non-profit medical institutions, including a world-renowned cancer center and a major public university’s health center

Public charities and private foundations — provided guidance with respect to the creation, funding and maintenance of private foundations, public charities and endowment funds, including providing tax advice with respect to relevant excise taxes and unrelated business taxable income issues

Healthcare organization — structured joint ventures and partnerships with for profit entities to protect continued tax-exempt status of exempt participants

University — addressed issues related to “debt-financed property” arising from electric generation facilities located on campus

University — structured an agreement whereby commercial sponsors fund research to be performed by the University

Independent school — addressed governance and compliance issues, including providing board training, a review of organizational documents, and the drafting of policies related to the operation of the school and its fundraising activities

Student loan organization — represented a public charity in connection with its purchase of a portfolio of below interest student loans

Senior living facility — obtained group exemption ruling for subordinate affiliates of a senior living facility

Private foundation — provided advice relating to the exclusion of a large tract of real estate from its minimum investment return calculation

Tax-exempt organization — represented client in connection with an IRS audit relating to alleged political activities

Pediatric Hospital — provided advice about the reporting requirements related to “quid pro quo contributions” in fundraising activities

Tax-exempt organization — provided advice regarding the “program-related investment” exception to jeopardizing investment rules

Public charity — provided guidance about continued qualification as an “educational organization”

Hospital — provided guidance with respect to the status of services providers as employees versus independent contractors

Multi-hospital health care system — advocating for client in Internal Revenue Service examination of client’s partnerships with proprietary health care providers

Healthcare organization — provided guidance relating to the rules and regulations enacted as part of the Affordable Care Act, including Internal Revenue Code Section 501(r)

University — structured the transfer of intellectual property to a for-profit company in exchange for royalty payments

Independent, non-profit biomedical research institution — draft and negotiate a variety of research and data sharing agreements and develop patent portfolio to facilitate institutional interests regarding the effects of human genetics on health outcomes and development of diagnostics and therapeutics for combating infectious diseases

Privately held remote pharmacy company — recapitalization by private equity firms led by DFW Capital Partners, a New Jersey-based venture capital fund, and in prior private equity investment by NeighborCare, Inc. (now known as Omnicare, Inc.), as well as compliance matters governing remote pharmacies





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