Legal Question in Business Law in Vermont

Re: board of directors on a non-profit organization

I am a business and intellectual property attorney in Panton, VT who has extensive experience as a financial planner and have designed a number of possible solutions to your dilemma. You have outlined a typical conundrum which occurs when either a non-profit is created from personal wealth or an inter vivos trust becomes irrevocable or non-reversionary.

The gist of your difficulty is one of continued control of assets which are now vested in a non-profit entity. As long as no other funds comes in, there is no problem, you can control it. Since you are not Bill Gates, and need outside sources of funds for this project, alternative legal structuring will be needed to appease the interests

of the various other parties who wish to become stake-holders in this organization's operation. It is necessary to know much more about the entities, corporations, foundations, mortgage holders, financing terms, etc. in order to design an optimal solution to your problem. Remember, that the IRS grants non-taxable status only under certain narrowly defined

conditions, and you need to follow those carefully to maintain control and still keep the tax exempt status. Possible structural answers may involve setting up trusts, LLC's, contractual arrangements for long term operations, or possibly a private operating foundation. It all depends on the sources of funds, their ultimate use, and the nature

of the tax exempt beneficiaries as well as the desires of the "investors". This is the type of question that requires in depth analysis before making irrevocable divestitures of needed assets.

If this is structured as a cooperative, or as an association, or NGO, or other exempt entity, state and federal laws need to be reviewed for applicability. By the way, do you mean chapter 501(c)3 or under chapter 503(c)?

Also, what is the nature of the "50 bed facility"? Is it a dorm room for a school, camp, or college? A nursing home, residency for monks or other religious order? There are too many unanswered questions at this juncture to provide more than a sketch of a solution. There are multiple ways of separating control of an operating entity with control and/or ownership of underlying assets used in the entity. The key to the design is knowing up front what goals/objectives the participating parties have, and designing alternative scenarios which are acceptable to them. A careful analysis sometimes reveals irreconcilable differences or ulterior motives (unstated) which preclude some parties participation in the organization. You may need to re-think your financing sources. (It's tough to get unrestricted funds these days!) If you wish to call me and talk, I do not charge for initial consultations.