545: Advising Not-for-Profit Organizations in Real Estate and Business Transactional Settings
There are more than 1.5 million not-for-profit organizations in the United States alone, and more throughout the world. Not-for profit organizations contribute to society in many ways, through diverse missions from education and research, to social services, relief, and advocacy, to religion, to arts and culture. In addition to the impact made through their missions, not-for-profits as a group are significant as employers and for their contribution to the general economy as well.
Not-for-profit organizations exist to further their charitable purposes, do not distribute dividends or net revenues (having no private shareholders or owners), and often are formed and operated to qualify for Federal income tax exemption under Section 501(c)(3) or other provisions of the Internal Revenue Code. Nonetheless, they have many of the same operational needs and characteristics of any other business. They occupy space (whether owned, leased, or hosted by others). They purchase and consume goods and services from vendors and suppliers. They manage and cope with attendant risks.
Interestingly, commentators suggest that not-for-profits can be more complex to manage, and to advise, than a for-profit business. The organization may have funding constraints, staff constraints, and knowledge constraints, particularly when copying with transactions or situations that arise only occasionally or where the organization is governed or operated in whole or in part by volunteers. Not-for-profit facilities and operations can be uniquely complex (think for example about a museum, a zoo, a hospital, or a cathedral), and their diverse sources of governmental and private funding can come with extensive conditions, restrictions, and reporting requirements. They may even be offered (or accept) donated goods or services in kind, gifts that come with their own implications.
This course will explore the opportunities and challenges for lawyers involved with not-for-profit organizations, whether as paid or pro bono legal advisors, or as board members or volunteers. The course will be centered around a recurrent series of fictional clients, each a not-for-profit organization, engaged in a variety of operational and transactional situations. Each client organization will have a different mission, size, and resources, as well as mock client representatives who will have different business and style preferences, which the class will need to accommodate and will come to anticipate in fashioning and recommending solutions for each client. There will be a particular emphasis on transactions and involving ownership, leasing, use, and operation of real estate, which (just as with many for-profit businesses) is typically the largest single category of capital investment and the second largest category of repeat expense (after total personnel costs) for many not-for-profit organizations. The course will also consider issues of legal ethics and professional conduct, as well as governance and fiduciary duty of board members, in the not-for-profit context.
The course will use traditional lecture and discussion learning techniques and case study simulation, with a major focus on transactional goals, issue spotting, transaction structuring, documentation, and implementation. The course's emphasis on case studies and commercial transaction scenarios is also designed to act as a capstone course that complements and draws upon the students' prior coursework in contracts, real estate and commercial transactions, ethics and government regulation. In these ways, the course emphasizes skills relevant in any transactional project, for-profit or otherwise.
This course is offered in the fall semester. We will meet most weeks at the scheduled class time for lectures, simulation exercises, and discussion. Students will be graded based on class participation, written assignments and exercises, and a take home examination.
This course also provides the background and framework for Advising Not-for-Profit Organizations: Business Practicum LAW 482 which is offered in the spring semester.