Starting a nonprofit requires more than good intentions. Federal tax-exempt status under Section 501(c)(3) demands compliance with IRS requirements that trip up many founders. Texas incorporation is straightforward, but the IRS Form 1023 application for tax exemption requires detailed information about governance, activities, finances, and policies. Mistakes can delay approval, invite scrutiny, or result in denial. Ongoing compliance with annual filings, unrelated business income rules, private benefit prohibitions, and lobbying restrictions requires attention throughout the organization’s existence.
Beyond the IRS, Texas nonprofits must navigate state registration requirements, sales and property tax exemptions, charitable solicitation rules, and Attorney General oversight for certain organizations. Churches face different requirements than charities. Private foundations have stricter rules than public charities. Business leagues under 501(c)(6) and social welfare organizations under 501(c)(4) have their own structures. Nonprofit attorneys help organizations choose the right structure, obtain proper exemptions, and maintain compliance as they grow.
What Nonprofit Attorneys Handle
Formation and Tax Exemption
Creating a nonprofit involves drafting articles of incorporation and bylaws that satisfy both Texas law and IRS requirements. The certificate of formation filed with the Secretary of State must include specific language for tax-exempt purposes. Bylaws establish governance structure, meeting procedures, conflict of interest policies, and other internal rules. Attorneys prepare and file IRS Form 1023 or the streamlined Form 1023-EZ for smaller organizations, then coordinate with the Texas Comptroller for state sales tax exemption.
Governance and Compliance
Boards of directors have fiduciary duties to manage nonprofits properly. Attorneys advise on board structure, officer roles, meeting requirements, voting procedures, and conflicts of interest. Annual Form 990 filing with the IRS requires accurate reporting of finances, activities, and compensation. State periodic reports and charitable registration renewals add additional obligations. Attorneys help organizations understand and meet these ongoing requirements.
Transactions and Restructuring
Nonprofits engage in contracts, leases, employment relationships, intellectual property licensing, and sometimes mergers or dissolutions. Attorneys review agreements to ensure compatibility with tax-exempt status. Joint ventures between nonprofits and for-profit entities require careful structuring to avoid jeopardizing exemption. When organizations need to change structure, merge with other nonprofits, or wind down operations, attorneys guide proper procedures.
Employment and Volunteer Issues
Nonprofits have the same employment law obligations as for-profit employers, plus unique considerations around volunteer management, minister taxation, and housing allowances for clergy. Reasonable compensation must be documented to avoid excess benefit transactions. Attorneys develop employment policies, review compensation arrangements, and address disputes that arise.
How to Choose a Nonprofit Attorney
Nonprofit specialization. Tax-exempt law is technical and differs substantially from general corporate practice. Choose attorneys who focus on nonprofit organizations and understand IRS requirements, not business lawyers handling occasional nonprofit matters.
Experience with your organization type. Public charities, private foundations, churches, business leagues, and social welfare organizations have different rules and challenges. Attorneys familiar with your specific type of organization can identify issues others might miss.
Practical orientation. Nonprofit founders want to pursue their missions, not spend time on legal technicalities. Good nonprofit attorneys provide practical guidance that enables mission work while maintaining compliance. They should explain requirements in understandable terms.
Ongoing support. Formation is just the beginning. Nonprofits need ongoing counsel as they grow, face new challenges, and encounter compliance questions. Consider whether attorneys offer continuing relationships, not just one-time formation services.
Texas Nonprofit Attorneys
Cullinane Law Group
Location: Austin, Texas (serves nationwide)
Website: https://www.cullinanelaw.com
Phone: 512-542-9898
Cullinane Law Group works exclusively with nonprofit and tax-exempt organizations. The firm works with 501(c) nonprofits of various types, including public charities, schools, churches, business leagues, arts organizations, and international NGOs. Services range from formation to ongoing compliance, corporate restructuring, transactions, and tax reinstatement.
Practice Focus:
- 501(c)(3) and 501(c)(6) formation
- Tax-exempt status applications
- Governance and compliance
- Mergers and restructuring
- Fundraising law
Perliski Law Group
Location: Dallas, Texas
Website: https://www.texasnonprofithelp.com
Phone: 214-865-7542
Perliski Law Group represents over 100 nonprofit clients ranging from small churches to large statewide organizations. Principal attorneys have more than 30 years of experience with nonprofit formation, including 501(c)(3) charities, private foundations, churches, and business leagues. The firm offers flat fee packages and discounted rates for nonprofits. Formation services include 12 months of support and board training to ensure organizations begin operations with proper understanding of their obligations.
Practice Focus:
- Nonprofit formation
- Church and religious organization law
- Tax exemption applications
- Board training and governance
- Ongoing nonprofit counsel
Brewer, Lang & Veach
Location: Grapevine, Texas (Dallas-Fort Worth area)
Website: https://blvlawfirm.com
Phone: 817-410-2345
Brewer, Lang & Veach focuses on representing religious organizations and public charities. Attorneys handle formation through complex transactions, advising on governance, compensation issues, intellectual property protection, employment policies, and liability minimization. The firm works with large established organizations and individuals launching new ministries alike. Practice areas include nonprofit formation, federal and state tax exemption, governance compliance, employment matters, and intellectual property.
Practice Focus:
- Religious organization representation
- Public charity formation
- Nonprofit governance audits
- Employment and volunteer policies
- Intellectual property protection
Costs and Fees
Nonprofit legal fees vary by organization complexity and service type. Basic formation including articles, bylaws, and EIN application may cost $1,500 to $3,500. IRS Form 1023 preparation adds $3,000 to $8,000 depending on organization complexity, plus the IRS user fee of $600 (or $275 for Form 1023-EZ filers). Texas state exemption applications are typically included or add $500 to $1,000. Complete formation packages from specialized nonprofit firms often run $5,000 to $12,000 total. Ongoing compliance counsel may proceed hourly at $250 to $450 per hour or through annual retainer arrangements. Some firms offer reduced rates or flat fees for smaller nonprofits.
Frequently Asked Questions
How long does it take to get 501(c)(3) status?
IRS processing times vary but typically range from 3 to 6 months for complete applications. Form 1023-EZ applications may receive faster processing. Complex applications or those requiring additional information can take longer. The IRS offers expedited processing in certain circumstances. State formation through the Texas Secretary of State typically takes one to two weeks, and can be expedited for additional fees.
What is the difference between a public charity and a private foundation?
Public charities receive substantial support from the general public or government and are the most common type of 501(c)(3). Private foundations typically receive funding from a single source, often a family or corporation, and face stricter rules including mandatory annual distributions, excise taxes on investment income, and restrictions on self-dealing. Most new nonprofits seeking broad public support should structure as public charities.
Can a nonprofit make a profit?
Yes. Nonprofits can and should generate revenue exceeding expenses. The “nonprofit” label refers to the prohibition on distributing profits to owners or shareholders, not a requirement to operate at break-even. Surplus revenue should be reinvested in the mission. Unrelated business income, revenue from activities not substantially related to the exempt purpose, may be taxable even for otherwise exempt organizations.
Last Updated: January 2026
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