EXECUTIVE SUMMARY

Charitable Allies, one of only a handful of nonprofit charitable legal aid firms in the country focused exclusively on nonprofits and their stakeholders, seeks to increase its capacity to provide pro-bono legal counsel and representation to help nonprofits—particularly those serving low-income and minority communities—more effectively execute their missions. 

In pursuit of this goal, Charitable Allies will establish and build a “Pro-Bono Fund” that will underwrite the cost of legal services for nonprofits that cannot otherwise afford them. The Pro-Bono Fund will allow Charitable Allies to play a larger role in the nationwide effort among legal advocates and charitable organizations to fill what has become known as the “justice gap”—the gulf between the civil legal needs of individuals and organizations and the resources available to meet them. 

As nonprofit organizations proliferate across Indiana and the US, and as demand for legal services in general continue to rise, the justice gap for nonprofits and their stakeholders is growing, and very few firms are able to meet the need for highly competent legal advice in the nuanced area of nonprofit law.  Even fewer firms are able to provide their services free of charge. Nonprofits that serve low-income and minority communities are especially at risk as already-constrained budgets and shrinking donor bases limit their ability to assess risk and resolve disputes.


We welcome your consideration and support as we seek to meet the growing need for pro-bono legal aid for nonprofits and the communities they serve.

Our mission and history

Charitable Allies is a charitable legal aid firm in the US that provides legal services to nonprofits, and was re-founded in 2013 following the 2012 closure of the Indianapolis-based Community Organizations Legal Assistance Project/Community Development Legal Center (COLAP/CDLC). 

Charitable Allies’ mission is to support nonprofit organizations with comprehensive, customized, and client-focused legal aid and education at no cost or greatly reduced rates to help them more effectively pursue their missions. Since its founding, Charitable Allies has focused exclusively on serving and supporting nonprofits with critical legal support and education, enabling them to devote their most valuable resources to realizing their visions, instead of on the complexities of the law.

Charitable Allies has nonprofit clients in more than 30 states and maintains a focus on small to mid-sized nonprofits—whose annual revenues are typically $10 million or less.* In the past three years alone, we have served nearly 500 nonprofit clients, charging significantly below-market rates for high quality legal services. In so doing, we save our clients hundreds of thousands of dollars per year, freeing them to reinvest those funds directly in fulfilling their missions and growth. 

Charitable Allies has grown tremendously in recent years, with growth of approximately 50% per year in 2017, 2018 and 2019 and nearly 100% growth in 2020. We receive, on average, 13 qualified requests for services from new prospective clients each week, and are seeking to grow our team and infrastructure in order to be equipped to take on all the worthy nonprofits who seek our assistance. 

*According to data available from the Urban Institute, this means the nonprofits we represent reflect less than 15% of all revenue and expenses in the exempt organization sector. 

Why we Exist

Driven by a passion to serve, educate, heal, and counsel others, nonprofit leaders devote themselves to changing lives and saving lives not for themselves, but “for the good”.  Our noble work strengthens communities all over the world, protecting those at greatest risk from falling behind, and sustains our democracy by nourishing civil society. 

Likewise, successful business people, issue experts, and generous donors, give freely of the time and talent to serve on nonprofit boards because they believe deeply in the mission of the nonprofit, and make personal sacrifices to help the organizations they lead be as effective and productive as possible. 

But starting a nonprofit organization is no easy task; and nurturing its growth from infancy to maturity can often require tremendous effort. The combined assets of a great idea, a passionate team, experienced leadership, and even sufficient funding, are not enough to build and maintain a successful nonprofit. Hundreds of would-be groundbreaking organizations every year, which might otherwise have made a transformative impact on the world around them, are forced to shut their doors because they or were simply unprepared to deal with the inevitable legal questions that all nonprofits face at some point in their life-cycle. 

Nonprofits rarely plan ahead for the legal issues they will inevitably encounter or set aside funds in their annual budgets for legal counsel.  Among small and startup organizations, where legal questions tend to be common, relatively expensive and potentially existential, access to affordable and competent legal counsel is all but nonexistent.  As a result, nonprofits typically only seek out attorneys and advice from the volunteer attorney on their board of directors or when minor problems have ballooned into full-blown crises. 

Even if an organization manages to avoid legal challenges that require representation in court, it will at some point need to retain counsel to provide clarity on any number of questions that arise when attempting to navigate the complex maze of interwoven state and federal law, state and federal agency rules and regulations, and constantly evolving judge-made law. Every day, nonprofit founders and leaders struggle to understand their rights and duties with respect to the contracts they sign, the products and services they purchase, and the charitable contributions they receive (or give) – and they must do all of this while also trying to run their organization and secure the resources necessary to keep pursuing their missions. 

The nonprofit sector is growing at a rapid pace, far outpacing the private sector, with industry observers estimating an expansion of between 15 and 20 percent over the last 10 years. As the sector continues to grow, federal regulations continue to expand, and court decisions become more complicated with more stringent requirements placed on directors and officers. For example, in a recent case, one nonprofit struggled financially, and, despite warning signs, the board was inattentive and made slow decisions. As a result, for the first time in US history, the individual board members were each found personally liable for $1.75M in damages for providing inadequate oversight, relying on incompetent officers and in failing to take adequate action once they knew there were problems. 

No director individually engaged in bad behavior other than being inattentive, but they were each still held personally liable. Had this nonprofit board of directors understood their duties to the organization, they might have acted sooner and more decisively – and that organization, which had served a particularly vulnerable population in the community for a century, might have survived.

When a nonprofit organization fails, the fallout can be catastrophic for the community it serves. The nonprofit hospital in a rural community that closes because its board failed to provide adequate oversight leaves the community without access to healthcare. The animal shelter that shuts its doors because of a conflict with its landlord requires the needless euthanization of animals. Likewise, the children’s museum that is forced to cancel its marquee programs because of its failure to adhere to donor intent, deprives the community of an important educational resource. 

Healthy nonprofit organizations are an essential ingredient to healthy communities, and healthy communities are essential to a flourishing society and a strong democracy. For nonprofits to thrive and contribute to a flourishing society, they need and deserve the best legal partners they can get. 

Charitable Allies is the legal partner nonprofits need to stand by them as they launch, grow, and succeed at what they were founded to do.

The “Justice Gap”

Nationwide, more than 85% of legal problems reported by low-income Americans received inadequate or no legal help. Nearly three-fourths of low-income households experienced civil legal problems each year in a wide range of areas. 

Proposals to address and fill the justice gap are typically couched in terms of the needs of low-income households, and the vast majority of charitable legal aid firms are structured to provide low- or pro-bono legal support to individuals and families. For low-income individuals seeking legal assistance, there are a variety of nonprofit law firms, legal aid clinics, and local agencies to which they might turn.  But when a nonprofit organizationa homeless shelter or an animal rescueneeds competent legal advice on any one of the complicated issues that it may face during its life cycle, very few options are available. 

The charitable legal aid community, while growing, is primarily focused on serving individuals rather than organizations. The reasons for this are clear:

  1. Demand: the need for counsel on issues such as rental housing, custody and divorce, education and disability are enormously high across the country. Millions of Americans need legal help and legal aid firms generally focus their attention on the area of greatest need.
  2. Competence: nonprofit legal challenges tend to be more complicated, involving a host of interconnected legal doctrines, regulatory requirements, and compliance standards. High quality legal guidance in this nuanced area is most often only available through high-cost, white-shoe firms.
  3. Funding: nationwide, the lion’s share of philanthropic support for legal aid firms is directed towards firms that serve individuals.  This is in part because the needs of individuals and families are simpler to explain and more easily measured than those of nonprofit organizations. Another reason funding is limited is that the cascading positive impact that a competent nonprofit attorney can have on the effectiveness of an organization is not widely understood or adequately explained – as a result, funders often only make grants directly to nonprofits in order for them to pay for the “technical assistance” of an attorney rather than supporting the nonprofit-focused firm directly to provide ongoing support and advice to many organizations.

Each week, Charitable Allies receives more than a dozen qualified new inquiries for help from nonprofit organizations located in nearly every state, and we conduct at up to 25 pro-bono telephone consultations every week. We regularly have to turn away clients either because we are at full capacity, or because the client’s budgets are so tight that they cannot afford our dramatically-reduced rates. COVID-19, with all the uncertainty and belt-tightening it has caused, has only increased the flow of inquiries for our help. 

The justice gap for nonprofit organizations is growing nearly as quickly as the nonprofit sector itself (by over 20% in the past decade), and with so few options available to affordably meet their needs, nonprofits and their stakeholders – along with the individuals, families, and communities they serve – are struggling to stay focused on their critical missions instead of on the complexities of the law.

The Opportunity

A dedicated, robust Pro-Bono Fund will allow Charitable Allies not only to play a leading role in filling the justice gap for nonprofit organizations, but to help nonprofits more effectively pursue their visions for vibrant communities, healthy individuals and families, and a flourishing society.  

During the past near-decade, Charitable Allies has served hundreds of nonprofit clients who pay either significantly reduced rates or receive our assistance at no cost. For many nonprofits, a brief consultation with one of our highly-competent attorneys allows them to resolve the issue they are facing, and in some cases, a call with Charitable Allies saves an organization thousands of dollars in legal fees to private firms. These savings can then be re-invested where the organization needs them most.

We find there are particular areas of law that are both particularly challenging for nonprofits and volunteer attorneys who do not practice in this area are a substantial risk, usually out of innocent ignorance. These include laws related to:

  • donations and donor intent (e.g., the Uniform Prudent Management of Institutional Funds Act, the Uniform Prudent Investor Act and charitable trust law);
  • the two state and four federal conflict doctrines–the doctrines and laws that control how a charitable entity should behave when dealing with a transaction in which there might be some level of conflict or private benefit;
  • rights and responsibilities of members, including non-voting members;
  • rights and responsibilities of directors and trustees;
  • nonprofit affiliation exceptions to the franchising laws;
  • Board liability management; and
  • unrelated business income taxation and related doctrines, among many others.

Ultimately, Charitable Allies can answer questions in these fields very quickly where it would take another attorney many hours to research in order to be able to give sound advice. 

Other nonprofits need more involved assistance, but because Charitable Allies focuses exclusively on nonprofit law and is intimately familiar with the most common challenges, we are able to respond to and resolve problems reliably and quickly.  Still other clients need ongoing legal counsel to assist them with complex disputes, governance issues, or compliance matters.   

In each of these areas for nonprofits, Charitable Allies is highly competent. The challenge and the opportunity is securing the resources to serve nonprofits on a completely pro-bono basis. To begin offering pro-bono legal aid to a wider range of nonprofits, Charitable Allies will initially offer the following tiers of service:

  1. One-Time or Short Consultations
  • This in-person, video or telephone one-time or short consultation will help nonprofits understand the basic considerations of the legal issue they are facing, sometimes even solving the problem completely on the call.
  • Charitable Allies currently offers free consultations nearly every hour, on the hour, from 1pm-5pm Monday through Friday, throughout the year.
  • Today, these consultations are tightly limited to the latter half of each day, and are funded through our work with low-bono fee-paying clients.  The Pro-Bono Fund will allow Charitable Allies to offer more in-depth consultations, with a wider range of nonprofits.

2. 2-hr* Engagements

  • Provide opinion letters on compliance, governance, compensation, and other issues.
  • Outline Legal strategies and plans
  • Evaluate Strengths and weaknesses of the nonprofit’s case

3. 5-Hour* Engagements

  • Assistance to launch and structure a new nonprofit
  • Review filings with IRS and state agencies, contracts, leases, or other agreements.
  • Presentation to Boards of Directors in best practices and risk management

4. Customized, ongoing Representation

  • Retained representation in the case of more complex disputes
  • Customized guidance on substantial changes to the nonprofit such as mergers, franchising, dissolution, or reorganization
  • Comprehensive counsel for general, transactional, and litigation needs.

5. Educational Programming

  • Charitable Allies will produce and distribute educational content that helps nonprofit organizations stay informed about changes in nonprofit laws and regulations, and plan ahead for common legal issues and pitfalls.
  • Charitable Allies will host training sessions and seminars for nonprofit organizations via in-person events and webinars.
  • We will provide our current paid subscription service, which offers monthly educational articles to nonprofits written by our attorneys who work with nonprofits every day, free of charge to qualified nonprofits.  Articles cover relevant topics to nonprofits and include helpful additions like checklists and worksheets, so our nonprofit subscribers can turn our legal education articles into actionable to dos that move their mission forward without the confusion of navigating legal requirements and compliance.

*The above time estimates are approximations. In each meeting/engagement, we ensure that we have fully answered each client’s questions and responded to concerns. These calls commonly last longer than what we initially estimate.

Though each client is unique and every engagement is different, nonprofits generally face the same range of issues. Charitable Allie’s Pro-Bono Fund will enable donors to ensure that the organizations they support will have access to high quality legal advice – at no cost to the nonprofit, allowing nonprofit leaders to focus their time on their important programs, and to direct donor funds to addressing the problems they care about most. In this way, the Pro-Bono Fund will help community nonprofits preserve core funding for programs and avoid the necessity of seeking additional donor funds to respond to inevitable legal issues. 

How We Qualify Pro-Bono Clients

Charitable Allies will allocate Pro-Bono Fund resources to organizations that meet certain criteria, i.e., where free legal assistance will have the greatest impact, and with a special emphasis on minority-led nonprofits and nonprofits that serve predominantly minority communities.

Each year, Charitable Allies gives free consultations to between 500 and 800 nonprofits seeking legal assistance in a wide range of areas. Prior to each consultation, clients complete an initial intake form, providing basic organizational data, contact information, and other relevant files. During the initial consultation call, Charitable Allies attorneys walk through the client’s issue or questions, and are often able to resolve the issue or provide actionable advice on the first call. 

In order to direct Pro-Bono Fund resources toward minority-led nonprofits and nonprofits that serve predominantly minority communities, while also maximizing the impact of the Fund by focusing on nonprofits that have a bona-fide financial need that is timely and urgent, Charitable Allies will revise and expand our client intake process and develop a more robust questionnaire for all prospective clients that includes:

1. Charitable Class Information:

  • Leadership and Governance Questions – Is the potential client themselves a part of a defined charitable class? Are they led by a person who is a member of a charitable class?
  • Governance Questions – What percentage of the board of directors meet diversity and inclusion criteria?
  • Diversity and Inclusion Questions – Does the nonprofit have a board approved Diversity and Inclusion statement?
  • Constituent Questions – What communities does the nonprofit serve? Does the nonprofit serve a predominately charitable class including low-income people or minorities? What geographic location (zip code)?

2. Funding Availability:

  • Has the nonprofit attempted to find funding elsewhere? If not, is there a legitimate reason? Alternatively, is the scope of engagement small enough that chasing a small amount of dollars would be an unacceptable burden to entry?
  • Is the matter an existential one for the organization? (only applies to existing organizations)
  • Has the organization ever budgeted for legal services? Is it open to doing so in the future as it grows and scales?

3. Timeliness and Urgency:

  • Is the project needed?
  • Does the project or the potential client fill a previously unmet need in a community?
  • Is the nonprofit meeting a current need, like providing support for those suffering from COVID-19 or is it intended to address a specific natural disaster or the like?
  • Is the entity suing or being sued? Why? Are they innocent actors?
  • Will the results create or potentially create new law in the nonprofit/public charity space?
  • Is the potential client the “underdog”?
  • Is the potential client in a niche field that has a unique need for legal services?

While these criteria may be refined and updated from time to time, the core idea is to ensure the nonprofit organization or stakeholder is highly-qualified and our efforts will have the greatest impact. 

This expanded intake process will enable Charitable Allies to effectively track the the impact of the Pro-Bono Fund; it will provide new and actionable statistical information about the practical challenges nonprofits are facing; and it will allow Charitable Allies to maximize the impact of philanthropic gifts to the Pro-Bono Fund by concentrating resources and highly competent attorney skills on nonprofits that not only need it most, but are doing the most good for or at-risk communities.

Projected Annual Budget 

ServiceQuantityTotal
One-Time/Short Consultations45078,750
2-hr Engagement12543,750
5-hr Engagement3530,625
Ongoing Representation550hrs96,250
Educational Programming91,875
Administration (15.0%)58,750
TOTAL$400,000.00

Leadership and Principal Program Staff

Zac Kester, Executive Director and Managing Attorney

Zac received his BA from Michigan State University, and studied law at Indiana University Maurer School of Law. Zac also has an LL.M. (Masters of Law) and a CFRM (Certificate in Fundraising Management) concentrating on the special needs of tax-exempt organizations and has practiced law primarily for charities for nearly twelve years, focusing on organizational and compliance services. Zac is licensed to practice law in Indiana and in the District of Columbia and can practice in other jurisdictions as permitted by that state’s rules on the multi-jurisdictional practice of law.

Robert Miller, Staff Attorney II and Program Officer

Robert graduated from Indiana University Robert H. McKinney School of Law in 2017 with a certificate in Corporate and Commercial Law. Robert is licensed to practice law in Indiana and can practice in other jurisdictions as permitted by that state’s rules on the multi-jurisdictional practice of law.

Kristen Revall, Legal Operations Manager

Kristen attended Purdue University before transferring to IUPUI where she graduated with a degree in Criminal Justice. She recently obtained her Certified Nonprofit Accounting Professional (CNAP) certification. Her ultimate goal is to gain CPA certification.

Conclusion

Through all of its efforts, Charitable Allies is thriving – along with the hundreds of nonprofits we have counseled and represented through their most difficult and celebrated times.  We are receiving more applications for our legal services and educational programming than ever before. Encouraged by these successes, and in order to leverage them for even great impact in the most vulnerable communities, Charitable Allies is seeking to create a dedicated, robust Pro-Bono Fund to expand its capacity to offer a full range of legal services to qualified nonprofits in 2020 and beyond.

After the devastating months of 2020, Americans are in greater need than ever of the noble, local nonprofits that see and meet their needs in so many varied areas of life. We hope that you will partner with us to support these nonprofits with the critical legal services they need to continue executing their missions.