LQ Heritage, Nonprofits

March 6, 2006
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You could say Wheeler Upham Attorney Bill Heritage wrote the book on nonprofit. Or at least one chapter.

As the co-author of a chapter in the YaleBusinessSchool book “Generating and Sustaining Non-Profit Earned Income,” Heritage said the honor was a highlight of his 35-year career, which has spanned international, immigration, business and nonprofit law, among other areas.

“It was just something that was of the ‘next level up’ in terms of contributions in the field of scholarship, in an area you don’t often have the chance here in Grand Rapids to participate in,” he said of the chapter, entitled “A Primer on Legal and Tax Considerations.”

Heritage said his work with nonprofit organizations has allowed him to have some new experiences and to meet people he may not have had a chance to meet otherwise.

He said he has worked with many civic and business leaders in West Michigan, as well as nationally known figures, such as former Dallas Cowboys coach Tom Landry, Black Panther activist Eldridge Cleaver, former Secretary of Education and drug czar William Bennett, and President Gerald R. Ford.

Heritage said the biggest difference between nonprofit law and business law is the tax-exempt status that many nonprofit and charitable organizations have.

Nonprofit, charitable or education organizations have an additional set of Internal Revenue Service rules, and Heritage said he helps the organizations to stay in compliance with those rules.

“You make judgments that protect the organization and make sure it retains its tax exemption, which is very vital to these groups,” he said. “If they are tax exempt, they don’t want to do anything to threaten that status.”

Also, Heritage said, unlike businesses, nonprofit organizations have to rely on funding, which may not always be readily available.

“One concern for nonprofits has always been fiscal constraint,” he said.

Heritage said it is always important to know the structure of the organization — whether it is an executive director, a board of directors or the total membership who make the decisions.

“The decision-making process, depending on format, can vary,” he said.

Nonprofits have come a long way from being neighborhood charities, Heritage said.

“They’ve ventured more into the fabric of our overall business and commercial activity that’s going on in society,” he said. “You’re finding now that nonprofit or tax-exempt organizations are providing housing, education programs and services, and providing medical care on a variety of fronts.”

Despite the larger scope of nonprofits, Heritage said the entities’ purpose remains the same.

“They always maintain their core emphasis on charitable or tax-exempt true purpose, even though they may be operating in an arena that profit entities operate in,” he said.

Heritage said he has worked with many organizations to show them how to operate in that manner without spoiling their tax-exempt status. He gives the example of Habitat for Humanity, which is not one of his clients.

“It’s building and supporting the building of housing, which is then sold to members of the public,” he said. “They’re competing, in essence, with for-profit builders.”

The same could be true of nonprofit publishing facilities, with which Heritage has had some experience.

“They’re operating in the same arena of activity that for-profit publishers are, and yet they have to do so within certain sets of rules and regulations in order to maintain their exempt status,” he said. “Their primary or even secondary purpose isn’t to make a profit; it’s to accomplish a goal or a mission. It’s coming at the same activity from a different perspective.”

Problems that nonprofits may run into include branching out into “unrelated business income.”

“You look at the function; you try to see if it can be defended or related to their tax-exempt purpose,” he said. “You try to keep it in a balance with their tax-exempt purpose.”

Heritage said technology is expanding the possible realms in which nonprofits can operate, and that is going to create new hurdles for the nonprofit and profit sectors.

“I suspect we’ll have to develop and adjust the rules to address those questions when they arrive,” he said.

Heritage said that between education, religious and health care organizations, the Grand Rapids area has a significant nonprofit presence. “With those three main sectors alone, for a popular area of our size, we certainly have a significant presence of nonprofit entities as compared to other less developed areas,” he said.

A North Carolina native, Heritage went to DukeUniversity for his undergrad training and to the University of Virginia for his master’s and law degrees.

Heritage said he was recruited to this area out of law school, and that it was a nice place to raise a family. He said he remembers former Mayor John Logie hosting him on his first visit to Grand Rapids 

He started his law career at Warner Norcross & Judd LLC before becoming general council for Rapistan. After four years with that company, he returned to private law and started with Wheeler Upham 11 years ago.

Heritage is also the West Michigan editor of “Michigan International Lawyer,” published by the State Bar of Michigan. He is a member of the Nonprofit Organization Committee of the American Bar Association and has lectured and also published some articles on the subject.

Though he is also active in international, immigration and business law, Heritage said he feels a sense of service working with nonprofits, because “good things are happening as a result of your work.”     LQ

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