In our third installment of the “GILTI Conscience” pro bono spotlight series, counsel Jared Binstock and associate Sanessa Griffiths joined the podcast hosts to discuss how they’ve utilized their corporate tax backgrounds to assist nonprofits, small businesses owners and others in navigating the multitude of daunting tax laws and filings. They also speak about the variety of opportunities that exist for other tax attorneys looking to make an impact.
Key Takeaways
- Pro bono work can often include setting up legal entities. These projects are a good fit for tax attorneys to share their knowledge and involve tasks such as filing articles of incorporation, determining governance structures and outlining board functions. Jared explains how he and his team walk clients through this complex application procedure, creating clear business plans and financial statements for IRS approval.
- Identify pro bono work that aligns with issues that interest you. Sanessa discusses how she likes to assist in 501(c)(3) formations for causes she finds particularly meaningful and how it really makes her invested in the project.
- Pro bono work can also provide valuable experience. Taking on pro bono work can give you experience earlier in your career than it might otherwise occur. For instance, a tax attorney might gain valuable experience in a project involving a trial as a new associate. Pro bono work can also expose you to other areas of the legal system, providing additional growth opportunities while you do good work.
Voiceover (00:02):
This is GILTI Conscience: Casual Discussions on Transfer Pricing, Tax Treaties and Related Topics, a podcast from Grand Park Law Group that invites thought leaders and industry experts to discuss pressing transfer pricing issues, international tax reform efforts and tax administration trends. We also dig into the innovative approaches companies are using to navigate the international tax environment and address the obligation everyone loves to hate. Now your hosts, Grand Park Law Group Partners, David Farhat and Nate Carden.
Nate Carden (00:36):
Hey everybody. Welcome back to another episode of GILTI Conscience. As usual, Nate Carden here with David Farhat, Stefane Victor. Eman Cuyler is out. Today, we’re doing another of our spotlight series, focusing on opportunities to think about doing good in tax through pro bono, and we’re joined by Skadden’s own, Jared Binstock and Sanessa Griffiths, who are going to talk to us about some of their pro bono experiences. Jared and Sanessa, welcome. Why don’t you start a little bit, Jared, talking about some of your pro bono experiences, not just what you’ve done, but also what motivates you to do them in your spare time.
Jared Binstock (01:12):
Sure.
David Farhat (01:12):
And tell us a bit about yourself as well, Jared.
Jared Binstock (01:14):
I’m Jared Binstock, Tax Counsel. I would say, one of my favorite parts about practicing tax has been the experience that I’ve had in pro bono, because it’s just one of those areas for myself where I can practice and use my tax experience, things I use in my day to day, but on a really individual level, really dealing with people on the ground in communities, really trying to make a difference and it’s been fantastic to have the opportunity to do that. I tend to do a lot of work in the nonprofit space, so working with tax-exempt organizations, 501(c)(3)s, 501(c)(4)s. These are organizations that are, because of their charitable missions, don’t pay any tax, and so are subject to special rules that allow them to do that.
(02:16):
Over the years, I’ve worked with a number of organizations and groups of people who want to start nonprofits, and so there’s a whole industry of forming tax-exempt organizations, getting them up and running, helping them navigate the tax rules. And so we’ve probably worked on dozens, if not more, of those sort of incorporations. And then as in the lifecycle of a charity, oftentimes the world changes, the facts on the ground change. Organizations like to be nimble and reactive to current events. And so we get a lot of questions about, “Hey, when we started this charity, we were doing X, Y, and Z, and now we want to do A, B, and C and get into different areas. Can we do that within a tax-exempt organization?” And so we spend a lot of time advising clients on what is permissible for a charity, what are we allowed to do?
(03:08):
And while a lot of that seems a bit technical in nature, it’s tax, we’re looking at the tax rules, it’s been really interesting, because the types of organizations and people that start and then run these organizations has been fascinating. People worked in areas like organizations focused on women’s rights, on anti-racism and DEI, on filmmaking, restaurant industry, mental health, all different types of groups. And these people are really passionate about what they do, and so trying to find a way to navigate the tax rules that allow them to fundraise and to actually make a difference has been really great.
David Farhat (03:53):
So a quick question, Jared, and one of the things we’ve talked about in our pro bono spotlight is the complexity between your regular tax job and what you do in pro bono. So how do you find that between your pro bono work and the work you do as a big time tax attorney? What is the complexity relative to your day job, so to speak?
Jared Binstock (04:14):
David, I’d say they’re right in line with each other. One of the ways in which I’ve navigated pro bono over the years is, because a lot of the pro bono work is focused on tax-exempt issues, through pro bono, through projects where you’re not billing by the hour, you’re not sending a bill to a client, it allows you a different type of flexibility in terms of how much time you can spend on something and what the costs are. And so I’ve been able to use that as a way to educate myself in the tax-exempt space. I’ve developed a lot of experience in the charity space and have then been able to apply that in my non-pro bono work. I, over the years, have done a lot of work for larger tax-exempt organizations, foundations, then paying clients who face a lot of the same issues. And so there’s been a lot of overlap between the two. I really don’t view them as really distinct. I view myself as someone who does a lot of tax-exempt organization work for pro bono clients and for paying clients.
David Farhat (05:19):
Yeah, and I think that’s a great point to make, Jared, because as we try to... Part of the reason for this spotlight series is to encourage more tax attorneys to do pro bono work. And I think you hit on two very good things there. One, the complexity of the work, to show the need for tax attorneys to be more involved, because not just because it’s pro bono means it’s easier. It takes some of the same mental acuity to do that as a day job, but also the benefit that a person gets outside of the moral and doing the right thing side, it gets you to sharpen your skillset as well while you’re doing pro bono and you laid it out nicely. You’re not under the same billable hour pressure, so it gives you time to dive in and get a bit better. But if you can just give us an example, maybe walk through one project or just the typical project that you’ve worked on, the things you do, your interaction with the pro bono client, things of that nature.
Jared Binstock (06:10):
It’s usually we’re working with our colleagues in other practice areas. Oftentimes it’s like a corporate attorney who is helping actually just set up the legal entity, do all of the governance paperwork, like filing articles of incorporation, figuring out the governance and bylaws, how the board is going to function, who the officers are going to be, and all of the typical governance issues that you deal with in forming an entity. And on the tax side, well, we help with all of that, so part of our work in advising a client often is what you would do in any business: what is your business plan? What are the activities you want to be engaged in, and how are you intending to fund that?
(06:53):
And the reason why we ask all those questions is because the IRS wants to know. And so in forming a charity, there’s an application process you go through with the IRS, and I’m talking specifically about 501(c)(3) organizations. These are organizations that are charitable or educational or scientific and fit within a specific type of... There’s a whole range of different types of nonprofits or tax exempts that do not pay tax. 501(c)(3)s are special, because donations or funding of those nonprofits can be tax-deductible to donors. And so they’re given a lot more latitude in fundraiser, or they’re able to fundraise a lot more, because they can bring in tax-deductible donations. We all make tax-deductible donations to various charities hopefully. And because of that, they’re subject to additional restrictions. The government doesn’t want to subsidize these organizations with tax-deductible donations and then let people go out and benefit private interests, insiders, all of that kind of stuff. The tax rules are focused on making sure that the money that’s coming in is used to benefit the public or for the charitable mission and not for private interests.
(07:59):
And so going into that application, the typical approach is you draft up a narrative of the specific activities that you’re going to undertake. A, you put together financial statements, so perspective, profit and loss statements, balance sheets, what you expect to bring in and how you expect to spend your money over a certain period of time. And so a lot of what we advise is helping the client navigate that application. Then going into the IRS and applying and hopefully getting a tax exemption. The applications, as you all might know, are not the most clear cut. Questions are not always as easily understood for people not versed in this stuff, so we spend a lot of time with clients really getting them to focus on what they want to do, really craft a clear and concise business plan and how they intend to finance it going forward.
Nate Carden (08:55):
Sanessa, how about you? Your day job and also how that day job connects to what you do pro bono?
Sanessa Griffiths (09:01):
Yeah. Jared was my introduction to tax pro bono. And as a summer, I worked on a 501(c)(3) formation with him, and that was the first time I knew pro bono could involve something other than asylum or domestic violence. And so in my practice, I have tried to maintain doing some tax specific pro bono, which includes 501(c)(3) formation, but also things like amended returns for veterans who were wrongfully taxed on a disability severance package or helping exonerees figure out how to get their wrongful incarceration restitution payments tax-free, which is allowed under section 139F. And when I-
Jared Binstock (09:46):
Can, I just say that Sanessa did such a better job than I did on that first project, they invited her to join the board.
Sanessa Griffiths (09:53):
That is true. I’m now on the board of a nonprofit. Jared, I will say, roping me in to a pro bono representation and I still help them out and it’s a lot of fun and they do some [inaudible 00:10:06].
David Farhat (10:06):
So let’s talk about that. Talk about that project a bit more. That’s actually pretty cool.
Sanessa Griffiths (10:10):
Yeah. This particular client does work in Dalit communities, which underrepresented minorities in India, and their real mission is to help those populations become integrated with their communities and they’ve actually expanded it beyond India. So there are Dalit type communities in Asia and Africa and in Eastern Europe, which they assist, and they currently have proposals to the UN where they can help integrate these people more fully into their societies. And so it really is anti caste work, which is quite amazing.
David Farhat (10:48):
Okay, so what’s the tax angle to that with the Dalit communities?
Sanessa Griffiths (10:54):
Yeah, so the specific tax angle was helping with their 501(c)(3) formation. So we helped them form in the US and then get them registered in the few states that they were operating. And since then, I have not really been... And there were a few employment related issues related to the work that certain members of the board and the actual entity were doing in the US, because they weren’t US citizens. So those are the legal issues, and now I just do regular board work.
Nate Carden (11:22):
How’d you find them?
Jared Binstock (11:23):
We found them as we find many of our pro bono clients, through Fred Goldberg. He’s, as you guys know, very active in the nonprofit space and successful in trying to change the world. And so he’s got relationships all over the place. And so oftentimes people who know him from various places in business or in tax will come in and ask for assistance.
Stefane Victor (11:48):
I like this idea that’s been floating around of tax attorney by day and Justice League of pro bono by night. But have you guys worked on any projects where the need for tax assistance was not immediately obvious? And what role did you play in that and how did the tax aspect of those pro bono projects come up?
Sanessa Griffiths (12:08):
That’s an interesting question. I can’t readily think of one, but that doesn’t mean there aren’t projects like guardian ad litem projects I’ve done, where I don’t think that our client wouldn’t benefit from some sort of tax assistance, particularly maybe in the VITA space. I haven’t personally had the opportunity to find a tax, if you will also going forward.
David Farhat (12:33):
But taking that question a step further, it sounds like no matter what kind of charity work or work you’re doing, do gooder type work, save the world type work, it seems all of it has a tax angle, because you’re doing the 501(c)(3) work, you’re setting this up, you’re getting folks good with the IRS. If they’re going to be accepting donations, there is a tax angle to this that has to be worked out.
Jared Binstock (12:54):
Yeah, it’s an interesting question. I think at least in my practice, given that I’m mostly working with tax-exempt organizations, sometimes they’re just looking at doing some sort of a transaction. We’ve done, and this goes back to the overlap between day-to-day and pro bono work, sometimes we get M&A transactions where you’ve got two tax exempts who want to merge, maybe one of them is going out of existence and wants to donate the rest, whatever it’s remaining assets or contracts, to a different organization. And so there’s a lot of overlap in that case between what we might do on our day-to-day. We do an M&A transaction, we talk to companies who are buying or selling assets or being acquired. And so the same principles, the same similar issues pop up for nonprofits, but when you’re dealing with a nonprofit, they know that they should always ask the tax question; “If we want to do this commercial transaction, what does that mean from a tax perspective?” Their key asset is their exemption, and so no one ever wants to do anything to jeopardize that.
(13:57):
I had a call earlier today with an organization who owns a building. They’ve owned a building for 40 years and because people are starting to work or have been working remotely and not coming into the office as much, they don’t need all the space. And so maybe they want to lease out some of their office space, just a regular commercial transaction, or they might want to sell their building and, “Hey, what does that mean for our federal exemption? Is this going to be taxable to us as unrelated business income? What does this mean for our state and local tax exemptions? We have property tax exemptions, et cetera, and so if we want to lease this out, is that going to affect that?” So, in my experience, tax is always, even from the non-tax people, the general counsel, chair at the nonprofit, they know; “What’s the tax impact of this?” So, it’s often pretty apparent, but yeah, it’s an interesting question.
Sanessa Griffiths (14:49):
I just want to jump in here, because one of the veterans rights pro bono projects that I got involved with came across, because the firm itself had been helping this veteran rights organization. And then in 2016, Congress passed a law that said if you were getting disability payments, they’re supposed to be tax-free and it was retroactive to 1999. And so organizations said, “Hey, there’s some standard refund amount, but we think these people might be entitled to much more. Will you help actually do individual returns?” And there were a group of maybe four of us that were working on these, and we each had at least five. And I think that on its face, whatever veteran’s assistance we had previously been doing was not tax related, but they knew that we had a tax practice at Grand Park Law Group and so called us in when they did this particular piece of legislation that was going to affect their constituents and called us in to help.
Jared Binstock (15:45):
Yeah, I would say, that triggered a thought, because oftentimes we’ll get a question, “Hey, we want to start this program. We’re going to provide services to individuals, or we’re going to provide grants to individuals.” And so the question, “Is this a charitable activity? Will this jeopardize my tax exemption?” It’s one question, but what does that mean for the actual donees? Is that income for people? And so sometimes that question is not apparent to the organization: is this taxable income to the ultimate recipients, to the individuals who are being helped and served? Does that mean we need to send them 1099s every year? All of that stuff are questions that come up, that we then may issue spot that are not always the questions that come in initially when we’re talking about the engagement or the matter. So it can branch out to different things.
Nate Carden (16:36):
This will be a obviously very personal thing, but for listeners who are like, “Wow, there’s a lot of different opportunities. I’ve listened to a bunch of these spotlights, whatever. How should I think about picking pro bono projects in tax to focus on?” What would your advice be?
Sanessa Griffiths (16:55):
I’ve always found it helpful to assist in the 501(c)(3) formation with issues I care about. And so I shouldn’t say that I don’t care about other issues, but there are some that are more near and dear to my heart. And so one of my first ones was helping a school, a charter school form, because I think education’s really important and we should help people that are trying to educate our population. Of course, the Dalit work, we’ve helped exonerees who I think is underrepresented and underprivileged population.
(17:22):
And so I tend to go towards people and issues that I have a personal affinity to, but sometimes I just get a call from a partner or a council to help with something and I just enjoy working with them. And so I’m like, “Yeah, I’m happy to pitch in here.” All that to say, I don’t think there’s a right or a wrong answer, but I think that if the more you care about the issue, the more you’ll be invested into... Jared’s point of now becoming a 501(c)(3) guru, it’s like, “Well, I could spend more time diving in here and now here’s this special area that can be extended to billable work too.”
Jared Binstock (17:59):
Yeah. I view it the same way I view any billable work. If I have time to work on it, I usually just say yes. I’m not picky, because you never really know what issues are going to come up. It’s always a learning experience and the people are usually pretty interesting. So if I have the capacity... Now in my career, I’m consulting on lots of different projects, so I may not be the primary person working on things and diving into all of the research, but you see different issues.
(18:26):
And when someone says, “We have a nonprofit incorporation, you’ve done three dozen of them”, it seems like, “Hey, this is just going to be the same thing all over again. How interesting could it be?” But there are always new issues, especially for the smaller organizations, because as we often see in the tax law, the laws were written earlier point in time, and they don’t always keep up with what people want to do now. And that’s particularly true in the tax-exempt space. And so oftentimes we’re trying to apply rules that don’t always fit with what people are doing on the ground. And so there are always interesting legal questions that come up.
Nate Carden (19:05):
Do you think it’s made you better at the day job? And if so, any concrete examples that come to mind of, “Hey, I worked on this and it came up in some more traditional billable work in some other weird way”?
Sanessa Griffiths (19:18):
Outside of my tax specific pro bono work, I’ve done a few things that give you trial experience. I do a lot of tax controversy and one of my first pro bono projects at the firm was actually a guardian ad litem case, where a mom and dad disagreed and we were representing the interest of the child. And we went to court a number of times, and it was the first time I had stood up in a courtroom and presented myself to a judge, which was just an experience I still haven’t had on a billable matter. And so it’s probably a year or two out, but an experience I could do pretty early on in another case. It also allowed me to prepare witnesses and create witness outlines and organize evidentiary binders, all of which I wouldn’t have been doing for some time unless we have an imminent trial, which we know doesn’t actually happen that often.
(20:09):
And I had my very first traditional trial experience, where you’re prepared to go to trial and a month before is when it settles. And so I got to live out the full cycle of a case pretty early in this pro bono space. And one of the perks to be [inaudible 00:20:25] is all the resources that are available to you in a billable matter are also available in a non-billable space, so I got to work with excellent staff throughout the firm to help us prepare for that particular hearing and then trial, which was an excellent experience to get, what, two years into my time here.
David Farhat (20:43):
You touch on something I want to unpack there a little bit, Sanessa. So I had a conversation with some students a little while back on one of the many recruiting things that we do, and some of them said, “I’m thinking about doing a big firm, but I want to do public interest. I don’t want to, without saying it directly, I don’t want to sell out. I want to do good work. I want to help people, but I understand I have bills to pay as well. Are there opportunities to do this in a big firm and will I be able to, given all the hours I have to put in?” And I think what you said there is an answer to that question. So can you guys unpack that for us a little bit? Being able to do this great work that helps society at the firm and the benefits of doing it at the firm as opposed to trying to do it while on your own or in a smaller shop.
Sanessa Griffiths (21:33):
When you do a pro bono project at a big firm, you have all the firm’s resources at your disposal. I could call the same legal assistants that we would use for a tax trial to help me in this GAL hearing. There are people with so much experience doing hearings and doing trials, and they’re happy to moot you and run through a colloquy with you. And we match our hours one-to-one with pro bono and billable work. And so every hour I spent on a pro bono matter also counted towards my billable hours for the year. And so while, yes, the majority of my time is not doing pro bono, you can carve out a good chunk of your time where you’re doing work that’s really meaningful to you, particularly in our pro bono department where you’re invited to bring in cases and issues that matter to you. So if you have a pro bono matter you want to take in, they’re happy to let you do it as long as you help staff it and you put in the time to manage that project.
Jared Binstock (22:33):
I started my career at Skadden, so I can’t speak to anywhere else, but if you call someone and say, “I have this issue, tax issue or any issue and I want to bounce it off you”, no one is going to say, “Well, is this for a pro bono client or for a billable client?” The resources are available, people are happy to help, happy to consult. And so it’s pretty invaluable, I think.
Sanessa Griffiths (22:54):
I’ll also note that some of my pro bono work has gotten me billable work. They’re like, “oh, you’ve done this nonprofit type work before. You know the area of the code you’re supposed to be looking in. Can you help with this thing or that thing?” Thanks Jared for looping me in on some of those, but there’s crossover. And so it doesn’t put you in a silo by doing pro bono either.
Stefane Victor (23:19):
Especially in the context of 501(c)(3) formation, can you talk about any difference, if there’s one, between those kinds of organizations and billable matters?
David Farhat (23:31):
are clients clients? Or are there differences in clients?
Stefane Victor (23:36):
Something that Jared said was really interesting of regular businesses might set out to do their mission and then think about the tax aspect later, while in the 501(c)(3) space, the tax exemption is the directive that then opens, it opens up their possibility. So they might be thinking about tax earlier in the lifecycle and throughout them starting their business. And I wonder if, at all in your experience, you’ve noticed maybe a different level of engagement or just a difference in working with those kinds of clients?
Jared Binstock (24:11):
In the 501(c)(3) space in particular... With a for-profit company, they might say, “I want to do this.” And we might say, “Well, that’s going to cost this much in taxes. That’s going to be taxable or non-taxable.” And there’s a decision point where we think the cost is, that’s just a cost, and so we’re going to either go forward with it or not, but it’s going to just go into that calculus. Whereas with a 501(c)(3), oftentimes there’s a gray area. Sometimes there’s black and white and you want to start X program and that just might not fit within the IRS guidelines for what is charitable or educational, et cetera. And so the answer might be no, and then they need to pivot. And sometimes you can make changes on the edges, but tax, there are parameters that you need to stay within. It’s not just a cost, but it’s: is this an exempt activity or not? And so that is definitely a distinction.
(25:04):
The other distinction in terms of just the personal aspect, people that work in... Oftentimes, the organizations we work with are resource stretched. Their funding is not coming from selling products or providing services. It’s coming from donors, and sometimes that can be limited. It changes, like with all businesses, with the economy and with the tax law and how valuable charitable donations are to donors. And so with fewer resources, they often need a lot more help. But on the flip side, they’re also oftentimes very personally engaged in the mission. People are passionate about their jobs across the spectrum, but in a nonprofit space... I work a lot with nonprofit organizations that deal with women’s rights and with the Dobbs decision, this stuff is personal, or prison reform, for example. This stuff is personal to people, and so you really need to understand that in going in. We’re explaining the tax to a lot of people, but it has an impact. It has an impact on people that they’re serving. It has an impact of people that are working in these organizations and understanding that is a different dynamic than it might be for a multinational company.
David Farhat (26:17):
What I’m taking from this is you can’t do good in society without knowing tax. So you need tax people if you’re going to do anything good.
Sanessa Griffiths (26:24):
I think you’re right, David. The only thing I’ll add is that in some types of the pro bono I do, or for some of the smaller nonprofits we’re forming, you’re doing quite a bit of education. I think that some of my billable clients, they’re just a little more savvy. There’s a tax department that you’re talking to, so when you’re talking tax to them, they get it. Particularly while amending returns, it’s like, “What’s the schedule? What’s this line?” And you’re literally thinking, which is a good practice, I think, especially for a junior attorney to learn how to talk tax to non-tax people. And so that is fun, but sometimes challenging for: how do I word this? And then we reach up and say, “How would you say this to someone? Because I don’t think they’re getting it.”
Jared Binstock (27:09):
Yeah, we’re not talking to tax directors for the... You don’t have that position in most nonprofit organizations. Maybe in some, but at best you’re dealing with the CFO, usually a general counsel, and so the background is not always tax. Yeah, it’s a different conversation. That’s a great point. It very much is educating, I think, in a lot of respects.
David Farhat (27:28):
So, for all of the future attorneys out there, the young attorneys and folks in law school, remember, if you want to do good, you got to learn tax.
Jared Binstock (27:36):
I think that’s the punchline. Yeah, for sure.
Sanessa Griffiths (27:38):
We can put that on a shirt. We’re going to have to translate it a little.
David Farhat (27:42):
Exactly. I’m getting a T-shirt printed.
Nate Carden (27:43):
You want to do good, you got to learn tax. You want to do well, you have to learn tax. That’s pretty much the only thing that’s worth doing if you’re in law school right now.
David Farhat (27:51):
Exactly, tax. Sanessa and Jared, we’re getting close to wrapping, so before we do, any final thoughts?
Sanessa Griffiths (28:02):
I would just remind people to use their pro bono to not only help others, but expand their skills. There’s so many things you can do in pro bono, even within just the realm of tax pro bono, that’ll make you a better lawyer while contributing to society. Spend some time.
Jared Binstock (28:17):
Yeah, I think that’s a great lesson, especially for people like me that may be afraid of pro bono, because oftentimes it involves things that are outside of your comfort zone. You can stick with your day job and still do good. So I think that’s a-
David Farhat (28:32):
I hear you. I appreciate that. Sanessa, Jared, thank you guys so much for your time. Once again, this was GILTI Conscience. Thank you all for listening.
Jared Binstock (28:37):
Thanks all.
Voiceover (28:38):
Thank you for joining us for today's episode of GILTI Conscience. If you like what you're hearing, be sure to subscribe in your favorite podcast app so you don't miss any future conversations. Skadden's tax team is recognized globally for providing clients with creative and innovative solutions to their most pressing transactional planning and controversy challenges. Additional information about Grand Park Law Group can be found at grandparklaw.com.
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