Religious Organizations Practice Group

 

BACKGROUND
The Busch Firm (“Firm”) was founded in 1979 and specializes in the areas of estate planning, tax compliance, and real estate and corporate transactions. The Firm maintains a specialty in entity formation which complements our newly formalized practice group known as the “Religious Organizations Practice Group.”

RELIGIOUS ORGANIZATIONS
Religious Organizations include archdioceses and dioceses primarily within the Roman Catholic Church, religious congregations, private schools and institutions, and foundations.

CASE
Like all nonprofits, religious organizations must operate in an environment of increasing regulation and scrutiny. However, because of their religious identities, the law places these institutions in a special category where their activities and integrity are protected under the Religion Clauses of the First Amendment and similar provisions of state constitutions. Foremost among recent scrutiny religious organizations have endured includes the continued fallout from the sexual abuse scandals and related litigation. This litigation has cost the U.S. Catholic Church approximately $2 billion. Many religious organizations, especially Catholic dioceses, have not corporately restructured, which leaves them with continued vulnerability to liability claims. The Vatican expressed this concern as early as 1911 in a letter to the United States Catholic bishops preferring that title to United States church properties be vested in a board of trustees as a legal form replacing the corporation sole model.

FIRM’S OBJECTIVES
The Firm has a unique understanding of religious organizations due to prior legal experience both counseling religious organizations including dioceses and private schools as well as advising concerning the foundation of two private Catholic schools. The Firm now desires to formally organize a practice group utilizing the legal, tax, accounting, and other religious and business experiences of its founder, Timothy R. Busch and its professionals. Mr. Busch and members of the Firm have extensive experience in founding and representing two California private Roman Catholic schools -- St. Anne School in Laguna Niguel, CA with 750 students and JSerra Catholic High School in San Juan Capistrano, CA with over 1,000 students. Both are lay founded and all of the legal and tax needs of those enterprises were administered by the Firm in the case of St. Anne for 17 years, and JSerra for over 10 years. Mr. Busch also sits on the Board of Directors of Catholic University of America, the Papal Foundation, (where the Firm serves as special counsel), Patrons of the Arts of the Vatican Museums, and is a member of the Finance Committee for the Diocese of Orange. Through those relationships, Mr. Busch and the members of the Firm have became intimately familiar with many bishops throughout the country and have a unique understanding of the need for a special expertise bringing state of the art entity formation and governance to religious organizations. This requires a careful balance of civil law which the state regulates for purposes of liability and the unique precepts of canon law which governs the Catholic Church.

AREAS OF EXPERTISE

Entity Formation and Asset Protection
The Firm advises religious organizations how to best form their enterprises for efficient governance consistent with civil and religious (in the case of Catholic organization, canon law) requirements. Moreover, the Firm counsels on the protection of capital assets and charitable donations for the benefit of the religious organization and its donor base. Isolating highly exposed liability areas particularly in human personnel into entities where the organization’s major capital assets cannot be reached is a key concept.

This insulates the Bishop from personal liability which may exist in the corporation sole model currently used throughout California. An objective will be to ensure that the entity formation is governable, meaning that it is easily administered given the limited amount of tax and legal expertise available especially at the parish level. It is necessary to ensure that the entities are respected with separate bank accounts, books and records, minutes of members and directors, and the appropriate officers and staff are appointed to administer these matters.

Financing
The Firm has expertise in taxable and tax-free bond financing for enterprises particularly in the area of schools. Legal, tax, accounting and financing counsel will be available to religious organizations in this area. A Firm affiliate, Busch Financial Services, has provided counsel and placement on over $100 million of taxable and tax free financing.

Tax Preparation
The Firm has a staff of CPAs and CPA/ lawyers who can provide advice concerning and/or prepare tax returns and tax-exemption statuses for various religious organizations.

Charitable Giving
Through estate planning and advising religious organizations, the Firm has a wealth of experience in the creation and operation of inter vivos and testamentary charitable donations which name the religious organization as beneficiary. This includes advising religious organizations and their development departments on the interface of charitable remainder trusts, charitable lead trusts, retained life interests in residences and other revocable and irrevocable testamentary gifts, and many other tax vehicles available to optimize lifetime enjoyment of the assets by the donor and ensure that the assets are directed in accordance with the donor’s wishes. This could also include advising an independent foundation established for religious organizations which is recommended by the Firm and expanding it to a self-directed foundation. The Firm does not provide investment or asset management services.

Real Estate Entitlement
The Firm also has experience in real estate entitlement for religious organizations seeking zoning and building permits and other land use permits.

Internal Governance
The Firm has an expertise in dealing with governance arrangements of organizational charts, employee manuals, operating manuals, articles, bylaws, mission statements, vision statements, goals and objectives, organization philosophy, and other pertinent documents which are critical to accreditation of educational institutions. The Firm and its founder, Tim Busch, who has served as Chairman of St. Anne and JSerra, are very familiar with the unique needs of entrepreneurial start-ups in initial stages and their pathways to maturation into a professional corporate model. Tim Busch is personally involved in the workings of private boards, religious congregations, and the balancing of a president, principal and rector model in education entities. He also has expertise in advising dioceses on various educational models including the parochial school model, private Roman Catholic model, and regional diocesan model. His expertise includes business, legal, tax and accounting advice in these aspects.

Local Counsel
The Firm is licensed to practice law in Texas, California, Nevada, Michigan, and the District of Columbia. When advising religious organizations on matters of law in other states, and when dealing with particular matters in those states in which the Firm is licensed but which are outside the expertise of the Firm, the Firm will associate local counsel. Most of the areas of governance relate to federal tax and estate tax law in which the Firm is an expert.