One benefit of 501(c)(3) status is the ability to borrow at tax-exempt interest rates. Judicious use of tax-exempt debt to spread the cost of long-lived capital assets over their expected useful lives can relieve pressure on operating budgets. When choosing between tax-exempt financing and conventional financing, a nonprofit organization should weigh the interest rate savings against the higher transaction costs and ongoing compliance burdens associated with tax-exempt finance.
This Legal Quick Hit will be led by two members of Venable’s public finance practice and will provide an overview of which expenditures are eligible for tax-exempt financing. It also will detail the costs and compliance burdens that need to be weighed against the benefits of such financing. Specific topics to be covered include:
- The process: what do you have to go through to issue tax-exempt debt?
- The benefits: interest rate savings
- The transaction costs: added costs over borrowing on a taxable basis
- More on the costs: ongoing compliance burdens
- Is it worth it?: who and what to ask
Walter R. Calvert, Partner, Venable LLP
Davis V.R. Sherman, Partner, Venable LLP
This event is open to ACC members only. Please visit ACC's website if interested in membership.