Article Archives >> To the Point

Our 501(c)(3) educational organization operates solely on membership contributions.  One of our primary activities is to work one on one training local governments on the laws which allow them to coordinate local plans and policies with those of state and federal agencies.  This includes traveling to their locations and spending several days.  Local governments are reluctant to make contributions to us for fear of showing favoritism, so we often recoup only travel costs.  May we charge a fee for these services?

Yes.  Charities charge fees for all sorts of services and so long as the work is within the educational purpose for which you are exempt, the fees will not create unrelated business taxable income.  You may face a whole new set of issues with governmental procurement laws, but if you retain your flexibility and tailor your arrangement to achieve what works, you should be able to increase your income.

Comments from our Readers

Doesn't the IRS limit on income other than from dues come in to play? That is a part of the non-profit law that's unclear and potentially a huge pitfall.
D.S. -- Via e-mail

I am not sure what limit on income other than from dues you are referring to.  There is no such limit for a 501(c)(3) charity.  There is a limitation on the amount of money other than income from members that may be received by a 501(c)(7) social club, but that is unique to clubs and does not apply to charities. --Don Kramer

12/16/2009