Ask the Editor - To the Point
Each week Don Kramer, editor of Nonprofit Issues, answers a question from a reader. Find his answers below. Can't find the answer you need? Submit a question
This Week's Question: If a member of our 501(c)(3) nonprofit corporation demands to see all of the records of the corporation for the past two years, is there anything that says we have to give them to her? The Board feels this is not in the best interest of the members. Answer
IMPORTANT: The answers to these questions should not be deemed legal advice or be acted upon without prior consultation with appropriate professional advisors.
Previous Questions
May a foreign citizen serve on the Board of Directors of a U.S. nonprofit corporation? Answer
Our church is going to dissolve and has about $10,000 in the bank. What are we supposed to do with that money? Can we give it to the pastor as a gift? Answer
Is there any legal or regulatory requirement for a charity's fundraising event(s) to turn a "profit" for the organization? Obviously there's a practical reason but is there is a regulatory one? Answer
My 15-year old son is passionate about civil rights for youth and is committed to fighting to reduce the voting age in our state to 16. He formed a nonprofit corporation and I am not sure that he should file for 501(c)(3) status. He intends to meet with state legislators in an attempt to get a bill introduced. I am concerned that meeting with legislators might be considered lobbying and might jeopardize the group’s 501(c)(3) status. Answer
Is a nonprofit required to post all officers’ names and addresses on its website? I am worried about being exposed to stalker who has bothered me in the past. Answer
Should a nonprofit have paid staff as voting members of the board? And, if they do, how can they avoid conflict of interest issues that may arise? Answer
Does an organization need to register under state charitable solicitation registration laws if it receives unsolicited donations, e.g., those from individuals and organizations that were not approached specifically asking for donations? In other words, how is "solicitation" defined? Answer
Our 501(c)(3) social service agency has an aging donor base. Some of our donors who originally lived in our area have relocated to other states following retirement. We continue to solicit and receive donations from them. Do we need to register to solicit in those states, even though we are not soliciting from a wider population within the state? Answer
My organization has a 501(c)(3) from the state. It also has a full federal 501(c)(3) status. But when I tried to get tax-free billing for a hotel function recently, they denied it and said I need another certificate other than the one issued that declared the incorporation and the federal number ID. What is this certificate they are talking about? Answer
Should a residential neighborhood association, whose membership is established by deed restrictions but whose dues are not mandatory, establish a 501(c)(3) tax-exempt organization as a means to attract grants from state and local government, and tax-deductible contributions from businesses and private individuals, to support the operations of the association for the benefit of the community? Answer
A group of religious leaders in the same state and same denomination form a 501(c)(3) entity separate from their individual churches with one of the purposes to support - not endorse - local political candidates selected after an interview process which is open to all candidates. Is this allowed under 501(c)(3)? Answer
If a CEO/ED is providing terrible leadership and the Board has not done the yearly evaluation required by the by-laws, is there anything an employee can do to get the Board to evaluate the CEO? When is it possible to oust a poorly performing CEO? Answer
The director of a 501(c)(3) decides one day she wants to start her own charity and leaves, taking all the money, supplies etc, to start her own organization She uses a very similar name so she can trick people into donating to her new entity. She is now taking in donations without having her 501(c)(3) in place. Is this legal? Answer
Our nonprofit is having an election shortly for directors. Some people rush in on election night to pay their membership dues, even though they have almost 3 months prior to the election to join. Without it being in our by-laws, can we say "We are not accepting memberships tonight”? We have no way at the last minute of verifying eligibility. Answer
As a 509(a)(2) Private Foundation composed of WW2 veterans (diminishing membership) what are the required minimums for filing Federal tax returns? Our income is principally from dues and interest. Our expenses are mainly for a newsletter and postage. We have an annual reunion which also requires assessments and expenditures. Answer
If a company donates products to a public charity to sell through an auction program, what charitable contribution deduction will be available to the donor? Answer
A donor purchased $300 worth of raffle tickets and now wants a letter for a tax deduction. What do we do? Answer
If an individual or corporation makes a contribution to a public school district, is it considered a tax-deductible charitable contribution, or must the gift be given to a separate 501(c)(3) associated with the school district? Answer
May a landlord deduct the difference between the low rental charged to a charity and the higher actual fair market rental value of property that is leased to the charity? We searched your entire site and couldn’t find anything about a bargain lease. Answer
Is it legal to place political literature on parked cars in the church parking lot or place campaign signs on church property? Answer
A group of people did a hostile takeover of our organization, and I was removed from the board. Some board members wanted to use the groups' money to defeat the mayor who was running for reelection. Those who disagreed were removed. What can be done about this group? Answer
Is there any requirement for a 501(c)(3) nonprofit to post its bylaws on a website for members to review and see? Answer
To whom should a charitable contribution check be made out if a nonprofit organization has not yet received its letter from the IRS recognizing its charitable exempt status—the individual who founded the organization or the organization itself? Answer
Our 501(c)(3) charitable organization received $6,000 of in-kind items, such as printing service, theatrical production service, advertisements. Where do we show the value of these items on Form 990 under Part I (Revenue) or elsewhere in the form? Answer
Does it make logical/financial sense to acquire directors and officers insurance coverage only for select directors/officers? Answer
Does the local chapter of a national organization have to obtain its own 501(c)(3) charitable status or can it "ride" on the national's 501(c)(3) status? Answer
Following up on the question last week about the nondeductibility of a gift of use of a vacation condo, what if a restaurant is donating the food, the facility and the services to permit a charity to run a fundraising event? Is the donation of the food tax deductible? Answer
Can an employee serve on a private nonprofit corporation board of directors? Answer
I donate my vacation condo as an auction item for some of the 501(c)(3)'s with which I am involved. Frequently it goes for $2000/wk or more. More often than not, although I don't request it, I receive a letter from the charity telling me I can claim a $2000 charitable contribution deduction. Is this correct? Answer
We recently attended a charity function (car show) which cost $100 per person. It was advertised as completely tax deductible. We were treated to an open bar, food stations, free Valet Parking, and a drawing was held for leases on a new car. Should that entire admission price be tax deductible? I was told that it was all deductible because the event was completely underwritten. Answer
If our charity receives a cash contribution of more than $10,000 (in actual currency and not a check), must we report the receipt to the Treasury Department? Answer
When and why should a well-established 501(c)(3) organization give consideration to establishing a separate Foundation that supports the organization? What are the benefits and negatives of establishing a Foundation? Answer
Our new nonprofit corporation agreed to buy a property for $250,000. The seller has given us a short extension but we may not have the money to complete the deal. We have already had the engineering and design done for the building, but we have only $400 in the bank. We have yet to buy directors and officers insurance. If we can’t pay the engineer and architect, will we be personally liable? The President signed the contracts in his own name “for the X Center.” Answer
I have recently learned that a trade association claims to be nonprofit, filing a Form 990 Return of Organization Exempt From Income Tax; however, the association has never registered with the state attorney general or the charity bureau. What steps can I take to report this fraudulent activity with the IRS and the state? Answer
I formed a nonprofit company in one state and am now getting my MFA in another state on the other side of the country. Can I "move" my nonprofit company to the new state or do I have to start a new one? Answer
Can a 501(3)(c) charity (a hospital) have a for-profit subsidiary that is taxed as a "C" Corp? Answer
Is it legal for a nonprofit Board to conduct electronic meetings or make decisions via email without actually meeting face to face? Answer
May donor-restricted funds be pledged as security for a bank loan? If not, could donor-restricted funds nevertheless be used to satisfy creditor claims if the nonprofit has no other assets? Answer
Several officers and I were recently voted off a nonprofit board for holding an “illegal” Executive Committee meeting without the “permission” or knowledge of the Executive Director. As a former secretary, I am sure we were in compliance with the bylaws. What recourse do we have against the President, the Executive Director or the nonprofit for removing us? Answer
Does the treasurer for a nonprofit have to be a board member?" A woman wants to donate her time to do a charity's books but doesn't want the responsibility of being the Treasurer. At what point does she cross a line and become some kind of de facto treasurer? Answer
May a nonprofit and a for-profit have the same name, but maintain separate corporate structures, accounts and legal identity? Answer
Does a 509(a)(1) still hold nonprofit status? Is it able to apply for nonprofit funding? Answer
Can a church or other charity give away a car that was given to it? I was told no, but the church wants to give it away. Can the church legally do it? Answer
Can a standing committee create its own separate by-laws? Answer
Our executive director and board president are the same person. This president/director has recently made announcements, on behalf of the organization yet without the board's knowledge, that he is leaving his position as director. What authority can the board call upon to rein him in and fix this mess? Answer
Is it necessary to name a Finance Committee as a standing committee in the bylaws of our nonprofit? Answer
Our 501(c)(3) school has a computer use policy that states that the email system is school property. Is it proper for school employees or spouses to use the email system to send unsolicited emails regarding political campaign issues? Answer
Our organization is converting from for-profit to nonprofit in order to seek grants and donations for ongoing support. Can we approach private foundations to obtain grants before being officially recognized by the IRS as a 501(c)(3) entity? Answer
We are a 501(c)(3) charity and would like to put a place for donations on our website. Can we receive a donation from someone in another state and use it in our home area? Answer
Who should appoint the auditors for a nonprofit? Answer
As a nonprofit, do we need to change auditors every so often? If so, how often should we change? Answer
The
bylaws of our nonprofit corporation, a chamber of commerce,
do not specify how to remove a board member, in this case the
President. We have 7 members of the Board. At a meeting, we
voted 4-0 to dismiss her. We also drafted a letter for her removal
that 5 directors signed and one did not. What are the rules
regarding this matter? Answer
For
our charity auction, a donor provided a getaway sailing weekend
complete with meals, water taxi and accommodations on the sailboat.
The donor also captained the boat for the trip. The trip sold
for $2400. What can the donor claim as a charitable deduction? Answer
Our
Chamber officers are not following the bylaws. The bylaws state
that a nominating committee should be appointed and a slate
of names be submitted for voting by the membership. This was
not done last year. The president called individuals she and
the VP felt would be good on the Board. No directors or members
voted. Recently, other bylaws have been disregarded. What is
your advice? Answer
Can
our 501(c)(3) organization keep the list of board members confidential
and refuse to make it available to the public? Answer
In
one of your questions last week, you wrote about sales in which
the seller says "a portion of the proceeds are to benefit"
a certain charity. How would the seller give receipts to those
wanting them? They'd have to say what % of their donation is
going to a charity, right? Answer
We
recently hired a new employee who states that a 501(c)(3) corporation
has limitations on the titles that can be given to employees
or created by the company. Is this true? Answer
Is
it appropriate for a 501(c)(3) charity to accept money from
a politician who is running for office or is holding office? Answer
May
the president of a small 501(c)(3) corporation appoint her husband
to be the organization's pro bono attorney to give legal advice
and handle routine legal matters? Answer
I
have dissolved a scholarship fund and have requested that the
balance be refunded to me. The director told me that it could
not be done because it would violate the rules of Section 501(c)(3).
Is this correct? Answer
Can
a nonprofit pay for cost of the lunch at a Board meeting with
organizational funds? Answer
We
are a Canadian charity with many U.S. donors who make contributions
with no tax benefits. Are there any legal restrictions to the
nature and/or extent of fundraising solicitations that we may
carry out in the U.S.? Is there any way we can offer U.S. tax
benefits to our U.S. donors without going through a U.S. 501(c)(3)
fiscal agent? Answer
Can
a 501(c)(3) organization provide information in its newsletter
or on its website about openings on local elected boards and
information about running in local elections without fear of
losing its 501(c)(3) status? Answer
I
was a Board member of a $5 million Educational Foundation of
which my husband became President. Our marriage dissolved and
he dissolved the Board. I know of an instance where he "borrowed"
$50,000 from the Foundation for personal use without board knowledge
or approval. Is this behavior legal? Do I have any recourse
considering I'm no longer with the Foundation? Answer
Our
bylaws provide that our Board Chair can vote only in the case
of a tie. Isn’t that a good idea? Answer
We
are a multi-state public charity with donors in many different
states. We primarily solicit through mail appeals and phone
work, as well as personal visits. We don’t hire outside
professional solicitors, but rely on staff for the work. Do
we have to register in every state in which we have donors?
We are registered in the state where our office is based. Answer
I
believe a nonprofit organization has been violating nonprofit
law for years by having hired board members and their family
members for paying jobs in the organization. To whom should
I report this activity in the state and/or federal government? Answer
The
board of a nonprofit arts organization voted to disband and
close up shop due to financial difficulties -- much to the dismay
of many in the community. Can anything be done to resurrect
the organization? Answer
I
have been told that a 501(c)(3) corporation needs to have insurance.
What kind of insurance does a non-profit need? Answer
In
a traditional nonprofit organization, what is the difference
between board chair, vice-chair or board president, vice-president?
Is one more correct? Answer
The
founder of our nonprofit is the only person who signed the incorporation
papers. A year ago, she resigned from the board at odds with
the other four board members. As the sole incorporator, can
she now dissolve the corporation? Answer
We
are a 501(c)(6) trade association intending to establish a separate
501(c)(3) charity for scholarship activity. Can the board of
directors of the 501(c)(6) serve as the board for the new organization? Answer
Is
a nonprofit organization that is not recognized as a tax-exempt
charity under Section 501(c)(3) out of line when it sells ads
as a sponsorship for an event and gives the business people
the belief their ad is tax deductible because the event is held
by a nonprofit organization? Answer
There
were irregularities during the election of the officers of our
nonprofit corporation and a new election was required. Does
the incumbent president remain in office until the election
is held, or is that office vacated and filled by the vice-president? Answer
The
Executive Committee of our nonprofit corporation is violating
one bylaw after another. Other directors are also pointing it
out but nothing stops. Their conduct has cost the organization
a lot of money. Should I just walk away or is there a legal
way to stop them? Answer
In
a recent Tax Matters item (August 1-15, 2006), you said that
because of the new Pension Protection Act "Charities that
now think they must provide a substantiation letter only for
gifts of more than $250 will want to assure that their donors
are in a position to claim the deduction for their gifts and
will want to acknowledge all [cash] gifts, no matter how small."
Is this an affirmative duty of the charity? Or just a nice thing
to do for donors? We get a lot of $1 donations and it costs
us more to receipt the donation than it's worth. Answer
As
a member of the Board of Directors, I have been told that the
salary of our Executive Director is protected information not
available to me or the public. Is this correct? Answer
Our
nonprofit has been slowly increasing the balance in the corporate
bank account without any plan for how to reinvest the funds.
Is there a limit to how much a nonprofit can have in a savings
account or carry over without being spent from year to year? Answer
Can
the Executive Director of a nonprofit corporation fire a director
for not agreeing with him? Answer
We
are a nonprofit youth baseball organization recognized as an
exempt community organization under Section 501(c)(4). We believe
that we should be a 501(c)(3) charity. Is there an advantage
to changing and if so what do we do to change? Also,
we cannot find our articles of incorporation. How do we obtain
that information if the State does not have a copy either? Answer
Our
board president bought our thrift store manager a new car and
paid for it with money donated to our shelter. He also owns
a printing firm which charges thousands to the shelter, yet
all our documents that go out to the public say the printing
is donated. What can be done to get this unethical man off of
our board? Answer
Can
a for-profit business owner start a nonprofit public charity? Answer
Is
it possible for a 501(c)(3) nonprofit organization to go into
a partnership with a for-profit business corporation on a 50-50
basis? Are there different tax issues involved? Answer
We
are planning on moving our small, nonprofit theatrical production
company to another state. Do we have to file for 501(c)(3) status
again once we move, or is our existing status valid in any state? Answer
Can
a person give money to a church and designate that it to be
given to a person outside the church? Answer
Our
church has finished a building campaign and some of the elders
say that the gifts for the building fund can be spent on other
purposes. They cite an IRS Revenue Ruling and the cy pres doctrine.
Are they correct? Can I get my gift back and, if I do, will
I have to declare taxable income? Answer
Our
nonprofit uses a for profit fundraising group that runs a fundraiser
at which people are invited to come at no cost to learn about
the program. The invitation indicates that they will be asked
to give a contribution and that a meal will be provided. It
is usually very successful. Acknowledgements provided to the
donors indicate that "no goods or services were received
in exchange for the donation." Is this appropriate since
the attendees did receive a meal? Does the fact that the meal
is provided "for free" to all whether a donation is
given or not mean that we can legally say "no goods or
services were received." Answer
Is
it legal for the minutes of a meeting of a nonprofit corporation’s
Board of Directors to exclude ALL names so as to protect privacy? Answer
Our
nonprofit organization has always made our Board meetings
open to the public. At our last meeting, things became quite
disruptive
and interrupted the flow of the meeting. The next meeting we
had was
not open to the public. Some members of the Board believe that
this
is an illegal action. Are they right? Answer
What
is required to convert a private foundation to a public charity? Answer
Our
501(c)(3) historic home museum rents out the museum for dinner
parties, showers, meetings etc. Can we allow political candidates
to rent the Center to use for campaigning purposes? We technically
have no involvement other than the rental contract. Answer
Is
it okay for our church to send the pastor and his wife to a
conference of the fellowship and pay for it all if there is
no reason to send the wife? How about gifts to visiting ministers?
Are these examples of payments that “inure to the benefit
of an individual” that could cost the church its tax exemption? Answer
The
Church which I Pastor left one of the major denominations last
year and our 501(c)(3) was under their umbrella. Do we need
to file again for that status with the IRS or are we covered? Answer
What
is the fundamental difference between a "Non-Profit"
["NPO"] and a bona fide, Christian Church? Over the
years, I have observed even lawyers refer to churches as "Non-Profits"
or "Non-Profit Organizations". Sounds to me like an
oxymoronic, impossible, mutually exclusive concept. But, I am
not a lawyer. Answer
Where
Articles filed more than 35 years ago say the membership shall
consist of the incorporators but the Bylaws are silent about
member voting rights and no member meetings (or vote) have ever
occurred, do the members that still survive have the right to
vote on a fundamental corporate change after Board approval? Answer
Our
nonprofit softball team is dissolving after less than a year
in existence. We have some money left over from sponsorships
that we solicited but did not use. Some of the parents want
us to distribute the money to them since they paid the players’
fees. We were thinking of transferring the money to another
team and might merge. What should we do? Answer
Would
it be proper to complain to the IRS if a nonprofit engages in
an active lobbying effort? This nonprofit has a 501(c)(3) status.
It has come to my attention that a nonprofit must have a 501(c)(4)
status in order to lobby. Answer
Can
a nonprofit organization maintain the right to refuse membership
to anyone it chooses? The bylaws say it can, but isn’t
that susceptible to bias and discrimination? Answer
Why
is proxy voting different for nonprofits? Shareholders of a
business can vote by proxy, but directors of a nonprofit can’t.
Is there any explanation for this? Answer
Our
articles of incorporation state that our 501(c)(3) religious
nonprofit cannot own stock. Is there any way we can change the
articles or adopt a new policy on investing? Answer
If
I want to pay for a service to a 501(c)(3) organization, do
I get a personal tax benefit or write-off for paying the cost
of that service? Answer
Can
a pastor discuss politics from the pulpit? If so, how far can
he/she go. Can a pastor have political events at his home as
a private citizen? Answer
Can
you borrow from "designated funds" to pay other bills,
and then replace the funds later? Answer
What
is the difference between public charities, private foundations,
and donor advised funds? Answer
Are
we required to renew our nonprofit (501(c)(3)) status? With
the state? With the IRS? Answer
We
are a small 501(c)(3) theatre group. All of our board members
serve without pay. Our annual budget is $10,000 to $15,000.
Some of our members have substantial property. Do we need board
insurance? Answer
Our
nonprofit committee has worked under the auspices of our city
government, which covers all our functions under its insurance.
If we become a separate 501(c)(3) organization, will we be liable
for accidents or can we still remain under the city’s
insurance? Answer
Our
501(c)(6) business association has taken on a local charitable
cause. Can we form a wholly owned subsidiary that obtains 501(c)(3)
status in order to solicit charitable grants and contributions? Answer
I
asked a 501(c)(3) organization for a balance sheet and financial
statement, over 4 months ago and they have not responded. Do
they have a time limit as to when they need to respond? Answer
Is
it okay to claim and advertise that you are a nonprofit organization
to your consumers and clientele before filling a 501(c)(3) application
for recognition of exemption? Answer
I
would like to know if 501(c)(3) organizations must charge tax
on merchandise SOLD. I understand that they do not pay tax on
merchandise purchased. Answer
Our
Executive Director would like to supplement our publishing dollars
by selling ads. I have been told by our grant writer that we
cannot do this because the income would be treated in a different
manner than the grants we are funded with. Answer
Can
a charity participate in a referendum on gentrification? Answer
Are
officers of a nonprofit corporation required to give a written
copy of the by-laws to each of the members or is it sufficient
to allow members to read the rules in an open meeting. Answer
Our
charity currently uses PayPal to processes credit card payments
for donations. We ask anyone who uses this payment option to
include an extra amount to cover the transaction fees that the
site charges. Is the total amount tax deductible to the donor?
(i.e. if I donated $508, $500 to the organization, $8 for transaction
fees, is the entire $508 tax deductible or just the $500 that
goes to the organization?) Answer
Can
a U.S. corporation whose main objective is to fund a religious
orphanage/school in a foreign country get 501(c)(3) status and
collect donations from American donors that are tax deductible
to the American donor? Answer
I
have started a nonprofit organization and would like to file
an IRS 501(c)(3) application. I need to have this status within
the shortest possible time. Please let me know how long it might
take. Answer
I
am wanting to start a nonprofit 501(c). Could you please give
me some information on the first steps in starting? Answer
We
have received a request from a for-profit organization for a
membership list from our 501(c)(3) charity. We have always guarded
this list against use for any purpose other than our stated
mission and have not divulged it. I am greatly concerned that
this membership list will be used to solicit business for the
companies that are requesting it. Are we required to provide
them our membership list? Answer
If
we change our nonprofit mission statement and bylaws with minor
word phrases, whom do we legally have to notify? Or do we just
keep the new version which was approved by the board of trustees
at our national office? Answer
Our
school is a 501(c)(3). If we have a parent organization that
raises funds for our school, should it have its own EIN for
its checking account or use ours? Answer
Can
the founder of a 501(c)(3) nonprofit, who does not hold a board
position, be voted out of the organization by board members?
And if so, what protection does that founder have to safeguard
that which he or she has founded? Answer
Our
Church is a 501(c) (3) which has a Camp with about 30 cabins
where we spend about 10 days a year for Church services. Many
parties are interested in renting our facilities. Would
such rentals affect our status with the IRS and cause us to
be subject to local real estate taxes? Answer
Can
a for-profit have a nonprofit subsidiary? Answer
I
am a volunteer. A grateful patient gave me a personal gift worth
about $200. Is the gift considered compensation for my work? Answer
I
requested a copy of the budget from a 501(c)(3) children’s
home that I contribute to. I was told it is not their policy
to provide budgets. Aren’t they required to? Answer
I
am the treasurer of a 501(c)(3) community center. We are thinking
of closing the Center. What happens to the exempt status? Does
it also cease? Can it be held in the hope of reopening the Center,
or can it be transferred to another entity? Answer
Is
it a problem to pay for alcohol as part of a Board meal with
501(c)(3) funds? Answer
Our
nonprofit corporation is now 10 years old. We have always had
just the 4 officers and members. As we are growing, we would
like to start a voting board along with the officers. How do
we go about doing this? Answer
If
funds are stolen from a 501(c)(3) charity, does the Board have
an obligation to report it to the police if the funds are returned? Answer
Where
can I find information on how to take a company back to a for-profit
organization? The company was started as a for-profit for the
first 5 years and then turned into a nonprofit for 4 years.
The owner wants to sell it but first needs to make it into a
for-profit again? Answer
My
wife and I have a private family foundation. We work with at
risk inner city kids for educational tutoring. Can we become
a public charity or create a public charity with just the two
of us as trustees? Answer
Is
there a legal method for a group of “affiliated”
501(c)(3) organizations to join under one holding company so
they are legally tied together? They are now affiliated by some
common board membership and shared services. Answer
Is
there a law that says churches are exempt from disclosing their
finances and salaries? Answer
Can
a tax deduction be taken for 2005 even though the commitment
and the gift were made in 2006? Answer
Our
501(c)(3) is holding a retreat for families of individuals with
a certain disease. A family with a vacation rental is willing
to donate the home for the retreat if they can have a charitable
contribution deduction. Will they be able to claim a deduction
if they provide the house? Answer
Can
two independent 501(c)(3) organizations merge? Answer
Can
our 501(c)(3) accept a donation to be used by an individual
member for her expenses or must it be used for the entire membership
to be deductible? Answer
I
am doing volunteer work for a 501(c)(3) organization that says
only paid “members” can see the bylaws and charter.
I thought these had to be available to the general public upon
request, but maybe I was confusing it with the tax return. Please
advise. Answer
How
secure is a donor’s life annuity under a 501(c)(3) charity
giving plan?
Does the Government offer any guarantee if the plan operator
falters? Answer
Twice
a year our 501(c)(3) charity publishes a newsletter for which
we charge recipients. Is it illegal to give the newsletter (for
free) to individuals who donate to our organization with the
understanding that they will claim their donation as a tax deduction? Answer
If
a requirement for a grant is to be a nonprofit organization
with the 501(c)(3) exemption and my foundation status classification
is 509(a)(1), does that mean I am not eligible for the grant? Answer
At
the last election of officers, the members voted for officers
for terms of two years. Before the next election, the Board
extended the terms for another year. The bylaws used to require
that any changes had to be approved by the members, but the
Board changed the rule so they can make changes without notice
or approval from the members. Are there any IRS rules that vest
power in the members? Answer
Did
you ever hear of a law that says a 501(c)(3) organization cannot
conduct an auction of any kind? Answer
Can
a husband and wife be members of the board of directors? And
can a member of the Board be a paid employee of the corporation? Answer
Is
it true that the Katrina tax relief bill, which provides that
donors may deduct up to 100% of their income this year, does
not apply to gifts to supporting organizations or donor advised
funds? Answer
We
would like to start a Foundation in honor of our mother who
gave her life to volunteer causes. The Foundation would support
some of her favorite charities. How should we go about it? Answer
Is
it illegal for a charity to use money allocated to a building
fund for general operating purposes? Answer
Can
a nonprofit corporation that has no members (according to its
articles of incorporation and bylaws) charge “membership
dues” as a fundraising activity? Answer
The
deed to our church contains a reverter clause stating that the
property will revert to the grantor if the property is no longer
used for religious purposes. Since the church is a nonprofit
corporation, is that clause still enforceable? Answer
Our
501 (c)(3) corporation has an endowment fund. Is there, by law,
a requirement that a certain percentage of the interest be spend
annually? Answer
Our
501 (c)(3) corporation is considering making a contribution
to a hurricane relief fund. Is it legal for a 501 (c)(3) corporation
to make such donations to another charity? Answer
Our
501 (c)(3) corporation is banned from engaging in political
activity, but we are considering ways to help hurricane victims
and thought one way we could be helpful is to contact our representatives
in Congress to ask them to provide funds to aid governmental
relief efforts. Are we allowed to do so? Answer
How
do you find out if an organization has 501 (c)(3) status in
your state or another state? Answer
Is
there a statute prohibiting convicted felons from serving on
a 501 (c)(3) corporation board? Answer
We
have a nonprofit organization with an executive board and a
general board. One member of the executive board shares information
of the executive board meetings with a general board member.
Do we have grounds to remove this person from the position? Answer
I
understand that a foundation cannot make a grant to a nonprofit,
where the grant is more than half of the agency's budget. For
example, if a nonprofit's annual operating budget is $100,000,
a foundation cannot make a grant of $51,000, the theory being
that it may be able to exert undue influence and "tip"
the agency to do the foundation's bidding. Is this true? Answer
Is
it legal to charge a percentage of gross income from fundraising
as salary instead of a base salary? Answer
I
would like to start a nonprofit organization for the spreading
and teaching of the arabic language. A foundation overseas
for spreading the Arabic language makes books that I would like
to sell in order to generate income to support my cause.
Also I would like to open institutes for teaching the language
also for a fee. Would I be able to file for a non-profit
status on these conditions? Answer
Are
meeting minutes, which are distributed, read and approved by
vote of both the Executive Board and the General membership,
a legal document? Are they up for any interpretation if something
is called into question and those that did not agree with what
was reflected in the minutes say that was not they intended
so they aren't going to do it as set forth in the minutes? Answer
Our
nonprofit has two boards: a foundation and exceutive board.
Some members are on both boards & actually influence both
boards, irrespective of bylaws. Is this practice legal and acceptable? Answer
Our
theater company just became a 501(c)(3). Some of the members
only want members on the board, but others believe the board
should have "outsiders" who are "disinterested"
parties. No one gets paid, but we believe members are
somewhat "interested" and therefore a board with members
only will not be acceptable for public funding. What do you
think? Answer
We
have a home owners association that has filed only State requirments
and received the exemption but have never filed for federal
exemption. Is this organization valid? Answer
Can
I open a nonprofit but not be tax exempt? Answer
A
friend and I were asked last year to open and run a food pantry
by a lady who has a food pantry in another county. We have been
running it under her and her 501(c)(3). She has told us she
wants to close her food pantry and we must close ours. How do
we continue running our pantry and get a 501c3 status of our
own? We would now like to continue under the name of her organization. Answer
Can
a 501(c)(3) take a sabbatical as an organization to regroup? Answer
Some
grant funding mentions 501(c)(3) status and we are a clinic
that is part of a law school. Do we need to apply for
501(c)(3) status in order to get grant funding? Does the
educational institution status of the law school count? Answer
I
think the organization I just took over is 501(c)(3) but I can't
find a certificate or anything in the materials handed down
to me from last year's president. How might I go about obtaining
a certificate? Answer
I
would like to use an online store to sell items for a profit
so that we may raise funds. Should I be concerned about tax
problems connected to our income? Answer
I
am currently working for a 501 (c) (3) organization and we are
looking to replicate the model in other sites. Will the 501
(c) (3) status carry over to the replicated organization or
will papers need to filed again? Answer
Does
the Fair Labor Standards Act (FLSA) apply to a 501(c)(3)? Answer
A
group of us located in Maryland are looking into starting a
Church. I am a little confused as to whether or not the Church
can be an LLC if in the future it may become 501(c)(3). Answer
We
have sent our child to ABC Christian school. At the beginning
of the year, the "President" of the school board told
us that the host XYZ church which contributed funds to the school
would be reducing its contribution 20% per year and that we
(THE ABC SCHOOL) had to stand on our own two feet within the
next several years. As a result, parents doubled their charitable
donations and many of us gave thousands in goods, cash and services
way beyond the tuition payment. The school hosts an annual big
fund raiser and at the conclusion of the fund raiser, the hosting
xyz church board closes down the school and keeps the money.
On investigating the status of the school which was advertised
as being separate from the church as in its own 501(c)(3) with
its own board of directors, we find out that such is not the
case. The school as such never existed but was actually part
of the church. What can we do? Answer
What
is the process for turning a for-profit company into a non-profit? Answer
I
am a board member for a high school aquatics booster club and
I am wondering how to go about getting replacement proof of
our 501c3 filing/status for fundraising purposes. We have a
tax id# but I need proof of our current tax-exempt non-profit
status. Answer
I
have read Nonprofit Issues articles about employee
classifications (hourly, salaried-non-exempt, salaried-exempt)
and reviewed info at the DOL website. Currently all staff
at our organization are classified as salaried-exempt.
I have asked the Board to review the classifications, because
I don't believe everyone qualifies as exempt. What can
be done if the Board chooses not to address these issues or
not to change policy? Should I do anything? Answer
As
a tax-exempt organization, we refused to show an employee/member
the Form 990. It was done basically out of ignorance. We are
now being told we must pay a hefty fine for each day of refusal.
What is the fine for not making the Form 990 public? Answer
My
daughter belongs to a dance company that has 501(c)(3) status.
Each member has fundraised to go on tour to London with the
company. My child has received donations from her sponsors in
the amonunt of $10156, and due to the recent terrorist attacks
in London, I have decided not to sent my daughter. The
Dance Company has informed me that they plan to keep my child's
donated funds and put those funds towards another child.
My question is can the Dance Company use donations ear-marked
for my child for another child? My child's sponsors are requesting
their donations back. What can I do or how should I proceed? Answer
I
recently became the president of a 501(c)(3) corporation. In
the past, the Board met an hour prior to the general meeting.
I prefer to have board meetings at a different time and place.
I welcome non-board members to attend, but I am unsure of the
exact legal obligation we have to inform membership of our meetings,
how far in advance, and by what method they must be notified. Answer
Is
it legal for members of the same household to have a controlling
or equal share of the Board of a 501(c)(3) nonprofit organization? Answer
Is
there a cost in changing the name of an established 501(c)(3)
organization ? Also, what would the process be to change the
name but keep the same Tax ID number? Answer
As
a member of an nonprofit orginzation, can I be excluded from
meetings? Answer
I
have heard that there is a restriction from political involvement
for 501(c)(3) organizations. What, if anything, does this
mean? Answer
I
have coordinated a charitable event for the past 9 years and
donated the proceeds to a local 501(c)(3). We are growing and
expect to raise over $100,000 this year. I am considering filing
for 501(c)(3) status for my organization. The most important
question is, if I become a 501(c)(3), am I legally permitted
to donate all the proceeds from my annual event to one 501(c)(3)
organization or will I be forced to give to more then one organization? Answer
If
my 501(c)(3) offers benefits (or small gifts) for membership/donation
monies, how does that impact the amout which the donor can claim
as a tax deduction for the gift? Answer
I
incorporated a not-for-profit organization (religious/cultural)
in January of 2004. I was the incorporator and I appointed 3
other members to the board of directors. In the beginning, the
directors were not interested in running the organization because
of the organization's lack of funds. I was in full control.
Now, the organization owns real estate worth $400,000 and has
big commitments to build a center! The other directors now are
trying to reshuffle things and gain more power. I believe the
other directors are steering the organization away from the
objectives that I have set. Right now bylaws are non-existent.
What can I do? Answer
Is
it illegal for one nonprofit organization (school) to give to
another nonprofit organization (another school) for a fundraiser? Answer
The
youth organization that I coach at let the 501(c) number lapse.
How can we reinstate with our paperwork? The officers have changed
without leaving proper paperwork. We rely heavily on sponsorship,
therefore, our sponsors need to be able to get tax credit. Answer
I
am a member of a non-profit golf club (600+ members).
I was denied access to the finanical records, by-laws and meeting
minutes. What is the law? Answer
Some
members of our 501(c)(3)women's service club have decided to
drop out and form a social club among themselves. They say they
do not intend to file with the IRS to become tax-exempt. However,
they intend to raise funds and donate to local charities. What
rules govern and/or limit them? Answer
We
are a 501(c)(6) trade association. One of our members has requested
we post our board of directors meeting minutes on the association's
website. We always distribute the minutes to our board
but are reluctant to post them on our website for "the
world" to view. Legally, what is our responsibility in
regards to making minutes available? Answer
Are
there laws that preclude a private (religious) association from
diverting funds given by its members for a specific project
(for, say, the publishing of a book, or for scholarships for
students) into its general operating funds? Who should one talk
to if one knows such a thing is going on? Answer
Can
a for profit company set up a 501(c) organization under its
umbrella? Answer
Can
a 501(c)(3) nonprofit enter into a business activity in competition
with previously established for-profit businesses? Answer
Can
an Executive Committee of the board approve new by-laws prior
to submitting them to the board for approval? Answer
I
received a charity request from the "Fraternal Order of
Police" who claims to be a nonprofit organization. The
form states "contributions...are not tax deductable."
I thought any legitimate nonprofit charity organization was
tax deductable. Please explain. Answer
Are
there published IRS standards for determining reasonable (acceptable)
salaries for the principals of a small non-profit religious
organization (2-3 employees)? Is there an acceptable level of
payroll as a percentage of Gross revenue? By what measure would
the IRS determine whether or not an individual's salary is excessive? Answer
We
are a 501c3 that supports the education of our kid's competitive
dance troupe. When we have fundraisers and opt to
disperse funds back to the members, does it have to be dispersed
equally amoung members or can it be ratio'd by how much they
participated in the fundraising? Answer
We
are a performing arts 501(c)(3) organization that charges an
audition fee for the various levels of dancers. Parents
are wanting to know if this is considered a tax deductible fee? Answer
What
happens to the assets of a nonprofit corporation if it dissolves
at the end of its term of existence within the articles of incorporation.
No bylaws exist to address this issue nor is it addressed in
the articles. I am told that the assets revert to the
State. Can this corporation be reinstated even though its original
term has lapsed? Answer
Our
501(c)(3) is interested in purchasing some land as a bargain
sale where the land owner could then take a charitable deduction
of the difference between sale price and fair market value.
The ministry wants to in turn sell the land to a family member
who is going to build a house. Are there any problems
with this, especially in the area of selling the land to a party
in interest? Answer
Does
the Board of Directors of a 501(c) corporation have the right
to hire an attorney to represent the corporation if one of the
members of the organization will be taking legal action against
the corporation for what the member percieves to be irregularities?
Can the Board make the decision to hire an attorney? Does the
Board have to present this issues to all members for a vote?
Can the fees for this attorney be paid from the general corporate
funds? Answer
I
have allowed an emergency needs program seeking their own non
profit status to use our 501C3 during their waiting period of
application. Now they have their own non profit standing. Can
they file their taxes under their new Tax ID number --
or must they file their taxes under mine. Answer
Does
a nonprofit volunteer fire company need file for a 501(c) status
of some kind to receive tax deductible contributions? Revised Answer
If
we secure contributions from other states for our nonprofit
organization, do we need to register or do anything? Our contributions
are targeted to individuals seeking $200 or less per individual. Answer
Can
you tell me what percentage of income a 501(c)(3) organization
must spend each year to retain its charitable status? Answer
I'm
a board member of a nonprofit sports club for kids. We're redoing
our bylaws. We came across an entry that stated executive board
members, Active members, Reserve Members shall pay an annual
fee of $5. No one has done this in the last 10 years of the
organization. Can we remove it or is there a reason that it's
there? Answer
If
we, as a grassroots mental health organization have filed for
our 501(c)(3) status but have not yet been approved can we do
business as a non profit and accept funding from a private corporation
for services rendered during this application time? Answer
New
to the Board of directors, I find that while attempts are being
made towards financial accountability by a new president, older
board members are stonewalling the effort. What can the new
President do to force these members to comply with the non-profit
laws? There are real concerns of fraud that can be substantiated.
Who does the new President turn to since this half the board
wants to move forward and forget about their neglect last year? Answer
If
a sum of money is donated as a memorial to a nonprofit organization
with a 501(c)(3) status and the money is deposited into the
general fund of the organization to be used in purchasing something
in the name of a deceased person as a memorial, can the monies
be withdrawn from that organization and given to another nonprofit
organization? Answer
I
am currently in the middle of the IRS advanced determination
letter process. The IRS has a hang-up because I am the only
Director. There is no internal revenue code law that says there
must be 3 people on a board of Directors. Do you know of any
1 person 501(c)(3)s? Answer
Will
a D& O Policy help my organization? My company has failed
to do the following;
1. remit taxes to the state and IRS
2. remit collected medical insurance premiums to carrier in
a timely manner which has caused insurance to lapse on four
occasions
3. mismanaged a government grant. Answer
What
is the total allowance of monies that the President and VP can
contribute into the ministry of a 501(c)(3) yearly. Also when
would the IRS question the amount of donations given to other
ministries, in excess of multiple ministries yearly? Answer
In
nonprofit charitable organizations are secret, closed assemblies
allowed? Answer
We
are a group of 15 bed and breakfasts who collect dues, stage
fundraisers, promote tourism, participate in community events,
and contribute to needy members of our community. We cannot
seem to convince a bank to provide us a checking account without
formal IRS status. Is 501(c)(6) right for us? Answer
What
is the advantages and disadvantages of becoming a 501(c)(3)
verses a 501(c)(6)? Answer
Can
a nonprofit hire a professional fundraiser to secure funding
for special events or donations and can their fee come from
a designated percentage of funds solicited and secured on behalf
of the organization? Answer
By
law what does a charity have to do if it receives a donated
car and wants to sell it? Answer
I
am the director of a nonprofit and want to rent an area of my
home to the organization. Is this illegal? Answer
The
treasurer of our PTO insists that we carry over at least $4000
for the next school year in case we don't have as successful
a fundraiser next fall. I think that is excessive.
Are there any laws regarding the carryover of funds? Shouldn't
we spend the money this year's classes raised on them? Answer
We
have an existing 501(c)(3) organization. We are applying for
another 501(c)(3) for a similar cause. Can we receive donations
to the established one and hold/transfer those donated funds
to the new one when we receive our advance ruling letter from
IRS. If so is there a proceedure we need to follow? Answer
I
am trying to find out whether our organization is recognized
as a church for tax purposes. Is there any other category under
which we could be exempt. Answer
I
belong to a 501(c)(3) organization, that is a Food Pantry, but
also, gives out money for help with utilities and rent. Every
year they are holding back at least 40,000 dollars in the account.
Is this against all rules. The primary is Food Pantry, is utilities
and rent unlawful, and who do I contact for an Audit? Answer
Based
on some other answers you've given, donations of labor for plumbing,
electrical, etc. work are not considered revenue for our new
501(c)(3) organization. However, can those individuals claim
the value of those donated services on their taxes as charitable
donations? And on a related note, is it better to have them
donate the materials used and have us pay for their labor, or
visa-versa; or does it really matter from a tax standpoint for
either us or those who donate how donations are made? ...we
are starting a Homeless Services Center. Answer
How
much public disclosure is required of a 501(c)(3) organization?
What are the basic requirements regarding annual meetings and
open membership, if any? Answer
I
am forming a multi-media production/publishing entity which
focuses on educational, religious, & literary themes, as
well as socio-political themes, which will be offered to religious
& educational institutions, as well as the public at-large.
In consideration of forming as either as an LLC or a 501(c)(3),
1)Can an LLC accept charitable contributions? 2)Can a 501(c)(3)
also be a 527 corp? Answer
Is
there anything a nonprofit subsidiary can do to ward off a forced
merger/consolidation with its nonprofit parent where the parent
is the sole member of the subsidiary? Answer
I
worked for a non-profit with the mission of restoring a theatre,
the current board has decided they are tired and wish to possibly
dissolve the corporation and abandon the project. There are
over $2.5 million in private and public funds invested in this
project. Also the property is privately owned with a 95 year
lease with the nonprofit. If the nonprofit should disband what
happens to those funds that were invested? Can the capital improvements
be turned over to a for profit corporation? Answer
Our
organization temporarily lost the status of the public charity
with the IRS, because we did not fill out form 8374 in time.
Now the form is at the IRS, but in the meantime we need to know
if we can apply for the grants and accept donations from our
supporters? Answer
My
organization is creating a separate 501(c)(3) foundation. Bylaws
of the foundation state there are no dues. The organization
would like to donate part of their yearly dues to the foundation.
Is this appropriate? Answer
Under
New Jersey Law, are members of a nonprofit organization entitled
to a listing of its members with names, addresses, phone numbers
and email information? Answer
I
work for a non-profit education foundation that awards grants
to synagogues (primarily) and some religious schools for family
education programs. Do the grantees have to renew their 501(c)(3)
certification or is it a one time thing? Answer
A
Board Member who has resigned has asked to continue to receive
Board minutes. This person may rejoin our Board again in the
future. We are a Private Foundation. Our Board Minutes often
have sensitive and confidential information. Should we provide
the minutes to this person? Answer
I
am the president of a nonprofit football league and also a photographer.
I take photographs for several teams in the league and sell
copies to parents if they want them. I don't get paid by the
league. I was told that I would have to either stop taking the
pictures or resign my position as president because this activity
is illegal. Is there such a law? Answer
When
hosting an event or fundraiser and we use the phrase: "a
portion of the proceeds to benefit..." are we legally obligated
to state what portion is directed to the non-profit, if asked? Answer
We
are in the process of updating our by-laws. Is there a specific
procedure we must follow by state/federal law to do this? Answer
Can
personal legal ramifications (for example, safeguarding a board
member's personal assets from lawsuit) be curtailed by establishing
an indemnification clause in a nonprofit's bylaws? Answer
We
award grants to community based organizations for educational
projects within in their communities. We would like to display
photos of children engaged in these educational activities on
our website. What are the legal things we need to consider? Answer
I
am the co-founder of a new non-profit organization and the question
has come up as to whether or not I can assume a paid position
within the organization. Can a co-founder ethically become an
executive director? Answer
I
have a 509(a)(1) organization and would like to use an organization’s
501(c)(3) status [to obtain contributions]. Is there a group
I can use as an incubator until I get a 501(c)(3) status? Answer
How
can I stop my Church from withdrawing money from the “principal”
of our endowment? Our church raises $100,000 a year but spends
$250,000. Our pastor says we should be thankful we have the
endowment for this purpose. Answer
If
my city gives our charitable organization a house to use as
a shelter can it be used as in-kind money? Answer
Can
a charity give money to a charity created by a politician who
currently holds office and is running for office? Answer
A
Board on which I serve wants to have a raffle that will give
away money and a car. Can you tell me what the dollar threshold
is for reporting the winnings to the IRS. Must we ask for people
to give their SS# in order to collect their prize? Answer
If
people give money specifically designated towards a “building
fund” of a church for a new sanctuary, and some of the
money is used to build the pastor a new office in the OLD building
by vote of the deacon board (without congregational input),
is this permissible? If people contribute money specifically
earmarked for a new vcr/tv setup for a Sunday school room, and
it is used instead for 'general funds' purposes, is this permissible? Answer
I
want to spend the rest of my life creating and directing musical
choral ensembles. Is a nonprofit organization the way to go? Answer
I
have been concerned about a drop in my church’s endowment
from 160mm to 90mm from 2000 to 2003. It is now 100mm. The head
of the investment committee is a broker. I am a Chartered Financial
Analyst, my polite inquiries have not been received well...
Have fiduciary boundaries been approached? What can I do? Answer
501(c)(3)
versus 509(a)(1). What is the difference between these two statuses? Answer
Our
synagogue wants to acquire several bank certificates of deposit
for different terms. Our president and financial secretary will
be the signatories. Can these signatories be changed if we elect
new officers? Will there be a penalty? Answer
Thank
you for the information on in-kind things. (See
To the Point, June 1-15, 2004.) Just 2 weeks ago I attended
a workshop given by the IRS and they told me we could not report
the in-kind support we received in the way of office supplies,
health insurance and liability insurance coverage for our employees,
postage cost etc. Now I think they gave me the wrong information.
The organization that gave us that start up support has given
us a copy of their monthly accounting reports that verify what
they contributed to us in 2003 well over $25,000. As of October
1, 2003 we are totally independent of the in-kind they were
helping us with. It has been replaced with a direct grant and
we have set up our own relationships with vendors. Answer
We
are a new charity that has not received any grants or other
cash donations yet, but have received in-kind services. Do we
still have to file a Form 990? Answer
Is
a nonprofit organization required to allow the public to sit
in on its entire Board Meeting or just the part allocated for
Public Comment? Answer
Can
the directors of our nonprofit corporation vote by proxy? Answer
If
our charity creates a limited liability company in which the
charity is the sole member and a donor gives it a piece of
real estate, will the donor be entitled to a charitable contribution
deduction? Answer
For
code of conduct and falsifying fact issues within a committee,
after raising it to the chair of the Board, no resolution was
achieved. Where is the next authority to report such issues?
Any organization governing nonprofit organizations? Answer
How
long is a nonprofit required to retain General Ledgers and
other original books of financial records? If the guidelines
state “in perpetuity,” what constitutes perpetuity
when an organization is 100 years old? Answer
I’ve
been the executive director of my organization about 20 years.
We had a good year this year and my board wants to give me
a one-time “achievement bonus” of a few thousand
dollars. Is this okay? Answer
I
am trying to find out how quilts can be donated to a museum
and deducted from taxes. I need a copy of the form and an
explanation if the amount is over $5000. Answer
Our
small performing arts organization has no directors and officers
insurance and no indemnification clause in its bylaws. When
I asked about this, I was told that the state law protects
us so that it is unnecessary. Is that correct? Answer
Our
nonprofit sponsors a tour of musicians. Do we have to take
out Social Security and taxes, or may we simply pass the honorarium
along to them? Answer
How
much surplus revenue can a nonprofit organization maintain
in its treasury?Answer
My
son belongs to a performing arts group, where there has been
some highly irregular activity by chaperones, including the
director, on trips. Both adults and kids have gotten drunk
and much of the behavior has been unmannerly. The board knows
we don’t approve, but doesn’t seem to care what
we think. As parents, how do we confront the board and prevent
something tragic from happening? Answer
My
company assists not-for-profit organizations and I need to
track down what legal percentage a not-for-profit can spend
on administrative costs.Answer
Our
Board of Directors is about to negotiate a new 20-year lease
with our landlord. We are concerned that the Board members
who are signing the lease won’t be personally liable
for the lease if, worst case scenario, our organization becomes
bankrupt. Answer
A
friend of mine had a horrible horseback riding accident and
is paralyzed from the waist down. He has no health insurance.
Several of his friends are willing to raise money for his
medical care and I am wondering what sort of trust, foundation
or other entity should be set up so that donations could be
tax deductible. Answer
Can
I be held accountable if I do not agree with a board decision
that is too risky and causes damage? Answer
I
am a member of a nonprofit organization. The directors say
they do not have to hold open meetings. Is this OK?