AboutHarvey Mechanic Expertise US Federal tax issues of nonprofit 501(c)(3) public charities only. Establishing and maintaining legal requirements for such non-profit organizations in the United States, including Internal Revenue service filings and requirements. I will not be working on this free forum to answer questions about Nonprofit's unrelated or for-profit businesses or how to fill out forms. This forum is only for general questions about federal tax law, not as the law applies to your specific situation.
To search my previous answers you can do a Google search: site:allexperts.com/q/nonprofit [with your other search terms appended].
Experience I have been practicing law and especially the law of nonprofit organizations since 1990 when I was admitted to the New York Bar.
Education/Credentials B.S. Columbia University in New York City, 1970
J.D. (Law Degree) Brooklyn Law School, 1990 -- Cum Laude
Question QUESTION: Can a non-profit 501c3 organization grant a large sum of money to an member.
A soccer association with member clubs some are 501c3 others are not and the parent or governing body is a 501c3
ANSWER: If the activities are for youth sporting, then such grants are allowed. From page 2 of
www.irs.gov/pub/irs-wd/0504031.pdf
"A section 501(c)(3) organization will not jeopardize its
exemption even though it distributes funds to organizations that
are not themselves charities. The exempt organization must
'ensure' use of the funds for permitted purposes by limiting
distributions to specific projects that further its own purposes.
The exempt organization also needs to retain control and
discretion as to the use of the funds and maintain records
establishing that the funds were used for section 501(c)(3)
purposes. (Citing to Rev. Rul. 68-489, 1968-2 C.B. 210)."
Harvey Mechanic
Attorney at Law
Harvey108@hotmail.com
---------- FOLLOW-UP ----------
QUESTION: Can the organization that recieves the funds use them to pay salarys.
ANSWER: First you asked about a 501(c)(3) organization granting money to a members. Your follow-up refers to an organization receiving "the funds" and the only organization you referred to was the 501(c)(3) organization giving, not receiving. Please clarify what you are asking and I will then reply.
Harvey Mechanic
Attorney at Law
Harvey108@hotmail.com
---------- FOLLOW-UP ----------
QUESTION: The grantor the Association, is a 501c3 and grants $$$ to a member who uses the funds to pay salarys. The member is not a 501c3 at this time but trying to become 501c3. Is this still ok for the Association to grant this money knowing it is being used for salarys.
Answer Salaries may be for 501(c)(3) organization purposes. It all depends upon the particular facts of the situation. The main problem will be if there is private benefit. An extensive discussion of by the IRS of the private benefit
issue relating to 501(c)(3) organizations is found at:
www.irs.gov/pub/irs-tege/eotopich01.pdf
(it takes a while to load the 19 page pdf file).
Harvey Mechanic
Attorney at Law
Harvey108@hotmail.com
