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 The 501(c)3 organization that runs our athletic program operates with 3 distinct divisions. Each division is responsible for running their program and operating statements are prepared separately, although form 990, financial statements, and assets are all reported by the one legal entity. One board of directors controls all assets, while individual committees run each division. One of the divisions would like to start a large fundraising effort to begin an endowment and possibly build a facility.
This division would like sole control over these new assets, and is considering creating a separate legal entity (qualifying for 501(c)3 status) to accept donations, hold investments and assets, and then awarding grants back to the original organization in support of just this one program. Obviously, this new organization would have separate bylaws, board of directors, etc. Can you comment on any pros/cons, IRS restrictions, etc that we need to consider? Thank you!
Answer It appears that you are referring to an organization that would be not running any athletic programs but will only be gathering and investing funds to support another entities particular program. That would be what the IRS calls a booster club.
