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: Is it true that a 501(c)3 cannot take in more than $25,000 a year in donations? Also, how long can a 501(c) 3 keep money in the bank before they have to start spending it. Our org will have more than $25,000 in the bank by the end of this year. I have heard that a 501(c) e organization cannot keep money in the bank for any length of time. Is there a set time? Thanks, Anne
ANSWER: I am assuming from what you wrote to me that the organization is
not a private foundation (you can confirm that on the IRS
determination letter).
There is no limit on amounts of donations that may be accepted.
A 501(c)(3) organization that is not a private foundation may
accumulate funds for years, as long as it maintains substantial
exempt activities. Exempt activities are those that are related
to the organization's purposes, not just activities to gain
funds. In other words they must be either religious, charitable
or educational activities.
See "Accumulations of Wealth by Nonprofits" that is an extensive
discussion by the Urban Institute and Brookings Institution of
accumulations by nonprofits. There we see "Universities and other
charitable organizations not classified as private foundations
are not subject to a mandatory current payout" http://pages.citebite.com/s7s8e2c5mdlj
Harvey Mechanic
Attorney at Law
Harvey108@hotmail.com
---------- FOLLOW-UP ----------
QUESTION: I have been told that NY state has restrictions on non profit organizations . If the non profit org makes more than $25,000 it must complete more paperwork. Is this true?
Answer www.tax.state.ny.us/pdf/2001/fillin/corp/ct247_601_fill_in.pdf is required for all 501(c)(3) organizations.
It appears you are asking about the State law of charitable
solicitations for New York. You would need to file some forms
with the New York State's Attorney General's Office to obtain
exemption from "Charitable Registration" as an "Organization
[that] solicits and receives gross contributions from NY State
(including residents, foundations, corporations, government
agencies, etc.), but organization's gross contributions are less
than and will continue to be less than $25,000 per year and
organization does not and will not use the services of a
professional fund raiser or fund raising counsel."
www.oag.state.ny.us/bureaus/charities/pdfs/char410SchE.pdf
on page two.
Otherwise, if above that $25,000 your organization would need to register.
www.oag.state.ny.us/bureaus/charities/charitiesforms.html
and then pay the annual fee which you can compute by using the
fee calculator at:
www.oag.state.ny.us/bureaus/charities/feecalculator.html
Harvey Mechanic
Attorney at Law
Harvey108@hotmail.com
