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 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
