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Nonprofit Law/trustee gift to executive director


At the end of the year, the president of the board contributed funds for employee bonuses, also contributing $5,000 for the executive director's personal retirement fund. Answering other trustees who objected to the contribution for the retirement fund, which other employees were not getting, the $5,000 was said to be a personal gift in thanks for the executive director's service. Is this legal?

Personal gifts are allowed, but, of course, then they are not deductible.  The gift would be taxable to the employees if the gift was given by the employer, however, The Internal Revenue Code at section 102(a) provides that generally gifts are not income.  "Gross income does not include the value of property acquired by gift..."

However, section 102(c) of the Code has "Subsection (a) shall not
exclude from gross income any amount transferred by or for an
employer to, or for the benefit of, an employee...."

This does not appear to be a gift by the employer.

Harvey Mechanic, Attorney at Law -

P.S. This response is intended to be a general statement of law, should not be relied upon as legal advice and does not create an attorney/client relationship.  

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Harvey Mechanic


I am an attorney and I volunteer time to answer general questions about U.S. Federal income tax issues of nonprofit 501(c)(3) public charities only. Those questions could be about 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 possible 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. If you do not make your question public then I will not be spending much of my donated time on answers that would not benefit the public. If you have other questions, please contact me at I will reply from my email. In any case, do not reveal confidential information to me until after I have contracted with you to provide personal legal services. My responses on this forum are intended to be general statements of law, should not be relied upon as legal advice, and do not create an attorney/client relationship. For me to consider your individual situation and how the law applies, I would need to gather extensive information about the situation. To search my previous answers you can do a Google search by "" without the quotes and then add your search terms before hitting enter.


I have been practicing law and especially the law of nonprofit organizations since 1990 when I was admitted to the New York Bar and I have maintained my status with the Bar since that time.


B.S. Columbia University in New York City, 1970

J.D. (Law Degree) Brooklyn Law School, 1990 -- Cum Laude.

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