Nonprofit Law/Appreciation

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Question
Is it legal for a 501c3 theatre boosters to give Professional Appreciation ($25 - $100 gift cards depending on service, $25 flowers and show tshirt) to school employees at the end of 2 months of volunteering after school for our school's theatre productions? The boosters provides no other payment to these school employees.  We do pay Professional Fees ($100 - $500) to other individuals who are not employees of the school that are hired to do things like choreography, play the piano or do the sound/lights.  Are either the Professional Appreciation or Professional Fees considered a private benefit to an individual and not allowed?  One of the previous posts discussed it could depend whether the appreciation gifts were "substantial".  We give very few Professional Appreciations so this situation is close to 100% of all appreciation, but a small portion of the overall expenses of the productions.

Answer
"Volunteers" who were promised gifts - taxable income Oregon case
http://goo.gl/F0OKL
which is a newspaper story describing a situation when the State
determined that organizations that promised "volunteers" gifts over
the value of $50 per quarter were subject to state wage regulations
for employees. That was an Oregon case but other state laws are
similar. That case was about a sports foundation's "volunteers"
being promised a season pass if they work roughly two dozen days
helping put on races at the ski area.

It is not an issue of private benefit as long as the compensation is not above what is reasonable for the work performed.  It is only an issue of employment taxes needing to be reported and paid and possibly wage and hour (minimum wage violations), but only if the practice is so regular that the workers would then expect the gift cards.

Harvey Mechanic, Attorney at Law -
Harvey108@hotmail.com

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

Expertise

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 Harvey108@hotmail.com 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 "site:allexperts.com/q/nonprofit" without the quotes and then add your search terms before hitting enter.

Experience

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.

Education/Credentials

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

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


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