Nonprofit Law/Tax receipts

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Question
QUESTION: If a church agrees to forward cash donations made specifically to a 501(c)(3) organization, who should issue the tax receipt - the church or the organization?  Detail: the church collects the cash and then writes a church check to the organization to avoid sending cash by mail.

ANSWER: It appears that the church is not operating properly for there is no reasonable non-tax reason why the church would accept a donation with the understanding that it would forward to another organization (the church is also treated by the IRS as a 501(c)(3) organization).  If the donor does have a substantial non-tax reason, let me know and I will comment further.  I do understand that someone does not want to send cash by mail, but why doesn't the donor simply purchase a money order (most 501(c)(3) organizations would be willing to reimburse the donors for the cost of the transmission of the donation).

But, to answer your specific question, if the donor has an enforceable agreement that the church will forward funds to another 501(c)(3) organization, then the other 501(c)(3) organization would be the proper entity to issue the acknowledgement of the donation (receipt). My opinion is based upon the U.S. Supreme Court case Davis V. United States because the contribution is "for the use of" the other 501(c)(3) organization. You may read that case at:
http://pages.citebite.com/m1d8r0t3t1fbb

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.    




---------- FOLLOW-UP ----------

QUESTION: The organization's fundraising is primarily through the church network; the church supports the mission of the organization.  The main reason for dropping the cash off at the church would be donor convenience.  Some cash donations are smaller ($5-10) so aggregation seemed sensible.

If there is no enforceable agreement, is it implied that the cash donation handed to the church is a regular charitable contribution to the church?  The church can then decide to donate to the other organization?

Thanks!

Answer
If there is no enforceable agreement then the donation is to the church and the church would give the acknowledgement. However, the church may want to readthe IRS Memo "Donor Control" at
www.irs.gov/pub/irs-utl/topico.pdf
starting on the third pdf page where the IRS gives a listing of
the factors it would look at to determine whether an organization
that has substantial donor control would be able to obtain and
maintain a 501(c)(3) organization status (and, therefore, allow the
donors to deduct their donations from their taxable income on their
federal tax returns).

To help clarify the record of the true intentions of a donor at the
time of a contribution, the IRS has suggested that the following
language be used in a receipt for the contribution:
"This contribution is made with the understanding that the donee
organization has complete control and administration over the use
of the donated funds."

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

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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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