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Nonprofit Law/501 3 c church sponsored thrift shop


QUESTION: We just opened a thrift shop - all non profit with all volunteers - no paid help and donated items. We are using our church's 501(c)(3) with permission from the elder board.  Some of our congregation is concerned that this is an illegal use of the 501(c)(3) status and the church could be sued or we could lose this status.  The shop has opened in a rental building and will be paying the rent and all utilities and any profit after that will be given to benefit different churches and the community exclusively.  Are we in violation of the IRS code?

Thank you so much for your help.

ANSWER: A church may only allow the use of it taxpayer identification number (which you refer to as it's "501(c)(3)) for its own activities.  All funds would be going into a bank account of the church. You did not explain whether the organization operating the thrift shop is a different entity or not.

Harvey Mechanic
Attorney at Law

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QUESTION: The thrift shop does have a separate checking account but uses all tax numbers of the church.  Also the accounting is done at the church as a separate QuickBooks company by the church treasurer.  We just opened this month but will have a board consisting of members of various churches in our town to decide where best to use these funds.  Does the church have to be the one who has the board and decides where the funds go? We want to do what is right but also want to eventually be independent and will apply for our own non-profit status.

Thanks for your quick response and again for your help.

As it is now, the church is legally responsible as the entity of record operating the thrift shop and, even though may decide to allow a committee to run the thrift shop, the church is responsible for everything.

Earlier you wrote that part of the proceeds would be going to the community.  A 501(c)(3) organization is supposed to be engaged exclusively in charitable, educational or religious activities, and, from what you wrote, I don't know if your funding for the "community" would be considered as such.

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


DO NOT GIVE ME INFORMATION THAT YOU WANT KEPT CONFIDENTIAL. 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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