Nonprofit Law/change of status


Thank you for taking the time to help me. I founded an organization in 2011 to promote and preserve Italian Culture in my local community. We have a membership that pays $150 in dues yearly and we are a women only membership; however, we serve the entire community through our historical preservation efforts.  I initially created us as a 501c7 as I was doing the legal work alone and wasn't 100% positive we fit the mold for 501c3 status. Since then we have definitely morphed into a 501c3 through our charitable work and historical preservation efforts. My questions are these...Can a 501c3 have paid members? Can they deduct what they pay in membership? what is the best way to make the change? First articles of incorporation and then 1023?

The IRS does allow 501(c)(3) organizations to give someone, whether a member or not, compensation just so it is not more than what  is reasonable. Starting on pdf page 10 of the IRS discusses many of the factors it would look at to decide
whether a salary is reasonable.

If the organization gives reduced membership fees for work, that is reported as compensation, specifically as a fringe benefit, along with salary. The IRS Publication 15-B discusses fringe benefits and is available

If you want to change the organization so that the IRS would approve it as a 501(c)(3) organization, you would amend the articles of incorporation and then, if needed, your bylaws, and then make your 1023 application.

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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