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Nonprofit Law/501 c 3 fund raising


I think my question has three parts we are a 501 c 3 that does baton twirling we are raising funds for a trip to disney only some of our girls are going we have been doing fund raisers to get there and all those fund are going a seperate account heres my question 1. can that money be seperated into indivual accounts per family to be paid out to them for the trip 2. can all the girls even those who have chosen not to go be required to participate in fund raisers such as a T.V raffle or have their accounts charged for not taking part? 3. Can we even have Mandatory fund raisers/buyouts without it being in the contract the parents signed thanks

1. No. Such an operation would be what the IRS calls a cooperative.  A cooperative is not qualified as a 501(c)(3) organization.  In August, 2013 the U.S. Tax Court supported the revocation of
501(c)(3) organization status of a formerly exempt organization and noted that a parent's fundraising was earmarked to reduce what otherwise could be a $1,400 payment the parent would have to pay out of his/her pocket. The direct linkage of a parent's fundraising resulted with paying expenses for that parent's child and was a very specific benefit obtained by the insider.  While the parent may not have been paid cash, the parent nevertheless ended up escaping having to write a check for the amount of the benefit. Families who did not fundraise did not receive any benefits from the purported a 501(c)(3) organization.

2. No (see the answer to #1).

3.  A 501(c)(3) organization may require participants to pay certain funds and such assessments may be made after a contract is signed, as long as such mandatory assessments are not prohibited by the contract.  If you send me a copy of the contract, I would be able to better answer your question.  A 501(c)(3) organization may, similarly require participants to raise funds, unless such is prohibited by the contact.

As for the raffle, Montana has regulations, which you would find at

Harvey Mechanic, Attorney at Law -

P.S. This resonse 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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