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Nonprofit Law/gifts to individuals or families from a nonprofit


Dear Harvey:

Is there any reason that a nonprofit (501 c 3) can't both receive a donation from a person or family and then give back a financial gift to that person or family later on? This gift from the nonprofit could be either as appreciation or as aid if the family needed financial aid.

Generally, if a donor expects something in return, whether it be labelled a "gift" or not, then the value of the initial donation is reduced by that amount.  As to charitable deductions, see IRS Publication 526 "Charitable Donations"  which is available at:

on page 6 middle column under the heading "Contributions You  Cannot Deduct" is "3. The part of a contribution from which you receive or expect to receive a benefit"

Of course, if the organization does it only once and the value of the gift is relatively small, then that is not going to be an issue for the organization, but, if the organization has a practice of doing it, then that would be clear indication of what is expected by the donors.

Internal Revenue Code section 501(c)(3) which is available at: (on page 2, first column)
has, in part, that the 501(c)(3) organization must be "operated exclusively for religious, charitable ...or educational purposes ... " and, certainly giving funds or gifts to donors is not considered a charitable purpose of an organization.  If the family is in financial need and the organization considers giving grants to persons who are in financial need in the community, the organization could not discriminate in favor of those who have already donated to the organization.  See pdf  page 13 of under the heading
"Charitable Class
--start of excerpt  ---
The group of individuals that may properly receive assistance from a charitable organization is called a charitable class. A charitable class must be large or sufficiently indefinite enough that the community as a whole, rather than a pre-selected group of people, benefits when a charity provides assistance.
--end of excerpt  ---
More details are found starting at pdf page 6 of

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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