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Nonprofit Law/Parents Working Selling Items?

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Question
We are a separate non profit which supports a high school band, not under the school's boosters.  School cannot require fees for students to participate in program therefore the non profit can only suggest donations.  We have calculated how much it costs per student to run the program.  We have families who donate full amount each year and many who don't donate anything.  Those who don't donate have offered to help at fundraisers if they could get "credit" for their help.  We have explained that helping generate funds is just as important as cutting a personal check but there are those who want to see their efforts in writing.  We have explained individual accounts being potential risk to status and that there is no private benefit allowed but they ask us to think of some way to make them feel like it is a "credit".

We would like to suggest options to support the program.  1)families donate the full amount to the program- tax deductible 2)volunteer at fundraisers to help generate funds for program, or 3)a combination of both.  We would keep track of every time someone helps out and every quarter send a statement of thanks to families, letting them know how much they have donated and how many events they helped at.  Reminding them of only donations being deductible.  We would like to "suggest" the families then determine how much they would like to donate out of their own pocket based on how many events they helped at.  We would "suggest" that if they help at fundraiser A, B and C they might consider donating $200 instead of $300, if they helped at A and B they might consider donating $250 instead of $300.  We have no need for individual accounts as everything is covered by general fund. General fund is fed by donations, sponsors and fundraising.  

We would clarify on our website and all documents, like sign-in sheets, that all volunteer efforts are non-tax deductible and any amount they "reduce" any donation is purely voluntary and not required.  There is no employment or private benefit implied.  In the end all students benefit from program regardless of donations of volunteering.

We would much rather prefer parents figure out value of their time on their own, but the majority has asked that we come up with some kind of "suggestions".

I have asked a non profit accountant who felt this "might" be doable as long as we made sure everything was voluntary, suggested and every students benefits the same.

Can we do this?

Thanks so much!

Answer
I have in my profile that this free forum is only for general questions relating to IRS federal exemption issues of 501(c)(3) organizations. Therefore, I am assuming that you are referring to a 501(c)(3) organization. If you mean by "fundraisers" that the parents are going to be selling items, then see "Fund Raising" at www.irs.gov/pub/irs-tege/eotopicl82.pdf
as to the type of "fundraising" that is allowed to maintain 501(c)(3) organization status and to avoid having unrelated business taxes due from your organization.

Otherwise, as no band member will be penalized if the family does not donate and/or work, there is no problem with your plan.

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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