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Nonprofit Law/501c3 minimum donation


CAAR in NC has a parking lot we use to accept donations for parking for our local flea market next door.  We currently just ask for any donation you wish to give.  Sometimes we get 4 cents for parking.  We want to put up a sign that says minimum donation of $3.00.  This is an important part of our fundraising.  It costs in excess of $5,000 per month to run our shelter and these funds are important to our rescue.  We have been told we can put any amount we wish on the new sign we will be making and then were told we could not ask for a minimum donation.

We are also adding that we are not responsible for any vehicle or its contents to the sign.  Is there anything else we need to add to our sign?

Could you please advise what we can do legally.
Thank you so much

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 and not for their unrelated businesses.  But I will give you some general information. IRS Publication 598 "Tax on Unrelated Business Income of Exempt
Organizations" at
explains that,  if products or services are not directly related to
the charitable, educational, religious or other purpose or function
constituting the basis for its exemption (other than for production
of income), then the activities are generally taxable.

Their exact wording is found in the middle column of page 3
"Unrelated business income is the income from a
trade or business that is regularly carried on by
an exempt organization and that is not substan-
tially related to the performance by the organiza-
tion of its exempt purpose or function, except
that the organization uses the profits derived
from this activity."

However, pn page 6 of Publication 598 you will see an exception when
substantially all the work is performed for the organization
without compensation. You did not inform me, but, if the parking operation is conducted by volunteer labor then you would be able to set a minimum donation or fixed price and then the activity would not be taxable unrelated business.  

As for the waivers of liability that is something you can do. I would be willing to work on your matter further, but I would need to spend a substantial amount of time in drafting waivers and that would be beyond the scope of my offer of free services.  If you want to inquire about hiring me for such work, please contact me directly to the email address below.

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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