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Nonprofit Law/501( c ) (3) club in a church

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Question
My Toastmasters district is forming a club at a church. The church wants membership in the club limited to church members. Toastmasters International says this is OK but I am skeptical. The Toastmasters club is not a religious organization but an educational one and I don't think we can exclude applying members based on their religion.

What do you think?

Answer
From the U.S. Supreme Court Case, Bob Jones University v. United
States, 461 U.S. 574 (1983) which decided the 501(c)(3)
organization status may not be granted to racially discriminatory
schools:

Section 501(c)(3) therefore must be analyzed and construed within
the framework of the Internal Revenue Code and against the
background of the congressional purposes. Such an examination
reveals unmistakable evidence that, underlying all relevant parts
of the Code, is the intent that entitlement to tax exemption
depends on meeting certain common-law standards of charity -
namely, that an institution seeking tax-exempt status must serve a
public purpose and not be contrary to established public policy.

http://pages.citebite.com/i5e6s9l9ninh

In Revenue Ruling 71-447, the IRS formalized the policy, first
announced in 1970, that 170 and 501(c)(3) embrace the common-law
"charity" concept. Under that view, to qualify for a tax exemption
pursuant to 501(c)(3), an institution must show, first, that it
falls within one of the eight categories expressly set forth in
that section, and second, that its activity is not contrary to
settled public policy.

The IRS instructions to 501(c)(3) organization exemption
application shows that they will grant exemption only to those
organizations that do "[n]ot engage in activities that are illegal
or violate fundamental public policy."
www.irs.gov/instructions/i1023/ar01.html#d0e192 at e.

See the 1994 IRS article "Activities That Are Illegal Or Contrary
To Public Policy"
www.irs.gov/pub/irs-tege/eotopicl94.pdf
and on page 4 the IRS explained that a good reference for what is contrary to public policy is the Civil Rights Act of 1964 and that Act was cited in the Bob Jones University Supreme Court in denying exemption to that University.  That same Civil Rights Act prohibits discrimination on the basis of religion. http://www.eeoc.gov/laws/statutes/titlevii.cfm

Therefore, the IRS should deny 501(c)(3) organization status to an organization that discriminates on the basis of religion.  There are exceptions whereby a religious organization  can discriminate on the basis of religion, but that does not apply here because the organization is not religious and also because the exception applies to hiring.

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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