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Nonprofit Law/501c3 - board members and employee relationships

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Question
Hello, I am researching 501c3 requirements and I am confused as to whether or not my husband and I can be on the board and he still be used in a research capacity and compensated as an employee.  I am aware of the suggestion of less than 50% of the board members being related but it seems that this could be satisfied by having 5 members total and only 2 being related.  So if I am correct in that this would be acceptable, would it also be acceptable that he be hired as an employee?  If not, is it possible that he could be paid as a consultant or hired to perform the needed research?

Answer
The IRS would allow a 5 member board with 2 persons related, one of who is receiving compensation as an employee.

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. Your issue is also controlled by state law and states may differ somewhat with how they would treat such issues. Even though this forum is not for such state law issues, I may be able to direct you. Some states, like California, are more restricted.  If you are looking into forming an Arizona Nonprofit Corporation, Arizona Code Title 10 Chapters 24 - 42 has the State Law for Nonprofit Corporations and it is available at:
http://www.azleg.state.az.us/ArizonaRevisedStatutes.asp?Title=10 and, specifically, you would read the requirements at Chapter 31 Article 1, which is entitled, "Board of Directors".

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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