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Nonprofit Law/PTA donation to school

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QUESTION: I have been told by our state PTA office that our PTA can't donate money to the public (tax-exempt) elementary school that we support because they are not a 501c3.  Is this true?

We donated the money to the school prior to disbanding our PTA (and then establishing a PTO) and the PTA is saying this was not a legitimate donation and the money should go to them (the state PTA).

Thanks for your help!

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.

Your organization, in accordance with your Articles of Incorporation and Bylaws, may grant funds to any entity that is able to receive donations that deductible as charitable contributions for federal income tax purposes. As to charitable deductions, see IRS Publication 526 "Charitable
Donations"  which is available at:
http://www.irs.gov/pub/irs-pdf/p526.pdf
and, specifically at the top of page 2 on the right hand side is a chart "Table 1"
that shows, "Deductible as Charitable Contributions" some items, and "Federal, state, and local
governments, if your contribution is solely for public purposes" is on that list.

The national office of the PTA has published on page 49 of their 82 page "Money Matters:
--- Start of Excerpt ---
PTAs are often called upon to finance programs and purchase
needed equipment that tight school budgets do not have the
money for, and each PTA must decide what it will do. Before
approving proposals for material aid to the school or community,
a PTA should consider whether or not the proposed equipment
or service is a public responsibility.
---End of Excerpt---
https://docs.google.com/open?id=0B4xNuGSpiyzgM2NhRng0U25OTUE

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.    



---------- FOLLOW-UP ----------

QUESTION: Thank you for your response - it is very helpful.  

The state PTA president is stating the following:  

"In accordance to bylaws, #Article III Basic Polices letter F. " Upon dissolution of this association, after paying or adequately providing for the debts and obligations of the association, the remaining assets shall be distributed to one or more nonprofit funds, foundations, or organizations that have established  their tax exempt status under Section 501 c 3 of the Internal Revenue Code and whose purpose are in accordance with those of National PTA."

It seems her interpretation is that donations must go to a 501c3; however, I believe the "or" in the sentence includes nonprofit funds or foundations that are not a 501c3 and that a school would qualify on those grounds.  

Have you ever seen this situation before?  Do you know if there are any precedents?  

Thanks again!

Answer
Your earlier question referred to your organization giving a donation.  Now you are citing to a sub-set of donations, which are during the process of dissolution.  Is your corporation dissolving?  If not, that bylaw does not apply to donations in the normal course of your activities - it only applies during dissolution.

If you are dissolving, the bylaws provide that you can not give your remaining assets to a governmental entity per se, but only to 501(c)(3) organizations.

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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