Nonprofit Law/System of Fines


Iím in a nonprofit organization and they do this thing where they put up a point system to get the officers (all of whom are unpaid) within to work. If you end up negative, then you  pay $5 for every negative point. The money is then split among the people that end up positive despite the fact the constitution says officers canít be financially compensated.

Lately, some people been wanting to do this trip. Theyíre essentially coercing everyone into going or losing points. This canít be legal. Can it?

I have in my profile that this free forum is only for general questions about IRS federal exemption issues of 501(c)(3) organizations. Therefore, I am assuming you are referring to a 501(c)(3) organization.

The IRS does not mind when officer are paid a reasonable fee for their work, but, the entity has, as you wrote, something in the constitution (articles of incorporation or bylaws) that prohibits compensation to officers.  If an officer agreed, before undertaking his or her duties, to a fine system that could include multiples of $5, that does not mean that the officers are compensated.  It means that the officer have agreed to come under a mandatory work requirement with fines possible.

Harvey Mechanic, Attorney at Law -

P.S. This response is intended to be a general statement of law, should not be relied upon Mechanic 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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