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Nonprofit Law/Gifts to staff of the orgranization receiving grant from 501(3)(c)

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Question
This small 501(3)(c) holds a fund raising event each year.  The proceeds are awarded to a local organization.  Staff from the local organization assist with the fund raising event.
May the 501(3)(c) give monetary gifts to the staff of the local organization to thank them for their help?
My opinion is that the gifts for the staff should come from the personal funds of the officers of the 501(3)(c).

Thank you for your assistance.

Answer
For small gifts, like around $10-$20 the IRS would not be concerned as that is relatively insignificant value.  Other than that it may appear, as it is done every year, that the payments are actually for work and, therefore, taxable as employment income.

The IRS has published on page 9 of their brochure "Charities and
Their Volunteers":

--- Start of Excerpt ---
Thank Your Volunteers
Carefully
-
Recognizing Volunteers with Cash or "Near Cash" May Have Unintended
Consequences
-
Free Food and Drink at a Gala "Thank- you" event is OK
-
Plaques or Similar Memento Honoring Volunteer Service is OK
---End of Excerpt---
http://goo.gl/xZXPN

An example of such unintended consequences --  "Volunteers" who
were promised gifts - taxable income Oregon case
http://goo.gl/F0OKL
http://pages.citebite.com/r8v8l8p8pdin
which is a newspaper story describing a situation when the State
determined that organizations that promised "volunteers" gifts over
the value of $50 per quarter were subject to state wage regulations
for employees. That was an Oregon case but other state laws are
similar. That case was about a sports foundation's "volunteers"
being promised a season pass if they work roughly two dozen days
helping put on races at the ski area.

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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