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Nonprofit Law/Non profit private non operating

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QUESTION: Can a non profit private non operating foundation make an eligible expenditure to a public K-12 school if the foundation by-laws state the foundation should only benefit a 501(c)(3) or 509(a)(1), without jeopardizing it's non profit status?

Thank you.

ANSWER: Bylaws is an internal document that an organization may deviate from in many areas as long as its own decision-makers, like board members and voting members have no objection.  If the foundation you are referring to is a Arkansas Nonprofit Corporation, let me know and I will be able to give you more information.

If none of the insiders objects the IRS will not object to a grant to a public school. A  governmental unit, like a county government is able to receive deductible donations at the 50% limit level. See IRS Publication 526 "Charitable Donations" www.irs.gov/pub/irs-pdf/p526.pdf on page 2 is the box chart which includes money or property deductible as charitable contributions to, "Federal, state, and local governments, if your contribution is solely for public purposes (for example, a gift to reduce the public debt).  On page 14 we see, "Only the following types of organizations are 50% limit organizations....
2. Educational organizations with a regular faculty and curriculum that normally have a regularly enrolled student body attend­ ing classes on site.

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: It is actually a Florida non-profit (established by former residents of Arkansas).  Specifically, the contribution would be to a public K-12 school in Arkansas to provide a source of funds that the school could use to provide clothing or other items to needy students.  Are there any documentation requirements that should be followed?

Thank you for the quick reply.

ANSWER: It is a Florida charitable (nonprofit) trust or a Florida Not-for-Profit Corporation?  I have in my profile that this free forum is only for general questions about IRS federal exemption issues of 501(c)(3) organizations that are public charities. The IRS has "Tax Information for Private Foundations" at http://goo.gl/GWY8v

If you want to hire me for other work I am available through my email address below.

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--It is a Florida not for profit corporation that has received exempt 501(c)(3) status from the IRS.  I was seeking clarification on the eligible disbursements from the foundation.

Answer
http://goo.gl/pbPdk is the "Florida Not For Profit Corporation Act" as amended in 2010 and specifically, as to "ultra vires" (operating outside of the scope authorized in the articles of incorporation or bylaws, see § 617.0304 http://goo.gl/QOGbG.  That means that the corporation may give grants to the school notwithstanding that such granting is not listed in the bylaws unless there is a court order challenging such action.

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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