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Nonprofit Law/sole member/director of 501(c)(3)


So long as state law permits sole member/director nonprofit organizations, is this structure permitted on a Federal level with respect to 501(c)(3) status?  Having one peron be both the only member and the only director?


I highly recommend that you have three directors who are unrelated
by blood, marriage, residential address, or for-profit business

The IRS wants at least 3 unrelated directors for public charities
and, in any case, the board should not be controlled by related

which is denial of exemption based, in large part, upon the fact
that there was only one effective leader of the organization. At
the bottom of pdf page 4, the IRS indicates what I have found in
the past, i.e. that, when a organization files for public charity
status has only one director, the IRS sends out a notice
recommending that, to increase the possibility to gain exemption
determination, the organization add at least 2 other, unrelated

The Internal Revenue Manual cautions its examiners who are
adjudicating applications for exemption, "Operating under the
control of one person or a small, related group suggests that an
organization operates primarily for non-exempt private purposes,
rather than exclusively for public purposes."

"Although control by ... a small group may not necessarily
disqualify [an organization] for exemption, it provides an
obvious opportunity for abuse of the claimed tax-exempt status."
Church of Ethereal Joy, 83 T.C. 20 at 23 (1984). That case is
cited in the United States Fifth Circuit Court of Appeals case
St. David's Health Care System v. U.S., 349 F.3d 232 (2003)

The U.S. Tax Court, in a 1984 decision, "New Concordia Bible Church
v. Commissioner", 49 TCM (CCH) 176 explained that "
"An organization will not be denied tax exempt status merely
because the creator is the sole or controlling officer. Such a
situation, however, presents an obvious opportunity for abuse and
calls for open and candid disclosure of all facts bearing upon
organization, operations, and finances so that the Court can be
assured that by granting the claimed exemption it is not
sanctioning abuse of the revenue laws."

Harvey Mechanic
Attorney at Law

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


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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