Nonprofit Law/Fee refund, again

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Question
Hello again Mr Mechanic,

You just answered some questions for me about fee refunds in exchange for volunteer duties for a tournament. How do things change if we give those returned fees to another non-profit in exchange for the volunteer efforts of those teams. We are a League, and we are made up of a consortium of Clubs, which are independent 501(c)(3) organizations that all have the same basic mission that the League does. How do the tax laws apply if we give money to these Clubs in proportion to the number of teams from their Clubs that helped run the tournament, and leave it to the Club to decide how to use or disperse those returned fee

-Pres

Answer
As long as the volunteer activity is not something that would be considered unrelated business activity, like vending of food and drink to spectators, I don't see any problem as the funding is going from one 501(c)(3) organization to another.

I am assuming that the team size is relatively large.  See pdf page 13 of
http://www.irs.gov/pub/irs-pdf/p3833.pdf under the heading
"Charitable Class
--start of excerpt  ---
The group of individuals that may properly receive
assistance from a charitable organization is called a charitable
class. A charitable class must be large or sufficiently indefinite
enough that the community as a whole, rather than a pre-selected
group of people, benefits when a charity provides assistance.
--end of excerpt  ---
More details are found starting at pdf page 6 of http://www.irs.gov/pub/irs-tege/eotopick99.pdf

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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