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Nonprofit Law/501(c)3 income percentage

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Question
Hello! We are a small registered 501(c)3 in Texas, with annual donations totaling about $4000. We recently had an offer of a large donation, but I remember a warning that only a certain percentage of our total donations can come from a single donor. I cannot find anything about this in any of the literature we have from the Federal or State government or on websites. Can you please tell me if we can only accept a certain percentage of our gross from the single donor, and where I may read about this regulation? Thanks for any guidance.

Answer
A one time large donation will not effect your public charity status. See page 35 for the IRS publication which is available at http://www.irs.gov/pub/irs-pdf/p557 as to the calculation for the public support test which is used to determine whether public charity status is warranted:
--- Start of Excerpt ---
Unusual grants.  In applying the 2% limit to determine  whether  the  one-third  support  test  or the  ten-percent-of-support  requirement  is  met, exclude  contributions  that  are  considered  unusual  grants  from  both  the  numerator  and  denominator of the appropriate percent-of-support fraction. Generally, unusual grants are substantial contributions or bequests from disinterested parties if the contributions:

1. Are attracted by the publicly supported nature of the organization,
2. Are unusual or unexpected in amount, and
3. Would adversely affect, because of the
size, the status of the organization as normally being publicly supported. (The organization must otherwise meet the support test in that year without benefit of the
grant or contribution.)
--- End of Excerpt ---

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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