Nonprofit Law/Fundraising

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Question
Sir, I will be brief and hope for some advice from you.
>
> I have been made aware of a family in need due to medical expenses incurred by a sick family member, a child.
>
> Friends and neighbors have organized a fundraising dinner for this family, as well as soliciting donations on Facebook. Donor checks are made out to the sick child. The parents have opened a bank account in the child's name.
>
> I am 100% sure that this is not a scam; the situation is real. There is no establishment of a 501c3 and the donations are not being funneled through an established charity. Since there is no governance over how the donations are being used, I am concerned that the family may be liable to someone, somehow, for something and they have no protection.
>
> Am I being overly concerned?
>
> Thank you in advance if you can enlighten me on this issue.

Answer
The Internal Revenue Code at section 102(a) provides that gifts are
not income.  "Gross income does not include the value of property
acquired by gift..."
http://codes.lp.findlaw.com/uscode/26/A/1/B/III/102

Therefore, the parents have no tax liability on the gifts.  Note, however, that the donors do not receive the ability to deduct their donations as charitable contributions as the money does not go to or for a 501(c)(3) organization.

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

Expertise

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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