Nonprofit Law/Cash Awards

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Question
We are an 501c3 Art Group. We bring in teachers for classes and do several exhibits per year that are only open to our members.  We hire a professional judge to award ribbons. Are we allowed to award cash prizes? For example, $100 for 1st place, $75 for 2nd place and $50 for 3rd place.

Thank you so much for doing this - it is very hard to get (or maybe understand) information on a 501c3!

Answer
A 501(c)(3) organization is not supposed to use its funds other than for charitable, educational or religious activities and grants to members is not allowed when the public is excluded from consideration of the awards or grants.

Sorry for the delay in the answer to your question. Allexperts.com has, for the last 10 days not been sending me the questions to answer.

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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