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Nonprofit Law/Booster expansion and fundraising ?

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Question
We have an existing parent booster group with 501(c)(3)status, founded to support dance appreciation activities and involving all dancers at our dance studio. Can this booster properly support a new subgroup within the dance studio in the context of a non-competitive, performance group of dancers who display their dance routines at mostly public events? If so, what are the parameters of fundraising- in terms of, can fundraising proceeds from the overall booster group be used to offset performance costs relating only to the performance subgroup? Should the booster bylaws be amended to include this new group or should the new group seek its own 501(c)(3) status and operate independently? Thanks.

Answer
A 501(c)(3) organization may decide to give more funding to one sub-group than to another sub-group, for example to higher level athletes who have more expenses and more competitions.  The sub-group could not be a low number like a few dancers. 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

Generally nonprofits would not need to amend their bylaws to authorize them to fund a new group, but I would need to look at your present bylaws before I could definitively answer your quesiton.

You did not ask a question relating to the following issue, but you wrote about "our dance studio" which appears to mean that you are an owner of the for-profit facility. See http://www.irs.gov/pub/irs-tege/eotopica93.pdf starting on pages 11 "Private Facility Owners" which discusses prohibited private benefit and excessive control of the booster organization by such private facility owners.

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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