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QUESTION: I am a board member for a non-profit museum which focuses on Naval Aviation.  I have been approached by a man who has written a book about Naval Aviation and specifically his father's achievements in that area.  He is looking to have the book published by the US Naval Institute (another 501(c)(3) organization).  They require that the author collect $10,000 in order to publish the book.  There is some sort of requirement that the money has to come from individuals, it cannot come from the author.  The author has asked us to enter into a Designated Fund Agreement which would allow us to collect funds which would in turn be submitted to US Naval Institute.  Would the contributions we collect be tax-deductible?

ANSWER: No.  Donations earmarked for individuals are  no deductible by consular.  As to charitable deductions, see IRS Publication 526 "Charitable Donations"  which is available at:
http://www.irs.gov/pub/irs-pdf/p526.pdf
on page 6 where the IRS lists as not deductible "Contributions to individuals who are needy or worthy. This includes contributions to a qualified organization if you indicate that your  contribution is for a specific person."

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.


---------- FOLLOW-UP ----------

QUESTION: So the part which is unclear for me is whether the contribution is for the individual or for the US Naval Institute Press.  I'm trying to determine that by getting a copy of the agreement between the author and USNIP.  If the contribution is for USNIP, which is a 501(c)(3) organization, does that change the answer?  Sorry if I'm being obtuse.

Answer
No.  see http://www.irs.gov/pub/irs-tege/eotopice96.pdf which is an IRS publication about prohibited conduit arrangements.

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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