Nonprofit Law/501(c)(3)


If a donation to an individual is taxable, is the income from the donation by the 501(c)(3) taxable?

In other words, are donations which are made to individuals or entities that are not 501(c)(3) taxable to the 501(c)(3) making the gift?

It appears you are referring to the situation when a donor gives payment to a 501(c)(3) organization with an understanding between the parties that the organization will pass the funds through to an individual.  That appears to be what the IRS refers to as a conduit arrangement and you can see details about such at which is an
IRS publication.

If such activity is significant the IRS could revoke the exemption of the organization or it could levy fines under what is called "intermediate sanctions" if the recipient is related to an insider to the 501(c)(3) organization.  You can read about intermediate sanctions at which is also an IRS publication.

If you are not referring to a conduit arrangement, then I do not understand, in what circumstances, an individual would be taxed on a donation from a 501(c)(3) organization.  If you want to specify, then I will reply further.

Harvey Mechanic
Attorney at Law

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


DO NOT GIVE ME INFORMATION THAT YOU WANT KEPT CONFIDENTIAL. 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 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 "" without the quotes and then add your search terms before hitting enter.


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.


B.S. Columbia University in New York City, 1970

J.D. (Law Degree) Brooklyn Law School, 1990 -- Cum Laude.

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