Nonprofit Law/Donations

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Hi Harvey... thank you for being willing to answer our question.  We are a US-based 501c3 organization that leads teams of volunteers into Mexico to build houses.  We are a small organization, less than $20K in revenues and 100% volunteer run.

In MX we work with an US citizen residing in the area who owns a camp able to accommodate large groups such as ours. This individual networks with local relief agencies and aids organizations such as ours with site selection. in. Our group pays him a flat fee per person for accommodations.  This individual's only sources of income are the camping fees plus direct donations.

One of our volunteers would like to support this individual on a monthly basis.  Our volunteer has asked that he donate monthly to our organization specifically for this individual.

We are looking for options in how to do this properly.  The individual in question would not become an employee.  An independent contractor arrangement has been considered, but the insurance is cost prohibited.

How would we best handle the request of our volunteer in assisting the individual living in Mexico.

Thank you.

Answer
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."

Further, your 501(c)(3) organization may not simply donate funds to an individual that you would like to help. 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

So the volunteer who wants to help that Mexican citizen can send him funds directly.  Your volunteer will not realize a donation that is deductible as a charitable donation, but he can send the funds directly.

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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