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Nonprofit Law/re: Non-profit org. to receive donation from another non-profit org.

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QUESTION: Dear Mr. Harvey Mechanic,

First of all, thank you sincerely for your precious time and honorable act to answer people with non-profit organization related legal issues. It is so invaluable in particular for small and young non-profit organizations with limited fund.

I am writing to see if you may shine some light on my confusion for a donation from another non-profit organization. I understand that it may be too case specific, I apologize for taking a liberty to ask for your guidance because the organization I serve is a young nonprofit org. helping  underprivileged children to continue their education. All members are volunteers without any benefits and compensation.  Every dollar we get from donation has been directed to the education of those underprivileged children.  

The dilemma we are facing is another non-profit organization would like to give (pass along) a donation from a match-funding program of a big corp. to our organization. The problem is that the employee did not give his(her) donation to this nonprofit organization. The big corp somehow gave away its matching donation. This org. asked that person to return the donation back to the corp., but no body in the corp. knew what to do with it, or even cared about it. That employee left the big corp thereafter. The money has been laying on the account in that org. for a few years..

Question: Any legal concern for my non-profit org. to accept this money after knowing all those facts? We want to do thing right and lawful and would never want to jeopardize our org. and the future of those children who need our help and support.

Any solution to the dilemma?

Thank you in advance for your time and consideration.  

Sincerely,

Wen

ANSWER: Are both organizations recognized by the IRS as 501(c)(3) organizations?  Is the other organization proposing to give your organization the exact amount of funds that they received from the big corporation?  Approximately when did the other organization receive the funds from the corporation?  You mentioned a few years, but can you be more precise?  Did that other nonprofit organization make any representations to the big corporation that it had already received the matching funds from the employee?  If so, when?

You wrote something that I do not understand, "This org. asked that person to return the donation back to the corp., but no body in the corp. knew what to do with it, or even cared about it. "  It appears that you meant that the other nonprofit asked the employee to contact the appropriate parties in the corporation and offered on behalf of the other nonprofit to have that nonprofit refund the money to the corporation, but, nonetheless, the corporation did not follow through.  Please confirm my understanding.  If you want to give me your state that may be helpful, although generally states have similar treatments as to these types of situations.

After you give me that information I will reply further.

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: Dear Mr. Mechanic,

Thank you for your quick reply, appreciate it very much.

Yes, both organizations are 503(c)(3) organizations.

Yes, it proposed the exact amount of fund they received in 2009 to our organization.

No. They did not make any presentation to the big corp that it received fund from the employee.

Yes, your understanding is correct. The corporation did not follow through. Sorry that I did not make it clearer.

Georgia.

Many thanks, in deed,

Wen

Answer
You are welcome.

You wrote " 503(c)(3)" but I am assuming you are referring to 501(c)(3) organizations. I do not see any legal concerns for your organization accepting a grant of the funds from the other 501(c)(3) organization even though your officers and/or directors know all the facts (as you presented them).

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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