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Nonprofit Law/Expenses paid by Board member Director


I paid all of the start-up expenses for my non-profit organization (501c3) which four directors including myself started last year (2013). Can I deduct what I paid as a donation to my own charity, or is that a conflict of interest?  Do I have to be reimbursed by the nonprofit, or say it is a loan to the company to be paid back later?  We have had no other income so far.  I could use the write-off, and I don't mind contributing the money to my own nonprofit's cause.  I'm just not sure if that is "allowed".  I tried to search this answer through your website but didn't find it;  I'm sure I'm not the first to ask, though. Thanks for your help and insight!

I have in my profile that this free forum is only for general questions about IRS federal exemption issues of 501(c)(3) organizations that are public charities (not private foundations). Therefore, I am assuming you are referring to such an organization.  There is no issue as to conflict of interest when an insider donates funds to a public charity or pays for expenses of the public charity and is not reimbursed for those amounts.  As to charitable deductions, see IRS Publication 526 "Charitable Donations"  which is available at and, specifically, as to unreimbursed expenses, starting at the bottom of page 4 under the heading "Out-of-Pocket Expenses in Giving Services" we see that you could deduct the unreimbursed expenses that you paid for the use of the charitable organization when the expenses you had only because of the services you gave.  The details are found on page 19 of the record-keeping requirements in the middle column under the heading "Out-of-Pocket Expenses" where you see you would need the organization's written acknowledgment to deduct.  Details of the acknowledgement
are also found on pdf page 11 at which is the IRS Publication "Charitable Contributions --Substantiation and Disclosure Requirements"

As you can see in that publication 1771, there would have needed to be an acknowledgement from the public charity to you "contemporaneous" to the donation or outlay of unreimbursed expenses (you can see that word "contemporaneous" on page 5 of the publication. It appears from what you wrote that you did not obtain an acknowledgement in time. You did you obtain from the Board of Directors approval for a loan which would have been in writing in a board resolution nor a written agreement signed by an officer that the payments were done not as a donation by you but as a loan by you. If you want to follow up on this issue as to the acknowledgment or loan documentation, send me an email directly to my email address below and I will quote you my fees for a detailed discussion applicable to your particular situation.

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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