Nonprofit Law/Scholarships

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Question
Can a 501c3 gymnastics booster club give out scholarships to gymnasts to help offset meet fees?  If this is legal, are there any restrictions?

Answer
 The IRS only refers to scholarships in the context of educational purposes within an educational institution. In their Publication 970 the IRS has, "A scholarship is generally an amount paid or
allowed to, or for the benefit of, a student at an educational institution to aid in the pursuit of studies. The student may be either an undergraduate or a graduate."
http://goo.gl/ZHdZS

Unless the gymnasts are representing a particular high school or college in the meeting, then, we would not use the word "scholarship".  In the area of nonprofits what the term would be is "grant".  A 501(c)(3) booster organization may certainly grant funds to a gymnast to help offset meet fees as long as the recipient is a "youth". My summary of IRS regulations relating to 501(c)(3) booster organizations is at: http://goo.gl/IdQwML and you may be interested to read that.

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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