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Nonprofit Law/multiple checking accounts


Hi Harvey -- i attend a weekly dance lesson at a facility that is owned and operated by a 501(c)(3) organization.  when reimbursement for expenses became an issue, the dance group asked if they could establish a checking account of their own because the treasurer of the organization was unable to reimburse for expenses in a timely manner.  The dance group was told that this would jeopardize the non-profit status of the org and thus, they (dance grp) could no longer be part of the charitable organization if they wanted to set up the 2nd account.  The group opened their own account.

The treasurer of the non-profit seems adamant about this concept (2nd checking acct) and is unlikely to accept the dance group's findings based on what i discovered by simply googling and finding your reply which supports having the 2nd account.  is there an IRS pub that addresses this ? if so, which one?  also - are you aware of other 501(c)(3) orgs - possibly some that are well-known?  (United Way? Christian schools?) that do, in fact, have more than one checking account under the same 501(c)(3) umbrella?

One of your replies to another group indicated that the 2nd checking account established by the committee also had the treasurer etc of the main group as signatories on the 2nd checking accountI.  Is this a requirement to allow a 2nd checking account by the committee?

FYI - the dance group charges admission, provides food, beer, wine to all who attend.  They also pay an instructor and if there is a net "profit" .. it is given to the owner of the facility as a "donation".  thus - there is no IRS taxable income from a business operations perspective but we have not applied for an EIN as a separate business entity.

recent discussions are leading the dance group to form a business entity that is not tied in any way to the charitable organization (LLC maybe?)  -- this is driven by the statements from the treasurer and leader of the 501(c)(3).  If we can prove that the 2nd checking account will not jeopardize the status we are hoping to be allowed to exist within the non-profit's org structure.

thank you for any information you can provide

If the checking account has the same EIN (Employer Identification Number - or Taxpayer Id number) as the 501(c)(3) organization and has been approved for set up by the board of directors of the 501(c)(3) organization, then that is considered in the total financial report of the 501(c)(3) organization.

The 501(c)(3) organization would have what is called a "consolidated" financial report and Form 990 filing with the IRS. Links to latest published Form 990 Series -- Forms and Instructions which are available at which explains which 990 series return to file.

It is not that there is any law stating that such an act may be done.  Here in the United States, unless something is specifically prohibited by law, then it is allowed.

  I know of many 501(c)(3) organization's that have different bank accounts, but I am not going to citing to you any cases or IRS publications that permit such, because I know of nothing published as to such an issue.  The knowledge of such being acceptable is common.  For example see and

It is not the burden of the 501(c)(3) organization to show a case that evidences that it is legal to do an act, such as opening up different bank accounts, such as one savings account and one checking account. It would be the burden of the person, like the treasurer, who states that it is NOT legal to do an act to provide the exact citation. Merriam-Webster's Dictionary of Law cites to the legal "principle that an act is not a crime unless there is a law prohibiting it."

That phrase comes from the Latin "nullum crimen sine lege" and a similar phrase is "Nulla poena sine lege" (Latin: "no penalty without a law").

Therefore, they would need to provide the citation or the URL for the law and then I will respond to the URL, if they, in fact, do provide something.

It is not a second, third or fourth checking account that could jeopardize the organization's 501(c)(3) status.  However, the activities and mode of operation of the dance group may jeopardize the organization's exempt status. I have in my profile that this free forum is only for general questions about IRS federal exemption issues of 501(c)(3) organizations. I have in my profile in my forum at the free service that I offer is only for questions directly related to IRS exempt purpose issues of 501(c)(3) organizations. If you want to hire me to analyze your particularly situation, send me an email directly to my email address below and I will quote you my fees.

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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