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Nonprofit Law/Fundraising Campaign that Includes Personal Stories

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QUESTION: We are doing a fundraising campaign to assist in the needs of domestic violence, child trafficking, and sexual exploitation victims. The needs range anywhere from immediate emergency funds to place domestic violence victims who are being stalked in a new location for their safety (travel and temporary housing), funds to assist with legal fees and experts to testify on their behalf, medical funds for domestic violence victims shot or harmed who have no insurance, counseling, and food to get by for 1-2 weeks.
Can we put some of the personal stories of victims, without using their names or pictures, to raise these funds just to show examples of the types of needs of victims and how their donations are being used?
Are we allowed to provide cash to victims if they contact our foundation expressing an urgent need for emergency funds if we request proof of the need and our board approves it?

ANSWER: I have in my profile that this free forum is only for general questions about IRS federal exemption issues of 501(c)(3) organizations. Therefore, I am assuming you are referring to such an organization. If not, let me know what you are referring to by "We".

Your issue about using personal stories of victims, without using their names or pictures, to raise  funds is controlled by state law and states may differ somewhat with how they would treat such issues. Even though this forum is not for such state law issues, I may be able to direct you, but first let me know if the victims are all in Florida (you wrote from Florida). After you give me that information I will reply further. I am assuming you are referring to the situation when you have not obtained written permission from those persons for such use. I can inform you that, generally, states allow use of such stories as long as the identity of the person is not discoverable from the information given. For example, California's law is discussed at http://www.dmlp.org/legal-guide/california-right-publicity-law
and Florida's at http://www.dmlp.org/legal-guide/florida-right-publicity-law

As to whether you are allowed to provide cash to victims if they contact our foundation expressing an urgent need for emergency funds.  Revenue Ruling 56-304 provides:
--- Start of Excerpt ---
Organizations privately established and funded as charitable
foundations which are organized and actively operated to carry on
one or more of the purposes specified in section 501(c)(3) of the
Internal Revenue Code of 1954, and which otherwise meet the
requirements for exemption from Federal income tax are not
precluded from making distributions of their funds to individuals,
provided such distributions are made on a true charitable basis in
furtherance of the purposes for which they are organized.

However, organizations of this character which make such
distributions should maintain adequate records and case histories
to show the name and address of each recipient of aid; the amount
distributed to each; the purpose for which the aid was given; the
manner in which the recipient was selected and the relationship,
if any, between the recipient and (1) members, officers, or
trustees of the organization, (2) a grantor or substantial
contributor to the organization or a member of the family of
either, and (3) a corporation controlled by a grantor or
substantial contributor, in order that any or all distributions
made to individuals can be substantiated upon request by the
Internal Revenue Service.
---End of Excerpt---
http://www.irs.gov/pub/irs-tege/rr56_304.pdf
(cited with approval in IRS instructions for Form 1023 Application
for Exemption on pdf page 23 middle column) at:
http://www.irs.gov/pub/irs-pdf/i1023.pdf)

Cash is still legal and you certainly can give cash.  

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: "We" is a tax exempt 501(c)(3)Organization. The victims are all from different states. My concern on the use of personal stories was more in the realm of: If we used the stories of 3 victims who in fact are 3 of 5 victims in desperate need of assistance due to extreme hardships in their specific circumstances and a large percent (say 75%) of the donations from this fundraiser would be used to assist the needs of those 3 victims, would the IRS see this fundraising campaign as a fundraiser for individuals if their were no personal identifying information such as names, locations, or pictures?

Answer
There is no IRS regulation prohibiting solicitation of funds by a 501(c)(3) organization using a fanciful story or a story that is real but without enough information to determine the identity of the person.

It is a fact that:
--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  ---
http://www.irs.gov/pub/irs-pdf/p3833.pdf (pdf page 13) under the heading "Charitable Class"
More details are found starting at pdf page 6 of  http://www.irs.gov/pub/irs-tege/eotopick99.pdf

Your charitable class is not the victims that you have chosen, but the universe of victims who your board consider, in a reasonable way, to be among those who would be eligible for assistance.

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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