You are here:

Nonprofit Law/Non Profit Concept

Advertisement


Question
Hi - I have a client with a concept for a non profit that involves using a facility to give music instruction and classes to kids in a major city. They want to use the non profit status to get donated equipment, cash donations, etc. They want to charge per student to help cover instructor fees, admin salaries, etc but also want to be able to give away classes to those in need. Program services would include classes, competition, studio time, etc. Their question is 'does charging most students per classes' violate their non profit status? or would it be considered public-support?  The for-profit they operate is a record label with built-in studio. The COO and CEO want to form this non profit to help reach kids.

Answer
Private schools are granted 501(c)(3) organization status by the IRS as long as they are set up on the state level as a nonprofit organization and operate as a 501(c)(3) organization should. See IRS Publication 557 "Tax Exempt Status for Your Organization"
which is available at http://www.irs.gov/pub/irs-pdf/p557.pdf for the many rules as to them keeping the operation as a 501(c)(3) organization should.

Specifically, as to educational purposes, see the IRS Exempt Organizations Manual at http://www.irs.gov/irm/part7/irm_07-025-003-cont01.html#d0e1748

501(c)(3) organizations are able to accept donations that are deductible as charitable donations (like equipment and cash) and may certainly charge tuition and fees (as universities and private schools, which are normally 501(c)(3) organizations do).

I have in my profile that this free forum is only for general questions about IRS federal exemption issues of 501(c)(3) organizations. The for-profit has other specialized issues and they or you may want to consult with me about those.  If you want to hire me, send me an email directly to my email address below and I will quote you my fees.

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. For me to consider your individual situation and how the law applies, I would need to gather more information.  

Nonprofit Law

All Answers


Answers by Expert:


Ask Experts

Volunteer


Harvey Mechanic

Expertise

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.


©2016 About.com. All rights reserved.