Nonprofit Law/Sports Uniforms

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Question
We run a charitable sports organization for youth boys and girls in our area.  Many different age levels of competition.  An individual wants to donate money for uniforms for one team in particular.  This individual does not have a child or relative on the team, but simply knows the coach personally and would like to support him.  Can we accept that money (with the intention of following the donor's wishes/instructions)?  Similarly, if an individual would like to donate to the girls teams specifically (but doesn't specify an age range) can we accept that because it's more broad (again, with the intention of following the donor's wishes/instructions)?  Finally, assuming the answer is no to the above two questions because that's considered "earmarking", is there a good way to change our set-up/organization or have sub-groups or targeting fundraising to isolate funds for particular teams by age or more broadly by gender and still have those donations be acceptable (i.e. charitable deductions to the donor)?

Answer
The IRS calls what you are referring to as "Earmarking" by donors.

From page 8 of  www.irs.gov/pub/irs-wd/0530016.pdf
is:
---Start of Excerpt--
The Taxpayer [501(c)(3) organization] must ensure that it maintains
its discretion and control over all contributions.  Accordingly,
the Taxpayer may endeavor to honor donors' wishes that designate
the use of donated funds.  The Taxpayer, though, must maintain
control over the ultimate determination of how all donated funds
are allocated.  Donors should be made aware that, although Taxpayer
will make every effort to honor their contribution designation,
contributions become the property of Taxpayer, and the Taxpayer has
the discretion to determine how best to use all contributions to
carry out the it's functions and purposes.
---End of Excerpt--

Therefore, I suggest your organization write to the donor as to the situation and that your organization would treat the expressed wishes of the donor as the college did for the donor in the following:

---Start of Excerpt--
Contributors will have the opportunity to express a preference
that their contributions be used to construct the house of a
specific participating fraternity.  College will keep records
permitting it to account separately for funds contributed that
are the subject of contributor preferences.  Contributors will be
informed that College will attempt to honor their preferences.
Contributors also will be informed that College will not be
obligated to honor those preferences, that such a preference will
not restrict or limit College's full ownership rights in the
contributions, and that College will be able to use the
contributions for any purpose.  The contributions will be
expended only by Colle ge.
---End of Excerpt--
http://ftp.irs.gov/pub/irs-wd/0003013.pdf

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.

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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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