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Nonprofit Law/Stipends to volunteers


Our non-profit currently provides a monthly stipend of $450/month to two of our volunteers (both donate over 100 hours month) who assist in helping clients with disabilities get on/off bus, deal with transportation delays, act as backup to classroom instructor in completing tasks, maintain attendance records, enter attendance data, answer phones, assist with fundraising and special events, one volunteer does monthly payroll, represents organization at special events, and assist in dealing with complaints, concerns, and inappropriate client behavior on specific days.  We recognize this stipend does not come close to covering donated time nor level of responsibility at this time, but it is what our revenue can afford given we are a fairly "new" non-profit.  Is providing a stipend in this manner legal?   Is there a better way of acknowledging their service besides hourly pay?  Should stipend identify what it is going towards or recognizing as part of their volunteer time?

The IRS has published:
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A stipend is defined as a fixed sum of money paid periodically for services or to defray expenses. The fact that remuneration is termed a "fee" or "stipend" rather than salary or wages is immaterial. Wages are generally subject to employment taxes and should be reported on Form W-2, Wage and Tax Statement. Refer to
Publication 15, Circular E, Employer's Tax Guide, section 5, Wages and Other Compensation, for rules on accountable and nonaccountable plans for employee business expenses.

The income from stipends is reportable. Is the stipend or fee paid to an employee or an independent contractor reportable?  The answer to this question determines the way that the stipend is reported.
See also the section entitled Employee vs. Independent Contractor.
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In addition, your payments are below the minimum wage and, therefore, you not in compliance with Federal and State Labor regulations.

You may reimburse volunteers for their out-of-the pocket expenses and that is not considered income when properly documented, but amounts above that are considered income for work.

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. 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


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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