You are here:

Nonprofit Law/501c3 Youth Sports Fee for Fundraising

Advertisement


Question
We are a small 501c3 youth hockey club. Recently the board was approached by a parent from another club offering a fundraising opportunity to us with a few stipulations.  One of which is for our club to pay him a set amount ($2000) every year for 4 years in exchange for the use of this fundraiser.   Is this something that we could even consider as a non-profit?

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. There is no IRS regulation against a 501(c)(3) organization giving someone reasonable compensation but you could not give more than that.  Also, if your group is involved in a lot of sales activities, your group may lose exemption.  See "Fund Raising" at https://www.irs.gov/pub/irs-tege/eotopicl82.pdf as to the type of "fundraising"  that is allowed to maintain 501(c)(3) organization status and to avoid having unrelated business taxes due from your organization.

Even though this forum is not for information about state regulation, you would also need to consider your state's charitable solicitation regulations. The Illinois Attorney General has posted the required registration forms and instructions at
http://www.ag.state.il.us/charities/file_require.html
and you will notice that the person that you would be paying ($2000) may also need to register. Your organization would register and he may have to register as a "professional fund-raiser".  In your registration form there will probably be, as in other states, a question asking whether you are paying someone.

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.