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Nonprofit Law/PTO donation to a student?


Our PTO, a 501(c)(3) organization, has been approached by a school district social worker who wants to know if we can support a low-income student who would like to join our school's ski club. She asked if we could give the student a scholarship to help cover the costs of the club, i.e. lift tickets and equipment rental. We would love to help out if we can, but are not sure how to go about it. Can we help? Can we give money to the student? To the ski club for the student? Do we have to establish a scholarship?

Generally, a 501(c)(3) organization may give grants to or for the benefit of individuals who are what the IRS calls charitable beneficiaries.  Low-income students are in the class of charitable beneficiaries.

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--- (cited with approval
in IRS instructions for Form 1023 Application for Exemption on pdf
page 23 middle column) at:

Unless your articles of incorporation or bylaws prohibits such grants, then your PTO may either give the money directly to the student's family or to the ski club for the student.  Normally 501(c)(3) organizations would prefer to give to the provider for the benefit of the charitable beneficiary.

You do not need to establish a scholarship or other specific fund. Just follow Revenue Ruling 56-304.  

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


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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