Can One Non-Profit Donate Money To Another?

I was asked if one 501(c)(3) non-profit can give money to another 501(c)(3) charity. With the usual, and necessary, caveat of, “I am not attorney, nor am I giving legal advice,” I responded that, Yes, when the transaction advances the donor non-profit’s charitable mission, a non-profit can donate money (and other resources) to another non-profit.

In some instances doing so is an essential part of a non-profit carrying out its mission. Example: An orchestra could donate funds to an organization which seeks to develop overall marketing and PR education and outreach to that city’s arts and culture population.

Along with that necessary start to the process, the donor non-profit needs to make absolutely certain that there is:

  1. No conflict of interest. Any person or persons responsible for the transfer of the donated funds must not personally (their families, friends, associates, etc.) benefit in any way. Example: The donated funds are used to purchase equipment in some way connected to business interests of a Board member of the donor non-profit
  2. No violation of donor restrictions. While exacting restrictions are not generally connected to most donations, nevertheless, the risk is that some donors would not approve of their money, in principle, going to another charity they did not choose, no matter how it fits or how worthy.
  3. No misuse of the donated charitable resources by the receiving non-profit. Should the receiving non-profit subsequently have publicized financial problems, even though the donated funds were not in fact misused, the overall perception of the receiving organization trumps the reality. Perception is everything. There could be serious trouble for the donor non-profit requiring it to justify its support of the ailing organization.
  4. No question that donating funds in any way will imperil the donor non-profit’s own financial health. In other words, that the donation was not over the top, excessive, or out of the realm of good judgment.

Of course, there are always exceptions, and at times such arrangements can be mutual beneficial. But, from what I have mostly come to know, the donation-to-another-charity question is most often asked by people who hope the answer is “No” because they are unhappy about, or uncomfortable with, a proposed action of this type. I know I would be as director of development, especially when challenges are possible by my donors asking that I explain the above point 2. I would not want to risk hearing, “Not with my money, you won’t!”

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76 responses to “Can One Non-Profit Donate Money To Another?”

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  1. Anshul says:

    please advise. I am planning to open a nonprofit . The purpose of that nonprofit will be to collect donations in USA and help small struggling nonprofit organizations in different countries like Haiti, Mexico, China, India .
    I’m not clear as to which laws would apply to this nonprofit
    and whom should I contact for the paperwork

  2. Justin says:

    You must be a generous man with your time to answer all these various questions – and with wisdom. I hope you get rewarded for your energy given.

    Our company is not yet a recognized NPO – but are pursing the process. But let’s say we become a NPO shortly. Can we donate to cover a high school student’s tuition in exchange for him volunteering some hours at our thrift shop? We’d like to call it a work-scholarship program. A private school in the area loves the idea. We sure could use the helping hands – and it seems likely the government would look favorably on our NPO helping with tuition. This would not be considered wages, as our NPO is giving directly to the school specifically for tuition. Do you see any issues with this arrangement?

    While I have the conversation open, we also have a second pool of volunteers that we want to compensate indirectly. These are men in a residential addiction recovery home program. We’d like to have them work with our thrift store. In exchange for their voluntary hours, we’d like to contribute directly to their most pressing needs, which is usually one or more of three categories: 1) court costs / fines, 2) child support, and/or 3) continuing their education on the college level. Would the IRS look at our direct contribution to these categories as wages for these volunteers?

    Then we have a third pool of volunteers to draw from – and this scenario seems plenty safe. These are elderly folks who would like to come in a couple hours here and there to help clean and such. Their reward for volunteering is our NPO contributes a donation to a local missions board. These workers just want to support missions work, and do so by volunteering their time. Does all this seem doable?

    Thanks much for your mental energy to think things through and reply.

    • Tony Poderis says:

      Thank you for your welcome and appreciated words of support for what we love to do here on Raise-Funds. It’s reward enough to Dave, Joyce and me to know we do some good.

      You can see from many of my replies that I reveal some unease when it comes to my opinions and guidance regarding explicit IRS and state rules and regulations the governance of non-profits.

      I must always cite the caveat that I am not an attorney, nor an expert in that field, but I do have some experience.

      As you are contacting the preferred professionals to ensure verifiable answers, I will give you my opinions, for what they are worth.

      Scenario No. 1
      IRS Publication 526 does, with exactness, forbid charitable donations to favor a named/given individual. So, the school must independently choose the student.

      Passing that test, I doubt it would pass further muster to oblige that student to work for the donating charity as a requirement for tuition paid. Even with legal issues aside, there should be no strings to your presentation of the scholarship.

      The only way around this, maybe, is if the school itself has a policy of tuition-granted to donated time and effort in support of a community non-profit.

      But, even at that, you cannot escape the direct tie-in to the granting of the scholarship to being obliged to volunteer at your specific charity. The scholarship recipient must be only given the opportunity to choose to work in your gift shop.

      In summary, I do not see how this can work within the IRS rules, or even in just the stand-alone partnership you have with the school.

      What do you do if that student does not like volunteering at your non-profit, or that you find that he or she is not a good fit, unreliable, or that the student is even undesirable?

      Scenario No. 2
      Simply put, and sort of a tie-in with No. 1, I am uneasy with the idea that you would provide your humanitarian support to your clients in exchange for volunteering.

      You can make the volunteer work needs be known, but the choice to work or to not work, to my way of thinking, must be up to the beneficiaries of your good work alone to decide.

      Your intentions are noble, but you risk the wrath of the IRS, and public and client perception, that to be served, you must work. Not so, but that is how it will be perceived.

      Scenario No. 3.
      Maybe. Just how much work done, by how many volunteers, leads to the issue of determining the amount you will donate to the local missions board.

      Too little, perhaps, no matter the amount, as thought by the volunteers putting in their time—or even as thought by the receiving charity.

      Through all three scenarios, I see the honest intent, good thinking, and dedicated folks all wanting to do good things for others.

      But, I see too much of those good works being contingent on adhering to self-developed rules and guidelines—all of which are not too imposing on the surface, but in time, I believe they will wear thin and cause problems from the IRS, your state, and especially from the volunteers and recipients themselves.

      No donation on your part should be contingent on the receivers/donees needing to do something on your organization’s behalf.

  3. Jonathan says:

    There is a NPO 501c3 that I give money to monthly. This organization helps less fortunate people worldwide. They do several Mission Trips a year and take teams of volunteers (who pay their way) on these trips to serve the target groups. When the volunteers raise funds, money is given to the organization by friends and family members donating to an individual and the donations are ear marked for a particular volunteer. Are these gifts tax-deductible gifts because they are written to the NPO but ear marked for use by an individual? This NPO is not a church but my experience with churches, is churches can NOT consider donations made to the church, but ear marked for an individual, a tax-deductible contribution, is this correct? The church basically just becomes a funnel of money from one person to another. However, if the donation is made to the church and it is put in the “general fund” and distributed per its budget per se then that is a tax-deductible gift. Do the same rules apply to 501c3 NPOs? Thank you for your insight.

    • Tony Poderis says:

      What I read between the lines as perhaps your misgivings, is correct–no matter it be a humanitarian NPO or church.

      There is no tax-deduction allowed for money given to any type of NPO when those funds are earmarked for a specific individual. (Even a needy and worthy beneficiary of the NPO.)

      — IRS Publication 526 makes that clear.
      — See “Contributions to Individuals”

      The trips can be paid for by friends, families and others to specific individuals, but those funds would be outright gifts, and should be directly used to pay expenses.

      There could be an overall travel fund set up by the NPO, inviting any and all donations (which would be tax-deductible), but then the NPO does its own, independent and appropriate distribution for travel.

      Such personalize “donations” as you described cannot/should not pass through the NPO to be given to pre-identified volunteers and used to pay their trip expenses.

      Such a practice clearly violates the IRS regulations.

  4. KW says:

    Hi Tony. I run a 501(c)(3) sports-based charity whose mission is to provide education and recreational opportunities to children in highly impoverished areas. A private sports club (not a non-profit) has proposed the following fundraising idea to us: their players raise money to benefit our programs and in return our charity would give approximately 75% of the funds raised back to the club to purchase equipment for each player. Do you see any problems with this idea? Thoughts?

    • Tony Poderis says:

      From my non-attorney, and not being an IRS expert, position, I see a major problem; possibly to have your status as a non-profit put into serious jeopardy.

      You would be allowing the sports club to solicit charitable funds in the name of your charity — then to have that sports club in effect, “keep” 75% of what was raised.

      Worse, your charitable donations mostly help to subsidize the club’s expenses and gives direct and personal benefit to its players.

      To me, that’s almost criminal on their part. It could very well be, according to the non-profit laws of your state’s Attorney General.

      The club is, in effect, nothing more than a paid solicitor, keeping an outrageously high amount of what they might raise.

      If, and I say again, if —- you enter into such an agreement, there would be the need for exacting control of the solicitation process in terms of how the money is raised, from whom, and for you to beware of problems when cash exchanges hands.

      As much as possible, donations must be made in the form of checks, payable to your charity—absolutely not to the club.

      Donors can claim tax-deductions only when their donations are directly traced to your non-profit by cash receipts and by checks.

      There are no industry standards when it comes to outsiders raising donations for non-profits regarding the percentage they keep of the funds they might raise.

      But, were I to be in your position, the first thing I would be sure of absolutely, is that the fund-raising process is totally known to me, and that all possible precautions are taken when it comes to the handling of cash.

      No money at all should pass through the books of the sports club.

      Then, I would let them do it, and in turn,I would give back about 30% of what was raised.

  5. Gen says:

    We have a 501c3 that we belong to as a member group. They say that they claim $40,000 a year of in-kind donations to each of their member groups to the IRS and each of their grants they apply for. I don’t see where they come up with that figure. They are not open telling me either. I was wondering what law I could use to make them share the detailed information on how they itemized out that amount of money per group or at least for my group? I don’t want to have to claim $40,000 in-kind donation to IRS when we aren’t actually getting it.

    • Tony Poderis says:

      The IRS does indeed require non-profits to report annual In-Kind donations of property—not services—on Form 990.

      Non-cash (In-Kind) donations are accounted for with their description, Fair Market Value (FMV), and date received.

      It is hard to understand how the parent organization justifies to its own finance department what are apparently made-up numbers, and dates received of the In-Kind donations.

      Even more surprising, is how the annual audit allows this procedure.

      What would the organization do should it be asked for names of those In-Kind donors from what looks like contrived and unsubstantiated data?

      Why the IRS has not yet flagged what would look like an obvious fixing of numbers—-to have the same In-Kind declaration cited for each member–is mystifying as well.

      You member groups have every right to see the books of the parent organization representing your interests.

      You have every reason to be concerned, since the parent organization may be risking its own status as a non-profit, thus possibly bring you and the other members down with them.

      They are promoting and providing financial data in your name, but which data is something you did not provide, and worse, which is erroneous.

      You should relate these facts to the leaders of the organization, especially the board member responsible for finance and accounting.

      In what I see from your note, there is a fraudulent practice going on unchecked, that is, until someone, or the IRS gets wind of it.

  6. Andrea says:

    I understand that a 501(c)(3) organization (Org 1) “give” funds to another 501(c)(3) organization (Org 2) for an Org 2 event if it aligns with their purpose. My question is can Org 1 be publicly listed as a sponsor of Org 2’s event?

    • Tony Poderis says:

      To my way of thinking — Yes.

      Just be sure that this deal is OK with the leadership and the donors of (Org.1).

      Though the Missions are in line, there should be no surprises regarding this specific use of funds given donors to (Org.1).

  7. MIchelle says:

    Quick question I hope someone is still looking at these. I work for a non-profit (501)C3 and they are purchasing new computers. Can they gift their wiped clean computers to their employees or do they have to sell them?


    • Tony Poderis says:

      I would certainly think there is an IRS rule prohibiting such gifting, but even if not, perception suffers when such property accrues to the benefit of non-profit staff or volunteers.

      As you know, all assets of a non-profit belong to the community, so to speak.

      They were made possible by donations. As such, should there be market value, I would think the articles must be purchased at that amount.

      In my opinion, you cannot/should not, give away items of value, especially to employees.

  8. Gina says:

    We have an LLC where we currently put together celebrity fundraisers for local and national children focused charities. We want to change to a nonprofit so that our sponsors can write off their donations. I saw a previous post from 2013 about someone looking to do the same thing and you didn’t feel it would be approved by the IRS. Is your position still the same? We get approached by nonprofit organizations wanting our help and services.

    • Tony Poderis says:

      This is from my non-attorney point of view, and personal judgment, to how the IRS might see the change you are thinking about regarding your commercial business:

      Changing to a non-profit, mainly to allow sponsors to write off their donations, is not a mission in the recognized sense, according the IRS, to do something for the public good and which is necessary to make a positive difference in the lives of those served.

      In the instance you cited, the move seeks only to benefit the bottom line of the sponsors.

      Yours is a commercial event planning and production company. To attempt to go non-profit, it seems to me, would be impossible given that your good work is just that:work to enable non-profits to produce special events.

      It is action culminating in non-profits being able to earn income from proceeds of those special events, the proceeds which would directly benefit those served by those organizations. You simply help make it possible from your professional services.

      Your good services are not the direct “ends” to making the positive difference to an identified constituency—as each of those non-profits have their own clients.

      On an even more sober note, remember that, even if your LLC did end up as a non-profit organization, you would no longer own it.

      Once you go charitable, the organization belongs to the community.

      You would be required to recruit volunteer board members—board members who make policy and hire and fire staff.

      The ownership, policy-making, management and doing business, would then be in the hands of others.

  9. Deb says:

    Our non profit 501 c 3 (lets call it organization “A”)ran a fund raiser for another non profit (organization “B”). Individuals at the event wrote checks out to “A” – in turn when organization “A” tallied the total donations Organization A wrote a check for that exact total to organization B.
    How do I phrase the donation receipt letter for tax purposes?
    Do i mention Organization B at all or say something along the lines of thank you for your donation to A on the behalf of B??
    just want it clear where their donation went.

    • Tony Poderis says:

      I expect that donors to your event knew clearly–without a doubt–that their contributions were to ultimately benefit Organization “B.” (If not, then you could have a problem when you do need to make clear where their donations went.)

      Since your Organization “A” was the first recipient, acknowledgments and other such communication should come from your organization to the donors.

      You cite in your communications that, thanks to their generosity, the good work of Organization “B” will continue and be made better to those whom they serve. You thank them as well for supporting your Organization “A” in such a way as to allow Organization “B” become the beneficiary.

      It could thought by some that Organization “B” should as well perhaps themselves thank key donors, but I do not think that to be a good idea—should it come up. The donors are yours, regardless of the stated purpose of their donation. Best to keep it that way should the issue arise.

  10. Mike says:

    I ask 20 groups to raise a certain amount of money for a non-profit (the groups can raise it anyway they want). Each group will have a different goal to meet. If the groups are able to raise the amount, the prize will be their group gets an opportunity to win a prize. The members of the group can enter their names to win a prize. Does this process count as a raffle (which I know has strict guide lines)?


    • Tony Poderis says:

      To my non-attorney way of thinking, since you are not selling tickets in the usual raffle setting, I see nothing risky with your plan.

      The prize-winning opportunity seems to me to be but an outcropping anyway of the main thrust to raise money for a charity. I see it more as an incentive to the groups/solicitors.

      However, from this literal and figurative distance, not knowing the details of the fund-raising campaign, I nevertheless offer a few comments which may or may not apply.

      — Be certain that the named charity has full knowledge of the plan, and that the charity is in total agreement with the operation.

      The charity must agree to aiding the groups in every way possible, especially when it is appropriate to send official thanks and other acknowledgements to donors.

      The charity should provide all needed promotion, publicity and solicitation materials.

      — Trust is major issue when handling donated funds. With 20 groups going forth to ask for money, it is safe to expect that many donations will be made in cash, and personally handled by many people. Try as best you can to have all donations made by checks made payable to the charity, otherwise, there is a good chance of unwanted, and perhaps, accusatory, requests for strict accounting.

      Supplying receipt books to each solicitor may be a good idea.

      Honesty is not in question here, but a concern for damaging perception when donations of cash flow around and along loosely.

      — Be absolutely sure that no money collected as donations will be used by any individual or by a group to pay for expenses connected to the fund-raising. Any such expenses should be donated.

      I’m talking about gas for auto travel, fund-raising materials, etc.

      You cannot allow anyone to withhold donated money for what they claim as expenses connected to their volunteer fund-raising effort.

  11. D.T. says:

    Hello Tony,

    I appreciate all the information you share. Here is my question. I have a friend who runs a non-profit organization (501c3) and is looking at “spinning off” a large fundraising event that has gotten rather large into another separate (501c3). The donations (ie: restricted cash, and a physical asset (vehicle) are to be “donated” to the new entity once approved by the IRS. I believe the missions are in line with each other, seeing how the donor was actually performing this task and is now separating it to the new entity. Do you see any red flags, etc.?

    • Tony Poderis says:

      It’s the “spinning off” action which bothers me. The work, time and expense given to make the event so successful, should not have those who made it work see their resources disposed in that way.

      It could be that the very reason for the event is falsely advertised when the profits are given to another NP.

      And I would look very carefully to make sure that this proposed spinning off to a yet-to-be-established non-profit has any links to relationships which could bring such asset assignments into question.

      Practically speaking too, such a major disposal of resources and assets to an organization not yet operating, is risky, in my opinion, when one does not know if the new NP could be up and running securely on its own.

  12. Raquel says:

    I have a 501(c)(7) non profit and would like to apply for a 501(c)(3) organization that has a similar mission as our current non profit. Should I apply for it separately or operate under the umbrella of our first non profit? Also can the 501(c)(3) contribute a donation to the 501(c)(7) without it being a conflict of interest?

    • Tony Poderis says:

      This is surely something you must research with your state’s Attorney General, the IRS or a lawyer skilled in non-profit law.

      From my non-lawyer view, to one of your points, operating one NP version to the terms of another NP classification, may bring you nothing but trouble.

      Before you go through the time, effort and expense to develop another non-profit, since its proposed mission is similar to the one you are now operating, you should ask yourself what would be the benefit to having what may be redundant or even conflicting dual organizations.

      Conflicts of interest are issues usually easy to determine when individuals personally benefiting directly from the donations of others, or when otherwise use the resources of a non-profit for personal gain.

      • Raquel says:

        Hi Tony and thank you for your prompt reply. By similar mission I meant to say the inspiration is the same but this would be for more charitable efforts with communities locally.

        • Tony Poderis says:

          Inspiration, alone or mostly, will not do it with your state or the IRS.

          What counts is that you must fill a definite, non-served, need and the mission must address the ends, not the means of the NP’s activity.

          Serving diverse groups may take your Mission a distance from its own core values.

          Hard from here to know exactly the situation there, but this is my best try.

          Work with accredited officials so you do not risk problems later.

  13. Cassie says:

    I work for a non-profit that recently received a donation of used coats. Our clients used some of the coats, however a portion of the donated coats were not used. Can we legally donate those coats to another non-profit?

    • Tony Poderis says:

      With the usual caveat that I am not an attorney, nonetheless, my opinion is that you can go ahead with your plan to donate the coats to another non-profit.

      However, I would expect the other non-profit to have a Mission similar to yours, and that the used coats go to those in need.

      Should the other non-profit not fit those criteria, and the non-profit simply sells the coats, then I think you could have a problem.

  14. JB says:

    My high school mountain biking club is a non-profit. We want to donate $ to another non-profit organization that is doing a fundraiser to repair the dirt trails we ride our bicycles on. The fundraiser also has a “raffle” component to it (one donor will “win” a nice cruiser bicycle). Do you see any red flags?

    • Tony Poderis says:

      First, some states prohibit raffles. A check with your state’s Attorney General’s office via phone or information on that department’s website may give the guidance you need. If raffles are not allowed, you take a chance when you present one anyway, even as harmless and in such an obscure setting.

      Next, just about all of my experience regarding fund-raising has been with 501 c 3 organizations. Yours is a non-profit, but perhaps it may be classified as a 501 (c) (7), or such, as yours is club.

      Such groups mainly exist from dues of members. Even so, how and if you donate your funds should be according the criteria I present in my article above.

      Factors such as the other non-profit’s status in the eyes of the IRS, and that they are presenting a fund-raiser for your organization’s benefit, must be explored in the same fashion. That is, does aiding your group fit with the other non-profit’s Mission, and you should assess how my other four criteria fit.

      Just make sure you take no risks with the raffle and ensure that donors/members would approve of giving each organization’s assets to another, while having the respective organizations staying is sync with their Missions and Articles of Incorporation.

  15. Amanda says:


    The nonprofit I am inquiring about is a children’s home (call it A). One of the house parents has their own nonprofit (call it B). B wants to resell the non-cash donations that A receives, and give the money back to A (after paying rent and themselves).

    Is this a conflict of interest since B is on the payroll of A, and will be benefiting by receiving a paycheck from B? This could also be deemed a violation of donor restriction since 100% of the proceeds are not going back to A. I am looking for substantial clarification before this situation moves forward (ex. IRS code).

    If this situation is allowed, how would this be tracked on the 990? I have searched IRS and cannot find any guidance for a nonprofit making a donation to another nonprofit.

    Thank you for your help.

  16. Amelia says:

    We are a very small non-profit organization that relies on public donations (as “members”) and foundation grants for our funds. One higher level member category of giving is “Friends” of the organization. Our board would like to donate to a charity in memory of a family member of one of our founding “Friends”, who recently passed away. The charity has nothing to do with the mission of our organization. If this donation an issue?

    • Tony Poderis says:

      Since the potential donation does not advance the mission of your non-profit, you could run the risk of coming to terms with the IRS and with your regular donors/members.

      Though the gift is meant in the best of ways, it would also seem to be a stretch when the one remembered is a family member of one of your non-profit’s founders.

      There is no practical basis for such a contribution. It’s driven by emotion. On its own terms, such a gesture could start a troublesome precedent.

      The board members themselves should personally make the donation, and not at all use the funds of your non-profit in that way.

  17. Brian says:


    I work for a non-profit that holds an event (lets call it a run) that allows individuals to raise money for the non profit of their choice, or the non profit I work for (by default).

    Is there a legal problem here? A question came up that we would be responsible for how the money was used at these other non profits. Or, that if someone misused the money raised for another non profit we would be liable.

    • Tony Poderis says:


      It seems like a nice community-care gesture on the part of your non-profit, but why operate an event, spending money, time and effort, to have participants donate to charities they choose?

      That your organization would benefit by “default” seems rather unfair to those working on your behalf. What’s in it for your organization, and for those whom you serve?

      But, to directly respond to your question, in my non-attorney position, I see nothing legally wrong if the participants make checks payable to the respective non-profits of their choice. No cash deals here, as that sets up all sorts of potential problems.

      If any of the non-profits so named as beneficiaries are accredited non-profits, then you have no liability whatever when participants to your event donate to those charities. You cannot be responsible for how they use donated funds. The oversight and responsibility of their trustees, finance manager, auditor, and the state in which they operate, and the IRS, is where the accountability lies.

      Just make certain that checks are made directly payable to any receiving charity. Absolutely, no cash should be passing from hand to hand.

  18. Sheri says:

    Can a non profit give money to a church to help with a remodeling project. The non profit board members are all members of the church that they are thinking of donating the money for a remodeling project. Are the members of the church benefiting from this>

    • Tony Poderis says:

      Looks like a conflict (though no doubt well-meaning) of interest to me. Not being an attorney, nor skilled in non-profit law, I’ll take the leap anyway and say that such a contribution may be illegal at worst, and definitely ill-advised at best.

      Anyway, I would guess that the Mission of the non-profit would not be in sync with what we know churches do, especially to serve a limited, congregation, beneficiary group.

      I would further guess that the Mission of the non-profit would not in any way point to its being able to give to a specific religious organization. Such a deal could put at risk its non-profit status and negate its Article of Incorporation with the state in which it operates.

      As well, do review again my article above for the IRS-inspired guidelines to one non-profit giving to another.

  19. Veronica Nealy says:

    I run a newly formed small nonprofit organization, I currently tithe to a local church ( x 20 yrs now ) but I would like to donate to the Nonprofit I run to meet some of the clearly stated needs and is there a limited amount of money that I or one of the Board members should or could donate . At this time we are under 50,000.00.

    • Tony Poderis says:

      I have been searching through IRS regulations for something which I recall deals somewhat with what you are asking. No luck so far.

      You should go into the IRS site and look for a regulation which states in percentages a ratio of sorts, intended to make sure the non-profit obtains a good portion of its contributions from others in the community than from just one or a very few donors.

      I think you should look for the ruling to see if it applies, check directly with the IRS, or ask an attorney who is skilled in non-profit law.

  20. Ann Hill says:

    Our small non-profit is a beneficiary of a fund with a community foundation. Can we donate to this fund this year, recording an expense on our books and later years receive money back recording as income?

    • Tony Poderis says:

      I did reply earlier, but somehow the Blog did not appear.

      My question is why, if you are a recipient of a donation from the fund in the Community Foundation, would you be giving a gift in return?

      The fund is a donating fund, not a charity, so you would not be donating to another non-profit. Donating foundations are set up by law in totally different ways than a 501 (c) (3) charity.

      If I am off the mark, perhaps a reading of my short piece on this topic will help.

      — Can One Non-Profit Donate Money To Another?

  21. Kathy doubleu says:

    If one 501(c)3 charity was handling fund raising as a favor for another 501(c)3 who had family issues and needed to take a hiatus, both for the same reason, dog breed rescue. Is there any law against them transferring money. The one helping can no longer help and is now transferring whatever balance that has not be used yet to the one who is now up and running again. If funds were designated to help the same breed, would there be a problem between these organizations?

    • Tony Poderis says:

      This is something for your respective attorneys and CPAs to handle.

      I am concerned about donated money being moved around as a favor, influenced by family issues, and the leadership taking time off from performing what are the core values of the organizations.

      Raising money for, and transferring money, between organizations, does invite some scrutiny. A non-profit cannot arbitrarily manage its donated funds based on the officials taking time off for family, or other personal, issues.

      The charities are public charities, so I urge that as much as possible the respective officials operate them with no direct personal influence.

      Care must as well be taken by the organizations to respect the wishes of their respective donors, some of which, may not be pleased to see they gave to one organization, going to another–no matter if they are similar.

      Your state’s AG and the IRS would want to be sure that neither organization is violating its mission, being more concerned with financial balancing than there would be with a straight-out donation at the end of a fiscal year.

  22. Jean says:

    Dear Tony,
    Here is my ethical dilemma:
    A cultural non-profit is helping another health and social services non-profit with support and monetary donations (approximated value of $3000) In exchange, the cultural organization wants a donation of 10 tickets ($500 value) to participate in a raise funding GALA for the health and social services organization!

    Is this possible? how could be possible?


    • Tony Poderis says:

      Your offline note to me indicated that your board has resolved the dilemma.

      From what I can glean from your Blog, it seems to me that the demand for those comp tickets is unreasonable.

      It is usual policy and good donor relations to comp such tickets to underwriters and in-kind donors, but necessarily to the degree that such comps are in reasonable number. After all, the event is to make money, and the more you give away, the less net profit you will have.

      It is strictly a judgment call, and if demands are excessive, there needs to be be reasoning if possible. If not, you either swallow the loss, or you might even find that the donation is not worth what you would in turn be giving away. Just do not burn bridges behind you.

  23. Betty says:

    Can a non profit preschool be run financially by a church, even when it’s a separate business? Are they allowed to control the budget/funds, and is it okay for them to funnel the profits of the school into the church?

    • Tony Poderis says:

      These are questions to be answered by an attorney, one skilled in non-profit law. I am just an old non-profit fund-raising practitioner, and yours is an organizational issue, dealing with IRS and state laws.

      However, from my non-lawyer view, I see where a few questions could be answered.

      — If the preschool is a non-profit, and has its own IRS 501 (c) (3) status, I would question why the preschool would want to be run financially by the church. The preschool could find itself in position to lose donors who would only want to make out their checks to the preschool, not to a church. Companies and granting foundations would most likely have policies in effect which would not allow donations to a religious entity directly.

      — If the preschool is operated as an outreach ministry of the church, then certainly, the church would have a great deal to say about the management of the preschool, including its finances.

      — The mission of the preschool would be quite different from that of the basic mission of a church. Support of the church in that way, by funneling profits to the church, could very well violate the mission of the preschool.

      Again, because I do not know how the preschool is aligned with the church, and if so, in what way, and whether or not the preschool has its own IRS “determination letter” to provide to prospects and donors, it is hard for me to give a clearer picture than what I have provided.

      You should have your questions addressed by an attorney.

  24. Jerry says:

    Can our nonprofit sell inkind donaations as a fundraising activity?

    • Tony Poderis says:

      Yes, you surely can. It is frequently done by countless non-profits which, for example, accept In-Kind donations and sell them through their gift shops–or through other means.

      Just make sure that you meet IRS requirements which stipulate that you annually secure regular donations in the required ratio to funds you raise selling things.

      Non-profits cannot live alone with income derived mainly or solely from selling items, be they In-Kind or from any other source.

  25. David says:

    David, i started a 501c3 non profit community based organization. I have gotten involved with a company that does matching donations for its employees. I have gotten a couple of employees to donate on our behalf with funds that we basically supply to them to donate in our name. Is there a potential conflict in this or pitfall we should consider?

    • David Patterson says:


      I am not qualified to give legal advice regarding this. However, what you are describing sounds at the very least unethical to me. I have been responsible for aspects of matching gifts programs, and in my past experience your “donors” would be violating the intent and probably the rules of the matching gift program of their employers.

      It seems to me that the employee-donor is risking disciplinary action and that your organization would potentially be liable for legal action on the part of the company for recovery of the funds your organization gained from them.

      I urge you to seek legal advice regarding this practice and to have your “donors” do so also. They may be putting their employment at risk.

      Personally, I would never do what you are suggesting. Companies have matching gift programs to support organizations and causes in which their employees believe strongly enough to reach into their own pockets to support. The practice you describe violates the ethical standards by which I have worked in both the nonprofit and corporate world.

      • J.S says:

        LoL, no. It’s called money laundering and it is still illegal in this country. You could always buy a car wash..

        • Tony Poderis says:

          Not so harsh. No one is going to post in public any scheme being illegal–knowingly.

          My colleague, Dave, gave another David a good bit of sound advice.

          We often see such things in the non-profit world based mostly on individuals just not knowing what is acceptable with the IRS and state law.

          Opening up dialogue to air out the question is a good thing.

  26. Hector Brual says:

    a few quesitons–

    One of the AD HOC committee–setting up 501 C3 status, wants to know if it’s possible for 501 c3 to rent a 501c7’s property (part of the building)? and vice versa?

    Also, 501c3 is thinking about buying a property from 501c7– are there any legal issues? tax deductible for 501c7?


    • Tony Poderis says:

      I am just an old non-profit fund-raising practitioner, and while my article above does deal with one non-profit donating to another, the non-attorney suggestions are directly from the IRS.

      Your situation is more involved, that being related to differing IRS classifications and property.

      You must consult your organization’s attorney, accountant, or the independent auditor which handles your year-end financial report.

      Look over the various IRS publications available online.

  27. McKenzy says:

    Hi Tony,

    My non profit has a mission related inventory that currently they are unable to sell. They have about 12,000 cookbooks holding up cash. My question for you is whether or not they would receive any tax benefit from gifting this inventory. I understand that as a 501c(3) they are tax exempt but what I don’t know is whether or not they would be elligible to benefit from their effective tax rate by gifting the inventory. The hope is that by gifting the book (plus any possible tax advantage) they are better off than liquidating at wholesale. Any thoughts would help. Thank you!

    Does a 501c(3) receive tax benefits for gifting away inventory with no real market value?

    • Tony Poderis says:

      Sorry, but I must give you the usual (though necessary) caveat about not being an attorney … etc. Especially in this particular instance. The old reliable IRS Publication 526 would be a good start, but even better would be your accountant and the annual auditing firm you engage at the end of your fiscal year.

      However, at first look, my fairly certain opinion (only an opinion) is that there would be no benefit whatever for you since you pay no tax rate. How your accountant could declare the disposal of the cookbooks as a tangible financial loss, is another matter.

      Again, I regret that this good question is out of my fund-raising-related territory.

  28. Michael says:

    I would love to form a nonprofit organization (NPO) that provides monetary donations to other nonprofits. In essence raise money and awareness toward a charitable organization my NPO identifies. I envision one or two NPO’s yearly to raise money and awareness for.

    For example, lets say one year the organization choses to raise money and awareness for an organization assisting homeless children, and a group working with children who are victims of sex trafficking. I see raising awareness for both organizations thru fundraisers and events. Any advice would be appreciated.

    • Tony Poderis says:

      Creating a new non-profit organization takes considerable time, effort, and some money. The non-profit must be formed in the first place to meet a well-defined public need, to paraphrase the IRS.

      A non-profit, therefore, must have a clearly stated mission to meet that exacting public need.

      From my non-attorney point-of-view, I suggest you pursue your good intentions by identifying the organizations you want to help, contacting their development leadership, and volunteering to raise money directly for them—with them.

      I doubt you will be able to obtain accreditation to form a non-profit from the sole intention of using the money you raise to donate to other non-profits.

      Additionally, even if such an organization could be formed, I believe you would have a great deal of trouble raising money for such an indistinct purpose.

      Forming a non-profit to do good works in name only as an idealistic objective will not work—in my opinion. And, you would be open to questions regarding why the potentially-receiving organizations are not themselves raising money for their own causes.

      It’s one thing for an organization to be formed which meets its stated mission, say a local music and drama group which presents performances, charges admission, and later donates any net gain for the year to scholarships at a university’s arts & culture department. It’s another thing, and one not well founded, to create a non-profit with the view that such net money gains will be used fo support other random non-profits in ways not at all clear.

      Use your dedication and devotion to do good under the guidance by and affiliation with currently operatiing non-profits which would benefit from your volunteer work.

  29. Hector Brual says:


    Just had a meeting yesterday re: between 501c3 and 501c7

    Quick question–

    Is it ok for 501c3 org to donate any goods or $$ to 501c7 org??


    • Tony Poderis says:

      From what I understand about such things is detailed in the above article, and it applies to any 501 organization.

      The similar mission requirement is key. That is for you to determine, along with working to the other points I make in the article.

  30. Anita says:

    Tony, I want to form a non-profit scholarship pageant that promotes fundraiser. I want to award scholarships to intelligent, gifted and active young women. I want to also encourage them to have their own fundraiser to help raise money to give to certain non-profit. Is that something that I can do without creating issues? Should I contact that nonprofit company prior to forming my pageant?

    • Tony Poderis says:

      If you are planning to raise money in any way to support an existing non-profit organization, then you must first contact the officials there to not only get permission, but to have many other things put in place.

      That would include working directly and closely with the organization, using its non-profit status to accept any donations for the donors to claim tax-deductions.

      Funds given directly to you without being earmarked to the charity would not qualify for tax purposes, and the critically important factors regarding strict accounting, oversight, appropriate use of the money to proven students in need, and banking of donations must be observed.

      You would not be in position to directly award the scholarships. Since you apparently do not operate a non-profit, but are seeking to give money to another non-profit, you are a caring and devoted individual, but one not allowed to raise what would be considered tax-exempt funds, nor to be able to administer that money.

      And, you should not encourage any scholarship recipient to herself or himself raise money on his or her own behalf as they cannot be considered a legal charity.

      They can seek to raise money for themselves, but only as outright gifts with no tax benefits to the donors.

      Even then, collecting donations from other than family and friends of each of the students, can raise all sorts of concerns regarding the actual use of the money.

      These personal and individual “causes” are rife and well known, and no doubt many are honest, but such raising of money for other than an accredited charity can, and does, very often result in many problems—administratively and legally.

      • Anita says:

        Tony, I plan to start a nonprofit early next year. After I submitted my question, I realized my initial idea would create legal and tax issues. So now my plan is to have contestants volunteer to have a fundraiser which the money raised from the fundraiser will go to another nonprofit. I want to promote the gift of giving back and award the top fundraisers. How does that sound?

    • Tony Poderis says:

      I think it will be hard to organize a non-profit to put on a pageant in the first place, considering that purpose to be a not clearly defined mission. Promoting fund-raisers is not going to be seen by your state and the IRS as something which fills a public need.

      You cannot be alone in the awarding of scholarships. And you will need strong accreditation regarding anyone receiving funds raised to pay for their education. Best to work with an existing organization doing somewhat the same thing.

      And your non-profit cannot/should not (to my way of thinking), encourage any potential recipient to fund-raise. That again is not a viable reason to form a non-profit.

      There are too many issues here which are unclear to me, so I suggest you talk to other organizations in your area which may be in the scholarship granting business to give you guidance.

      Best of all good luck.

  31. Ryan says:


    My non-profit is organizing an instrument drive to benefit one of our programs and six other non-profit music education providers. As organizers, we will need to provide donors with an in-kind donation receipt for their donation, will be working to have the instruments repaired, then will distribute them to our program and others based on established needs. Is there an IRS rule related to if/how a non-profit should account for the transferring of in-kind donations to other 501(c)3 organizations? Thank you for your insight!

    • Tony Poderis says:

      My sincere apologies. I did not see your post until yesterday, November 12. On August 14 my wife and I moved from our home of 22 years to a new home. It was to be some time before I could get my computer back on line, and in the meantime, I had taken steps to apprise those writing to me of some rather long delay with my responses. Sorry to say that procedure did not work in your case.

      No doubt you have gone on well along with your good project during the elapsed three months.

      From what you must have since determined, and from what I would have then said, the transfer/donation, it seems to me, would be OK since the donated-to-you instruments were given to other charities working to similar, or reasonably similar, missions.

  32. Jesse says:

    Tony, if I form a non-profit to fund the costs of a large fundraising trip around the country, with the intent of donating everything that is given to me (minus costs of food, hotel, etc.) to another non-profit, is that okay?  

    • Tony Poderis says:

      I must always take care to keep from giving what may be considered legal advice, and such is the case here as I see it from your brief note. Well intentioned, no question, but to my knowledge, you cannot form a non-profit as an individual. Yours must be an organization for the “public good,” in the words of the IRS. And, such non-profits “belong to the community,” so you must have a board of volunteer trustees to work the policy making and governance of the organization. In any event, you would have major problems when working to fund-raise for worthy organizations, when all the while you are spending sums of money for on-going and long-term living expenses—no matter how well you practiced good economy. Back to the main point, however, an individual cannot "be" a non-profit organization.



  33. David says:

    Thank you for the reply.  Sponsors and donors are made aware of the charity to whom the donations will be given (Keystone Wounded Warriors, Make-A-Wish Foundation, etc).  This should aleviate the like-kind to like-kind point you make. Yes?  No mention of possible taxable amounts.  Thoughts?

    • Tony Poderis says:

      Still something for you to follow through the IRS, and/or a non-profit-knowledgable attorney. Though it is a good thing that your donors know where their money was given, they are not the ones to make the procedure OK as far as IRS regulations go. The IRS sets up the rules, and you should find out if it is acceptable that you give other people’s money, which donated to your mission, to other organizations having their respective missions not near your organization’s reason for being.

  34. Tony Poderis says:

    David, I cannot provide legal advice in such matters. Even so, there would be other details regarding your situation of which one would need to know in order to advise.

    I do think that from such a city-wide position as you are part of, surely that would be an attorney whom you could consult.

    And, of course, just go into the IRS website and read what is there about the rules and regulations applying to non-profits.

    Still, though from a literal and figuraitve distance, I do feel confident enough to suggest that as your sports organization does donates to another or other non-profit(s), that those receiving non-profits must have a mission close to yours—as I state in my article above.

    For example, your sports-related non-profit should not give its donation to a foodbank, no matter how worthy. Your donation must be given to towards a similar mission. After all, donors to your organization, in the first place, chose a sports-related organization, thus they would expect that any other use of their donations be given in the same manner.

  35. David says:

    We have a non-profit community athletic group that conducts three yearly events.  Proceeds from the events pay for the group's expenses first and the remaining proceeds are donated to anoter non-profit.  The entire community os a non-profit organization so the athltic group falls under its umbrella.  Would the donated funds be taxed?