Doll News Summer 2020 - 152

RESPONSE TO 501(C)(3) QUERY

I

have received a lot of feedback on the DOLL-ER$ & SENSE article that was in the Winter 2020 DOLL NEWS.
It was positive, with members liking the Q&A format and the graphs. With this follow up, I wanted to reply
to a couple of queries I received on what I had written about 501(c)(3) donations. Let me start by repeating that
particular Q&A and then give the response:
Q7. Can you please explain this 501(c)(3) stuff again - we find it very confusing?
A7. If the IRS came to visit, as part of checking up on our 501(c)(3) status, they would look at our books to see if our clubs were
following their guidelines on who they donate to, (this is why we need clubs to send us their completed Activity Reports).
They would want to see that money was being given to other 501(c)(3) organizations that "fit" with our mission - the research,
education, conservation and appreciation of dolls. When Connie (my predecessor) attended a seminar on this subject, it was
indicated that because dolls were involved, it was acceptable to extend the scope to include "children."
Bottom line is, IF THE DONATION IS GOING TO GO THROUGH THE CLUB BOOKS, it has to fit in with the IRS
guidelines. I've seen some great examples - UFDC clubs donating a dolls house to a children's home, donating money to a
museum to restore a doll, donating to a charity to provide dolls to the children of veterans, donating money to a school or
library to provide books on dolls/toys. You can verify if the organization you are considering donating to is a 501(c)(3) by
looking at the IRS website.
But I know that some clubs would also like to donate money to charities that don't meet these IRS guidelines. In this case, my
advice is to pass the hat around and don't put the money through the club books. And when making the donation, say it is from
the members of the club (not the club itself).
I hope this helps. UFDC is not trying to control or dictate who your club donates to, it's trying to keep you and UFDC out of
trouble with the IRS!
The query was about the need for the mission of the 501(c)(3) organization(s) that clubs would like to donate to having to
align with that of UFDC.
The following are quotes from the IRS guidelines:
"A 501(c)(3) can donate to another 501(c)(3), as long as the donation is restricted to a charitable purpose that aligns with the
organization's mission and does not violate the 501(c)(3) nonprofit's eligibility."
and "With two 501(c)(3) organizations, the second organization should have a similar tax-exempt purpose to avoid questions of
misuse of the first organization's assets."
Also, here is an extract from an article by Tony Poderis, who, up until last year, ran a blog on non-profit organizations
(the whole article can be found at www.raise-funds.com/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 nonprofit. 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."
One final thought... there is often confusion between a nonprofit and a foundation and the requirements are different.
I hope this helps. Please keep the feedback coming. Carol Cameron (Carol@ufdc.org)
152

SUMMER 2020


http://www.raise-funds.com/can-one-non-profit-donate-money-to-another/

Doll News Summer 2020

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