Legal Question in Business Law in California

Not-For-Profit Question

I started a bona fide charitable organization (has proper designation with the IRS, etc.) that takes all donations (cash only) to feed hungry children. I was wondering if the following scenario would be legitimate: I would like to donate all cash donations to another entity that is a distribution business. With this entity, I'd like to be able to directly take the donations from the bona fide charitable organization and not only feed the hungry, but use the funds to help people start their own business. Is this okay?


Asked on 1/06/11, 4:28 am

2 Answers from Attorneys
Bryan Whipple Bryan R. R. Whipple, Attorney at Law

I'd think it's probably not OK, for the reason that your Federal tax exemption under IRC section 501(c) is based upon an application you made describing certain activities and the proposed changes would be totally inconsistent.

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Answered on 1/11/11, 10:23 am
Edward Hoffman Law Offices of Edward A. Hoffman

I agree with Mr. Whipple. Your organization's donors gave their money for a specific purpose, and you are not free to spend it on a different (albeit related) purpose. I suggest starting a new organization, which can raise money expressly for your new project.

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Answered on 1/11/11, 12:04 pm


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