is it against the law for a non profit organization to hold fundraising events or collect donations?

Answer 1

Dear Not For Profit,

This is a great question! I'm actually on the Board of Directors for a local Non-Profit here in Laguna Beach, California. I wanted to point out that non-profit organizations are a wonderful resource for people to get together and raise money for a cause or lack of money for certain resources.

Your non-profit (if recognized by the State that the non-profit was created in), can accept donations, collect dues, collect membership fees, can hold events (like auctions, bake sales or donated sales) and receive monies from any legitimate activities.

The key thing is, that the monies you are collecting go towards the expense of the organization and the company breaks-even. One example of expenses could be salaries, grant monies (i.e. $1000 scholarship to a college student) and general operating expenses (office rent, printing supplies, etc).

The only thing you really need to do is to make sure that the non-profit doesn't actually make a profit. This shouldn't be too hard if you're donating funds to charities or special needs circumstances. I provided a few resources below on a way that you can collect donations (found it off the web for you - seems like a free service too) and to get more information.

Ultimately, I would talk with a CPA and go over the structure of your organization and how to run general expenses and activities through the company... Good luck to you on your event ideas!!!

Regards,

~ A.R. Pouretezadi

P.S. The people that also responded after me say you CAN NOT have an interest baring bank account? That is completely false. I work at a bank and the only two entities that can have FDIC insured / interest baring checking accounts are Sole Proprietorships and Non-Profits. So go ahead and make some interest!!! Just keep in mind what I noted above about profits / breakeven.

Answer 2

Of course not as long as they are not doing it for PROFIT. Almost every non profit organization can and will hold fundraisers so they can do the things that the charter says they will do. Most non profits are for helping people, this is how they get the funding to do that. Many have buildings to maintain, like churches and schools, they must file a tax return every year and show where every cent is going.
Now having said that there are crooks in every walk of life, some non profits pay their directors huge salaries and there is nothing wrong with that as long as no one blows the whistle or complains.
If you are suspicious of a non profit demand a copy of their annual statement they should account for every cent they take in, if you can prove they are cheating blow the whistle but be sure because anyone they are helping will be cut off during the investigation if their funds are frozen.

Answer 3

Do some research on 501C non-profit organizations. Most are allowed to solicit donations through fundraising events like you mention. They cannot themselves donate money to another non-profit from their own treasury. Their members can give directly to another charity, but not the 501C organization itself.
Every state is different regarding the money issues of 501C. There may be a state level office at your State comptrollers office that can provide answers.

Answer 4

No it is not, it is essential for all non profit organizations to have fundraisers. The only thing you cannot do is have any kind of interest bearing bank accounts or long term savings accounts, such as CD's or money market accounts. A local organization here where I live just got busted by the IRS for having such. They had to pay penalties of over $7000.

Answer 5

It relies upon. Are you a State approved non-income or a non-income with a 501(c)3 tax-exempt status? once you say fundraising, this includes many diverse ranges from Bingo to making use of for federal substances. commence by asking your State Dept of gross revenues about your section's criteria for the form of fundraising you've in options. There are stiff consequences for particular kinds of fundraising without the right licensure... analyze first.

Answer 6

That's how they make their money! It is essential for non-profits to do fundraisers and collect donations, that is how they stay afloat. How else do you expect them to make money? They do apply for grants, but that has become a difficult avenue and very time consuming. Not all grants get funded these days.

Answer 7

Since my wife just walked in the Relay for Life in our little town to raise $62,000 for the American Cancer Society, I don't think so.

Answer 8

Absolutely not. They can do anything they want to raise funds and can even have retained earnings to ensure future revenues.

Answer 9

NO, do it all the time