Does a charitable organization have to distribute donations?

Question

Does a 501(c)(3) organization have to distribute their donations each year or can it retain the funds in order to make a large contribution in future years

Answer 1

I don't understand what you're asking. A 501(c)3 organization doesn't have to distribute donations - donations can be used for expenses.

Answer 2

Generally speaking a charitable organization does not need to distribute donations received, they are usually used to cover the expenses of the organization. The difficulty is that 501(c)3 is a broad category with many subparts and then section 509 also comes into play. The charitable organization may be many things, a Private Foundation, a Charitable Trust, an Endowment Fund, a Supporting Organization, an Operating or Non-Operating Foundation, or many other types. The rules for each organization vary based on the section of the revenue under which they are organized. The ByLaws or Articles of the organization may also state what must done. There are just too many variables here to properly answer but the general rule is that most charities do not need to distribute at all but spend the money on programs.