What constitutes “not-for-profit”?
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What constitutes “not-for-profit”?
As I read the IRS qualifications to be a non-for profit, a homeowners assocition must spend 90% of its income per year. Is it legal to spend say 75% of the assessment money for landscaping and hoard the rest of money in the reserve fund and still qualify as being non-for-profit?
Asked on October 18, 2010 under Business Law, Illinois
Answers:
M.T.G., Member, New York Bar / FreeAdvice Contributing Attorney
Answered 13 years ago | Contributor
I would strongly suggest that you seek help from an attorney in your area rather than interpret the not for profit laws. And by the way, you need to interpret your state laws in addition to the federal guide lines. Without confirming or denying the validity of what you have said, but rather based on what you have said, you could not hoard the rest of the money and still maintain the status as not for profit as you would not have spent 90% as you say is required by law. So I would really suggest that you seek help from an attorney in your area just to be sure. You would not want to lose your status. Good luck.
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