organization wants to use another organizations 501c3 status for purchases

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organization wants to use another organizations 501c3 status for purchases

My church has tax exempt status- 501c3. We donate money to another organization monthly. This organization is ran by members of my church. The organization has a name but no legal filings. They also receive monetary donations from outside donors which is collected and maintained by them. Their contribution letters they send out are in the name of their organization, not the church, and their events are in the name of their organization. This organization is now requesting to use the church’s 501c3 status for their purchases. Is this legal?

Asked on May 22, 2019 under Business Law, Alabama

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 2 years ago | Contributor

No, it is NOT legal. A 501c3 status may not be loaned to or used by another: it may only be used by your church. If your church does this, you could lose your tax exempt status. 501c3 status is "personal" to the entity qualifying for and having that. Furthermore, there is not even another organization here in any event--if they have "no legal flings," they do not even exist as a separate or legal entities. There is no organization there which you could lend the status to, even if you wanted.
Your church supports what these church members are doing, correct? You write that you donate to them. So you can purchase for them and donate the purchases to them if you want.


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