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| Re: for-profit organization looking for grant funds
Posted by Linda Procopio on 2/14/2006, 6:02 pm, in reply to "for-profit organization looking for grant funds"
In Revenue Ruling 68-489, 1969-2 C.B. 210, the IRS held that a 501(c)(3) organization can distribute funds to organizations which have not, themselves, received IRS recognition of 501(c)(3) status, if certain steps are taken to insure that the funds are used only for charitable, educational or other 501(c)(3) purposes. Only a few guidelines are set forth in the ruling:
• funds must be used for specific projects in furtherance of the sponsor’s own exempt purposes
• the sponsoring organization must retain control and discretion as to the use of the funds
• the sponsoring organization must maintain records establishing that the funds were used for section 501(c)(3) purposes
While a fiscal sponsor relationship can be beneficial to the sponsor, the funder and the ultimate recipient, it must be approached carefully to avoid both IRS problems and misunderstandings among the parties involved.
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Link: http://www.procopiofundraising.com
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