Jason: Yes, a non-profit can donate money (and other resources) to another non-profit, when the transaction advances the donor non-profit's charitable mission. That is essential. Example: An orchestra could donate funds to an organization which seeks to develop overall marketing and PR education and outreach to that city's arts and culture population.
Along with that necessary start to the process, the donor non-profit needs to make absolutely certain that there is:
(1) ... no conflict of interest.
--- Any person or persons responsible for the transfer of the donated funds must not personally (their families, friends, associates, etc.) benefit in any way. Example: The donated funds are used to purchase equipment in some way connected to business interests of a Board member of the donor non-profit.
(2) ... no violation of donor restrictions.
--- While exacting restrictions are not generally connected to most donations, nevertheless, the risk is that some donors would not approve of their money, in principle, going to another charity they did not choose, no matter how it fits or how worthy.
(3) ... no misuse of the donated charitable resources by the receiving non-profit.
--- Should the receiving non-profit subsequently have publicized financial problems, though the donated funds were not in fact misused, perception is everything, and there could be serious trouble for the donor non-profit to justify its support of the ailing organization.
(4) ... no question that the donated funds in any way will imperil the donor non-profit's own financial health.
--- In other words, that the donation was not over the top, excessive, and out of the realm of good judgment.
From what I have come to know, but perhaps not in your case, the question is most often asked by someone who hopes the answer is "No" because they are unhappy about, or uncomfortable with, a proposed action of this type. I know I would be as Director of Development, especially when challenged by my donors to explain item No. (2) above.
I hope this helps.
Tony Poderis http://www.raise-funds.com
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