[17529] in APO-L
Re: What it means to be tax exempt...
daemon@ATHENA.MIT.EDU (Michael Leahy)
Tue Nov 11 21:52:57 1997
Date: Tue, 11 Nov 1997 21:38:48 -0500
Reply-To: Michael Leahy <michael.leahy@VT.EDU>
From: Michael Leahy <michael.leahy@VT.EDU>
To: Multiple recipients of list APO-L <APO-L@VM.CC.PURDUE.EDU>
> We kept about $160 in the savings account for emergencies and used the
> checking account actively. Remember, as a 501(c)(3) tax exempt
> organization we technically must maintain a zero balance in the checking
> account (we cannot make a profit, legally)... although fortunately the IRS
> doesn't keep very close tabs on us, which is why we have been able to keep
> the savings account where it has been for years.
Let me clarify something here. Being a nonprofit organization (501(c)(3))
means that you can't have profit as your main purpose and you can't
disburse your profits back to members or executive board members.
Every organization is allowed to make money off events. Every organization
is allowed to have a savings account and save for rough times. Many
nonprofits have large endowments. Nonprofits, however, are required to use
that money to either "grow the organization" or use it to further their
stated objectives (for APO, that's to develop leadership, promote
friendship and provide service).
Nonprofits are allowed to pay fair salaries for reasonable work. They are
allowed to reimburse members for reasonably incurred expenses.
They are strictly forbidden from lobbying politicians to support
legislation or engaging in other partisan political activities. Supporting
the political process (i.e., helping at polling stations, assisting with
voter education or driving voters to the poll booth) is permitted.
Note: I'm not a tax accountant or lawyer. But this represents my
understanding and experience with nonprofits and the tax law. Your
specific situation may be different.
Thanks,
--Michael
Michael Leahy michael.leahy@vt.edu
Zeta Beta Advisor
Former Section 82 Chair
Reg III Leadership Devel. Coord. home 540-951-4945
P. O. Box 11286 office 540-231-3272
Blacksburg, Virginia 24062-1286 fax 540-231-5922
The ultimate measure of a man is not where he stands in
moments of comfort and convenience but where he stands at
times of challenge and controversy. --Martin Luther King Jr.
