Not for Profit Questions
I don't have any not for profit clients and am .far from an expert regarding not for profits.
I am a member of a club and I was asked a couple of questions. I am hoping you all can amswer. This is a 501(c)(7) - a social club with members.
A board member who chairs committees has a business that sells figurines. They sell online and also at trade shows. They decides to donate a portion of the the proceeds to our club and two other clubs. They state they are doing this on a sign and in their online notices.
The questions asked are: does this go against the club's constitution and does the club risk losing their not for profit status because this member is personally profiting from their association and relationship with the club. The club is not promoting or endorsing this business.
This is what is stated in the constitution:
"The Club shall not be conducted or operated for profit and no part of the net earnings of the corporation shall inure to the benefit of, or be distributable to its members, officers, directors, or other private persons, except that the corporation shall be authorized and empowered to pay reasonable compensation for services rendered and to make payments and distributions on furtherance of the purposes set forth in the Constitution or in Article I of the Bylaws."
I don't thing what this member is doing is violating the constitution by listing that they will.donate proceeds to the club which they name as it is their personal business and they are not benefiting from the net earnings of the club. The member who asked me believes it is a conflict of interest because the member who owns the business is listing the club's name.
I look forward to your replies.
I look forward
