Dear Editor: A Tax Exempt Charitable Organization Can't Donate to a For-Profit Entity

Dear Editor,

I am neither a lawyer nor a business advisor, but I have danced with a few 501C3s.

A tax-exempt charitable organization may or may not have a relationship with a business or entity. The entity may sever that relationship, but that doesn't dissolve the 501C3.

The charity can only dissolve by not renewing its certificate with the State or by a majority vote of its officers. Before that, it could only deal with tax-exempt funds by following the outlines of its charter or by-laws. It cannot transfer tax-exempt funds to an entity that is not tax-exempt.

At the time of dissolvement, the officers must agree and transfer all assets only to another 501C3. Simply put, it prevents the 5th-grade bully from taking the 2nd-grader's lunch money.

With the focus and view of the tax men taking a long look at charitable organizations and the public knowledge the Town has taken, it would be remiss for an auditor not to notice. This could easily result in penalties that exceed any gain that they might result in.

It is only basic business practice that tax-exempt funds cannot be transferred to a non-tax-exempt entity.

JOHN MOULTON

Whitehall, Montana