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Nonprofit Issues

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May 1-31, 2012

May 1, 2012 to May 31, 2012
Lead Stories
To the Point

Can we spend money for entertainment of members at event?

Our small 501(c)(3) nonprofit organization holds an annual free public event with the dual purpose of drawing in new members and raising funds for another charity. Attendance is usually spilt about 50/50 between club members and the general public. We raise funds through a silent auction and a raffle of donated items. We usually use $1000 of club funds for some advertising but mainly to pay for entertainment, and we raise 2-3 times that amount to donate to the other charity. A board member is telling us that we can no longer do this because it is a form of private inurement. He believes we are not allowed to spend any money if it has any direct benefit to our members. Is he right?

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