I am the president of our school music department's 501(c)(3) booster club. Recently, through budget cuts, we came very close to losing our music programs at all levels. Through a lot of grass roots effort, we restored most of the programs. However, we did lose some stipend positions. Our club has been asked to pay for those stipend positions, which would be a substantial amount of money and something that we would not be able to sustain beyond one year. Can we pay teacher stipends, the taxes and retirement contributions that the district has asked of us without being in violation of any federal laws?
If your organization’s charitable purpose is to support the school’s music department, I see no federal tax law reason why you could not provide funds to pay the stipend teachers to provide services to that department, assuming that you are not earmarking the funds for certain teachers and not others. There may be issues of local law about exactly how you do it since I assume that you do not want to be the direct employer of the teachers, but I assume that it can be done.
You talk about your grass roots effort to protect at least a part of the program for this year. Since you can’t continue to support the program at the present level, this is the time to continue your grass roots effort to restore the school’s funding for next year.