You are here

May charity pay finder's fee for donation?

Your Legal Questions Answered

May charity pay finder's fee for donation?

Our 501(c)(3) athletic organization has in the past collected $250 per player for league fees. The rest of the funds are acquired through ad book sales and fundraisers. Is there any reason why all of the funds could not be acquired via fundraisers? The past treasurer has stated that part of our funding must come from parents to keep our nonprofit status.

The Association of Fundraising Professionals says it is unethical for a charity to pay a finder’s fee to a person who brings a donor to the organization, but it is not illegal.

Depending on how the finder actually operates, the finder may need to be registered as a professional fundraising counsel or solicitor if operating in one of the 39 states and the District of Columbia that have charitable solicitation registration laws.  A charity operating in those jurisdictions is generally not permitted to deal with an unregistered counsel or solicitor and has to list them on its registration statement.  If you decide to play this game, both of you ought to check any applicable registration statutes.  It can significantly interfere with your operations if a state says you aren’t in compliance with its registration law.

Tuesday, May 28, 2013

Sign-up for our free weekly Q&A

Add new comment

Sign-up for our weekly Q&A; get a free report on electioneering