Staying Tax-Exempt: Avoiding Pass-Through Payments to Individuals

Generally speaking, a donation to a §501(c)(3) nonprofit charitable organization IS tax-deductible, but a gift to an individual is NOT. This means that donors and §501(c)(3) nonprofit organizations may not skirt this rule by passing payments from donors, through the nonprofit organization, to specific individuals. An organization that participates in this type of transfer — called a “pass-through payment” — on a regular and ongoing basis is at risk of losing its §501(c)(3) tax-exempt status.  Read this article to learn more about how your donors might fund specific causes at your nonprofit, while avoiding pass-through payments.
Staying Tax-Exempt-Avoiding Pass-Through Payments to Individuals