Friday, November 30, 2012

Members Only grants?

Our local unit offers grant program for teachers to provide some additional funding for their classrooms.  Can we require that the teachers be members as a condition of the grant?
I recommend against such a condition.  Under the Internal Revenue Code, organizations that are tax exempt under either Section 501(c)(3) or (c)(4) of the code are supposed to operate for the benefit of the public at large and not for their members. 

Accordingly there’s a risk that if the IRS were to audit your local unit, the grant program would be viewed asan “inurement” or benefit to the member and not a benefit for the general public. Of course you can certainly encourage the teachers to join, pointing out among other things that more members increases your unit’s capacity to provide the grant program, but I’d recommend against including membership as a requirement.