Page 95 - Washington Nonprofit Handbook 2018 Edition

are for the organization. This publication is available through http://www.irs.gov. It
is advisable to seek advice from a lawyer or accountant.

y Line 4b

If the answer to this question is “yes”, the IRS will want enough information to
assure that any compensation paid to the organization’s fundraisers is reasonable.
Generally, it is best to avoid arrangements pursuant to which the fundraisers’
compensation is a percentage of the funds raised for the organization.

y Line 4e

If the answer to this question is “yes,” seek advice from a lawyer or
accountant to be sure that you understand and can comply with the complex rules
applicable to donor-advised funds.

y Line 6a

If the answer to this question is “yes,” seek advice from an attorney. While
501(c)(3) organizations may engage in economic development activities, the IRS will

want to be sure that such activities are sufficiently circumscribed so as to be
consistent with 501(c)(3) status. The instructions to this question provide a helpful
summary of the facts and circumstances in which the IRS may find it acceptable for
a 501(c)(3) organization to engage in economic development activities.

y Lines 7a-7c

Generally, the answer to lines 7a and 7b will be “no.” If the answer to either
one is “yes,” provide the IRS with sufficient information to show that the
arrangement does not result in undue benefit to private interests and that the
organization retains sufficient control over its assets. If needed provide
information in response to line 7c to establish that any such arrangements are
approved pursuant to the organization’s conflict of interest policy.

y Line 8

If the answer is “yes,” seek advice from an attorney.

y Lines 9a-9d

If the answer to line 9a is “yes,” the answers to lines 9b through 9d generally
also should be “yes.”

WASHINGTON NONPROFIT HANDBOOK -84- 2018