Is this legal?

[Apple Of Sodom]

I have a question about charities and how money is spent. I'm involved in raising some money for a friend for a transplant, and I don't think the charity involved is doing the right thing.

A charity, an actual 501(c)(3) charitable organization, is working with us to accept donations on my friend's behalf for an organ donation. This makes it so he doesn't get taxed on the income and so others can donate and write it off on taxes. This seems legit.

However, the head of the charity is very good friends with my friend's dad. His dad seems to think the money is to help pay for his family to live with him while he waits. My friend is almost 30 and doesn't necessarily feel the same way.

The head of the local group states that she just gives them money when they ask for it. She said that if he wanted to, he could go out and buy a speedboat with the money. She has no problem with it, although she would hope they do use the money wisely.

Is it legal for a charity to donate money to an individual like this without needing an accounting of where or how the money is being used? If so, why can't he just donate all of his income to charity to avoid taxes, then have the organization give it back to him?

 

[Zim Hosein]

Originally posted by: Apple Of Sodom
I have a question about charities and how money is spent. I'm involved in raising some money for a friend for a transplant, and I don't think the charity involved is doing the right thing.

A charity, an actual 501(c)(3) charitable organization, is working with us to accept donations on my friend's behalf for an organ donation. This makes it so he doesn't get taxed on the income and so others can donate and write it off on taxes. This seems legit.

However, the head of the charity is very good friends with my friend's dad. His dad seems to think the money is to help pay for his family to live with him while he waits. My friend is almost 30 and doesn't necessarily feel the same way.

The head of the local group states that she just gives them money when they ask for it. She said that if he wanted to, he could go out and buy a speedboat with the money. She has no problem with it, although she would hope they do use the money wisely.

Is it legal for a charity to donate money to an individual like this without needing an accounting of where or how the money is being used? If so, why can't he just donate all of his income to charity to avoid taxes, then have the organization give it back to him?

I have no idea to be honest Apple Of Sodom, but I would like to know.

 

[mitchel]

Legal gray area.

 

[Atomic Playboy]

I do gift processing for a 501(c)(3) organization, and while I don't know exactly how the money is used, I do know that we have an annual audit in which we must account for every dollar, what fund it goes into, and how the money is distributed within those funds to various divisions in the organization. This is a voluntary audit, mind you, but I can't imagine we would do it if you could use the money however you wanted as a tax-exempt charitable institution. If there is an audit and the money is found to be going to finance personal items rather than whatever the charitable organization received its 501(c)(3) status for, you're liable to be facing prosecution for fraudulent use of a charitable organization. I'm not a lawyer, so I can't give you the specifics, but it's definitely a bad idea.