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TexLaw, Attorney
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Experience:  Lead trial/International commercial attorney licensed 11 yrs
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Question regarding paid fundraisers for a California religious

Resolved Question:

Question regarding paid fundraisers for a California religious 501c3. Is it legal for our organization's members to raise funds and be paid on a commission basis as independent contractors, rather than as paid employees, and also without being considered "fundraising counsel" and having to deal with registering as professional fundraisers in California? [Let's ignore the ethical argument about whether fundraisers can be paid on commission.] Is there any specific dollar threshold for fundraising counsel?
Submitted: 5 years ago.
Category: Legal
Expert:  TexLaw replied 5 years ago.

Zachary D. Norris :

Good Morning,

Zachary D. Norris :

In short, yes it is legal to be paid in that manner.

Expert:  TexLaw replied 5 years ago.

A 501c3 charitable organization may pay its members, or it may set of transactions as you are speaking of without lossing it's statuts as a non-taxable entity. However, you must be careful in setting up such a transaction, as payments to independent contractors who are also tied to the charity might raise suspiscion with the IRS.

Now, what you are specifically asking about is whether this will get you around the need to register under California law. You reference whether the independent contractor would qualify as a "fundraising counsel." However, unless you are an attorney, then this section of the law does not apply to you. My understanding of your question is that the charity itself wants to hire workers to work on a commission basis and not have to have them register as "commercial fundraisers" but still be able to pay them. Under my reading of California law, I do not think this would be legal. The law is designed to prevent the fraudulent use of a charity. Thus, it requires that all people who are paid money to raise money for a charity must be registered with the State. While it does not appear to have any sort of jail time or fines associated with violating this provision, it could lead to revocation of the charities right to do business in California.

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