The short answer is “YES”, a nonprofit organization is allowed to provide financial aid and other assistance (e.g., meals, PPE) to groups and organizations that are NOT 501(c)(3) exempt organizations so long as the assistance is provided and used for charitable purposes. For example, if your nonprofit desires to provide meals to emergency room and ICU workers at your local hospital during the COVID-19 crisis—and such activity is consistent with your nonprofit’s charitable mission—it will not matter whether your local hospital is organized on a for-profit or nonprofit basis, such relief would seem to clearly fall within the definition of charitable. The nonprofit should follow its normal grant-making procedures to be confident the work being done or the relief provided is furthering a charitable purpose, including follow-up investigation and reporting as appropriate depending on the circumstances. Keep in mind, however, concepts of commerciality (nonprofits should not operate too much like a for-profit business) and private benefit (defined as non-incidental benefits conferred on disinterested persons that serve private interests) should still be kept in mind. Intentional or careless violations of these compliance rules and concepts might result in the imposition of intermediate sanctions, or in really egregious situations, revocation of an organization’s tax-exempt status. Reach out to Perkins Law anytime with your nonprofit compliance, governance, and entity maintenance questions.
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