Several times each year our 501(c)(3) organization raises funds for a specific cause (or other charity) through a special event or a raffle. Once the event takes place, how long do we have to submit the funds to the designated charity?
There is no specific deadline, but funds should be distributed within a reasonable time. What is a “reasonable time” may vary depending on the circumstances, such as what your solicitation literature said when you were trying to raise the money. If the solicitation was silent, do you have a general distribution policy that would apply? Do you have an agreement with the beneficiary organization that addresses the issue? All else equal, you will better off distributing the funds sooner rather than later as it indicates a high level of professionalism, organization, and commitment to the cause. It will also give the participating organizations a great opportunity to better promote the success of the fundraising effort and the valuable work being done with the funds. Supporters love to see and hear how their donations were used. By being able to tell that story quickly, a nonprofit can strengthen connections with its donors. In short, the timing of distributing funds from a special fundraising campaign is not so much of a legal issue as it is a strategic one.
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