Any reason to report a 501(c)(3) nonprofit whose only purpose is to benefit a for-profit business?

Question

I accepted an invitation to serve on the board of a 501(c)(3) nonprofit that a friend had set up.

After I discovered that the nonprofit does not do any fundraising or activities- it’s just a straw man that helps the friend’s for-profit corporation to make more money- I resigned.

Is there anyone I could or should report this to?  The entity ought to lose its tax-free status or be shut down.  The IRS or a state charities regulator?

Thanks.

? · Answer

Go to IRS.GOV
Report them on form 13909
https://www.irs.gov/pub/irs-pdf/f13909.pdf

Anonymous · Answer

I trust you were smart enough to bond/insure yourself before joining the Board in order to limit your personal liability if things don't go well?

You are under an obligation to report the company to IRS AND the State.  If you do not and the fraud is discovered, YOU were on the Board and YOU have some liability.

ibu guru · Answer

Since you know this is an illegal operation, you must report it to IRS and to state regulatory authorities.

? · Answer

report them to the IRS for fraud. They won't know you reported them

Judy · Answer

both the IRS and the state

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Any reason to report a 501(c)(3) nonprofit whose only purpose is to benefit a for-profit business?

5 Answers