Tuesday, November 07, 2006

New York Times Investigates Shriners Bingo Problems

In the New York Times today is a great article written by a reporter named Stephanie Strom.

She highlights a great example of potential abuse by a non-profit organization, here is a shrine temple club that runs a charity bingo game and is allowed to keep 49% of the charity money raised to maintain the upkeep of the club building.

There defense was it was OK under a local city ordinance that allows groups to keep 49% of the money raised, however it is NOT allowed under Internal Revenue Regulations, and it violates United States Tax Code Section 501.
Under IRC Code Section 501, 100% of net proceeds must be transferred to the public charity that was intended to get the public charity money

Which is more important ?

A local city ordinance or the United States Tax Code ?

The problem for the Shriners Hospital for Children an approved IRS Public Charity under IRC 501(c)(3) because of this type of actions by a small local club in Alabama they LOST over $ 119,000 in charity money that was supposed to be used for the operations and expenses of the Hospital, not for the operations of the shriners fraternity club in Alabama
Can you imagine if the local Alabama shrine club can keep over
$ 119,000,00 of public charity money, than a organization that has over 177 shrine temples in the United States, what IF all the shrine temples had one club that did the same thing as the group in Alabama and kept charity money in the amount of $ 119,000.00 X 177 temple clubs
$ 21,063,000.00 in LOSS revenues


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