Legal Question in Business Law in California

There is a 501c3 in California. Mother and father are on the board and are the founders. Non-profit is based on son who is blind. There are approx. 4 other board members. This is a very small non-profit and dormant at the moment. Mother and father are going through very bitter divorce and mother and son are now pennyless. Can 501c3 loan any funds from non-profit (with promissory note) to mother and son for emergency living expenses (i.e. - shelter, food, etc)? If yes, are there any specific guidelines?


Asked on 5/26/16, 10:44 am

1 Answer from Attorneys

1. That does not sound like a legal 501(c)(3). You can't found a charity to benefit an individual. It also sounds like the rules on disinterested board members are not being followed.

2. Even if it is a valid charity, no, the charity cannot make loans to board members without strict compliance with conflict of interest rules that could not possibly be complied with by a two person board going through a divorce.

Read more
Answered on 5/26/16, 10:57 am


Related Questions & Answers

More Business Law questions and answers in California