Assume Mr. Jones is the founding member and sole director of a 501(c)(3) organization. Further assume that he is employed by the ACME corp. Each year, Mr. Jones donates $50,000 of his personal income to his 501(c)(3). Is this donation deductible from his income tax?

1 Answer 1


Yes (although there are some limitations on how much of a charitable deduction can be claimed as a percentage of total income and based upon whether the standardized deduction or itemized deductions apply).

But, a 501(c)(3) which predominantly receives its donations from a single donor counts as a "private foundation" and is subject to additional limitations and regulations.

To be a "public charity" in contrast to a public foundation, the entity needs to receive funds from grants and the general public as a large proportion of its assets.

Also, the money that the 501(c)(3) has to be spent for a charitable purpose and can't be used for the personal benefit of Mr. Jones (or other private individuals, such as his family members) in excess of fair market value compensation for his work for the charity which generates taxable income to him.

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