I am currently in the middle of the IRS advanced determination letter process. The IRS has a hang-up because I am the only Director. There is no internal revenue code law that says there must be 3 people on a board of Directors. Do you know of any 1 person 501(c)(3)s?
We have obtained 501(c)(3) status for one-person charities. The IRS is obviously very suspicious because of the potential for abuse, but you are correct that there is no IRS ruling, at least none that I am aware of, that says a one-director corporation is, per se, ineligible for exemption. Some state nonprofit corporation laws require a minimum of three directors, but other states will permit a single director. Ask the examiner to talk to a supervisor.
Sunday, February 25, 2007
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In California, the nonprofit religious corporations law within the Corporations Code prohibits the President and Treasurer from being the same person. If the officers = the directors, then a one-person board like this in California would be unlawful.
While having just one director may be perfecty legal, I see no reason to proceed that way. It is easy enough to find other board members who will not interfere with your management of the organization, and who will support you in the efforts you wish to undertake. Some of the members of my board are pretty inactive, but even those occasionally surprise me by providing something very helpful -- an opinion, a reference, etc. They all are very, very supportive of my efforts, which is nice, because it is a lot of work, there are many ways to make mistakes. Support and appreciation are very welcome. The several member board is also useful in deflecting people who are pressing you to do things you don't want. You can tell them that the board won't permit it. One person came back with the answer "but you are the board", and I was able to assure him that indeed I am not, there are others and their votes count.
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