The organizers say the events are run by the book and intended to promote economic development in inner cities. But the group behind the cash giveaways is registered as a 501(c)3 charitable organization. One leading legal expert on nonprofit law said the arrangement raises questions about the group’s tax-exempt status, because it does not appear to be vetting the recipients of its money for legitimate charitable need.
"Charities are required to spend their money on charitable and educational activities,” said Marcus Owens, a former director of the Exempt Organizations Division at the Internal Revenue Service who is now in private practice at the law firm Loeb & Loeb. “It's not immediately clear to me how simply giving money away to people at an event is a charitable act.”
Asked about the legality of the giveaways in a brief phone interview, the Urban Revitalization Coalition’s CEO, Darrell Scott, said that most gifts were between $300 and $500, and that the group mandates that anyone who receives over $600 fills out a W-9 form in order to ensure compliance with tax law. He did not respond to follow-up questions about how the giveaways were structured and whether they met the legal standard for a charitable act.
