Non-Profit Beneficial Owner

pchisam
New Community Member

In trying to respond to the requirement to identify Beneficial Owners, you are required to enter a % between 25 and 100% for a person being identified.  

 

A IRS 501 (c) (3) Non-Profit does not have owners.  If you interpret the requirement as "or a person who has a controlling influence in your business.", then you must enter ownership between 25 and 100%.

 

How does a non-profit respond to this requirement?

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8 REPLIES 8

PayPal_JonK
Moderator
Moderator

Hello @pchisam,

 

Thank you for reaching out on our Community Forum for assistance. That's a great question! The following entities may be asked to provide information on the Beneficial Owners:

  • Business Trusts
  • Charities (except for Government-owned)
  • Corporations
  • Limited Liability Companies (LLC)
  • Partnerships
  • All other types created by filing of public document with Secretary of State

Legal entities will normally have between 1 - 5 Beneficial Owners. While this is not an exclusive list, examples of Beneficial Owners may be the following:

  • Chief Executive Officer
  • Chief Financial Officer
  • Chief Operating Officer
  • President
  • Vice President
  • Treasurer
  • General Partner
  • Managing Member
  • Any other individual who regularly performs similar functions as those listed above that may have an equity interest of 25% or more of the legal entity.

I hope that clarifies a few things. Here's a great Help Center article that may be able to assist a bit further as well: What is a beneficial owner and why do I need to provide this information?

 

Have a great day!

 

 - Jon K

 


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gospelmi
New Community Member

This answer does not address the issue! A 501(c)3 non profit corporation DOES NOT HAVE A BENEFICIAL OWNER . Period. End of story. Asking us to provide beneficial ownership information is dishonest at best, and breaking the law at worst.  If we provide "beneficial owner" information even though no one in our organization holds any percentage of ownership, we would be lying! Pretty sure that would be considered perjury.  If our organization were to disband, the proceeds would not go to any of our board members; any funds remaining would be divided among the charitable organizations that we support.

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PayPal_Rachael
PayPal Employee
PayPal Employee

Hi @gospelmi,

 

Thanks for posting here and I am sorry for the confusion. 

You are correct in saying that a charity does not have a beneficial owner and we do account for that. Instead of beneficial owner you can enter a senior management officer, so the person who is in charge and will be responsible for the account. You would then mark this person's ownership share as 0%.

 

I hope this helps. 

Rachael 

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MaryAnnaD
New Community Member

The form does not allow me to enter 0% ownership. The only option is to check the box saying that someone owns at least 25% of the non-profit - which IS NOT TRUE. It will not let me proceed unless I check the box. Please advise - I can't seem to find how to complete this truthfully. I'm stuck...

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dunromin2
Contributor
Contributor

I agree with the complaints of the posters above. I represent a church, a 501(c)3 non-profit. We have a Council that serves in effect as our Board of Directors, but nobody gets paid for this and no one has any "equity" in the church. The PayPal form for Beneficial Owners doesn't seem to recognize that in fact we have NO one with equity in the church. Please can someone clarify how churches and other 501(c)3 non-profits are supposed to truthfully fill out the Beneficial Owners information?

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STA70
New Community Member

Was this ever resolved? I agree with the above posts, entering that an Officer of a non-profit has a 25% beneficial interest is false. What provisions has Paypal made for 501(c)3 and 501(c)6 entities so we can comply without providing false information?

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YG613
Member
Member

Same exact issue here....

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U3AHealesville
New Community Member

The answer still does not address the fact that Not for Profit Incorporated Associations like ours do NOT have beneficial owners nor do we have any one person (or even persons) who have the right to spend our members funds without our Committee of Managements approval (currently 10 people on the Committee). So there is no way to answer this question honestly. Certainly no one with 25% ownership or voting rights!! PayPal needs to work out what an “appropriate question”  might be for us to be able to answer honestly. Currently our answer is that the “Beneficial Owners” we have listed have 0% ownership, which doesn’t seem to be acceptable, even though this is true for us.

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