Problem with nonprofit Association tipping its staff (US)?

My condo association wanted to tip the worker for the firm that cleans the building (same person always does it) and give a gift (like restaurant certificate) to the mgmt firm. Somebody on the board says this isn’t some the board can do with board funds. For the life of me I cannot see why. Granted, most nonprofit boards that I have worked with that give out gifts to employees have given out plaques and such for recognition of service, but is there a reason money cannot be given by the board to its agents? Is this “gift” dissimilar to compensation or is there a tax reason (or complication) for this?

(Of course, the alternative we may implement is just to gather voluntary donations for the residents.)


Wouldn’t it depend on the particular condo association bylaws?

I doubt by-laws prohibit it. I’m just wondering if there’s some tax reason for why a non-profit cannot single out staff for monetary gifts (or even if it just becomes complicated).

There’s nothing wrong with what is proposed (unless specifically prohibited in your organization’s specific by-laws). What the board member is probably thinking of is that this somehow constitutes a disbursement of profits, such as what happens with dividends to stockshareholders. Non-profits are specifically prohibited from having shareholders (where the “non-profit” part comes in). Your assoc. does not have shareholders, so doing this is not doing something that is prohibited.