Q. Are 501(c)(3) organizations permitted to
donate funds to individuals or pay their expenses?
A. Yes, if doing so legitimately furthers a 501(c)(3) purpose. Revenue Ruling 56-304 requires organizations to maintain case histories which show the 501(c)(3) basis for such distributions.
(Note that rules for private foundations, not covered here, are different.)
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Real Help With Your 501(c)(3) Application
Form 1023 Paperwork, In Millions of Hours, 1986 to 2016
Source: U.S. Office of Management and Budget. Click image to learn more.