Friends of the Library

There seems to be a trend for libraries that have Friends groups to hold fundraisers, donations, and membership drives at the library. In some instances, the library collects money for the Friends and pays it to them at a later date.

Ideally, a public library does NOT handle the money of another entity, even for "Friends."  Ever.

That said, there is no law barring a library from helping out a partner or organization with cash handling for events; this "never" rule comes from risk management, not the law.  

Are incorporated "Friends", who do not receive over $50 thousand, do not have paid staff, and are only able to provide the funds to the library, required to register [with the New York Attorney General] and submit the CHAR500 form?

When one considers becoming a "Friend" of a library, several activities spring to mind:

There are so many ways the relationship between a library and their Friends can get "complicated."

Can you provide a template for an agreement between a library and their Friends?

NOTE: As a primer to this answer, which mostly consists of the requested template, I suggest reviewing the materials in the ever-excellent "NYLA Handbook for Library Trustees,"[1] particularly the guidance and links on page 85.

Is it legal for a Friends of the Library group to hold their funds and not to use those funds to support the library's mission? OR refuse to pay for library program and services when ask by library staff?
Can they lose their 501c3 status, if it is proven that the funds are not being used to benefit the library?

Before we address what may be the clear signs of a dysfunctional relationship between a library and its "Friends," let's explore the basis for the Library-Friends arrangement.