Shanetripleomac
Junior Member
What is the name of your state? Michigan
Hello. I am planning to start a nonprofit organization with some others and am in need of some quick legal advice. Of course, I plan to consult a lawyer who specializes in this area, but I thought I would try to get some advice on here first.
We want our organization to be able to receive "returnable donations" from donators. Basically, we will receive their donation, invest the money, use the profit from the investments for the charitable cause that we have in mind, and then return the donations in full to the original donators. We are doing this as a way to encourage philanthrophy among individuals and businesses where they do not lose any of their earned income in the process. There will be incentives to donate to us (we have a few things planned out), so basically the donators receive a "free" service with their donation that is eventually returned to them. It will encourage philanthropy, offer them a service, and help out a needy cause in the process. I want to know if we can set this up in a way that allows us to follow this process while avoiding having to pay taxes on the donations. I realize a normal 501(c)3 nonprofit organization will not work for this plan because the government requires that a certain percentage of all donations be used toward the charitable cause to keep the nonprofit status, and with our plan, essentially 0% of the incoming donations are actually used, but instead profit generated from investing the money is used toward the charitable cause and 100% of the donations are returned to the original donators. Is there a way to set this up so that we would be federal and state tax exempt on all the donations. If so, how? Also, if this is possible, is the profit generated by the donations also able to be federal and state tax exempt?
Thank you for your help?
Hello. I am planning to start a nonprofit organization with some others and am in need of some quick legal advice. Of course, I plan to consult a lawyer who specializes in this area, but I thought I would try to get some advice on here first.
We want our organization to be able to receive "returnable donations" from donators. Basically, we will receive their donation, invest the money, use the profit from the investments for the charitable cause that we have in mind, and then return the donations in full to the original donators. We are doing this as a way to encourage philanthrophy among individuals and businesses where they do not lose any of their earned income in the process. There will be incentives to donate to us (we have a few things planned out), so basically the donators receive a "free" service with their donation that is eventually returned to them. It will encourage philanthropy, offer them a service, and help out a needy cause in the process. I want to know if we can set this up in a way that allows us to follow this process while avoiding having to pay taxes on the donations. I realize a normal 501(c)3 nonprofit organization will not work for this plan because the government requires that a certain percentage of all donations be used toward the charitable cause to keep the nonprofit status, and with our plan, essentially 0% of the incoming donations are actually used, but instead profit generated from investing the money is used toward the charitable cause and 100% of the donations are returned to the original donators. Is there a way to set this up so that we would be federal and state tax exempt on all the donations. If so, how? Also, if this is possible, is the profit generated by the donations also able to be federal and state tax exempt?
Thank you for your help?