Hi Mark Kohler here with another tax and legal tip. Let’s talk about setting up your own charity
How cool would that be! something that you can help control and get donors and make the world a better place?
Well, it’s an exciting topic. Now. There’s a lot of pros and cons and some how to’s here. It’s a huge topic
So let’s dive into it and see where we go. Now. I want to go through the good news
the bad news
The how-tos and explained right off the bat that I’ve got a full blog article on this with lots of bullet points in detail
If you’re serious about this, you want to hit on that link below and get to the article
It’ll help you out a ton as you prepare and consider to take this step forward
Now this hit 3 bad news items first
You have to have a charitable purpose now some you may think well mark, that’s why I’m doing this
How can that be bad news? Well, I do get clients. Call me sometimes again
Oh
I want to set up a charity that can get donations and then it’s gonna hire my business or it’s gonna give me a job
Or some fangled way that it’s gonna help their business if you have that ulterior motive somewhere in your plan
Let me tell you right now
it’s not going to the IRS sees through that they’ve been doing these for years approving them or rejecting them based on these little
Side deals that are kind of charities in a sense, but they’re really to help your business. Don’t go there
So the first issue is which some may consider bad news others think of it
This is the reason I’m doing it
you’ve got to have a charitable purpose something to make the world a better place whether
Locally regionally in the United States or in the world. I don’t care if I have a charitable purpose. That’s not to benefit you
Number two, there are rules to running a charity
You can’t just open up a bank account and think oh, I got a charity now
No, you’ve got to go through some steps, which I’ll come to is the third item of bad news
but the second one is as operating it you’re gonna have to deal with some ongoing rules of
following procedures filing an annual tax return
Reporting to your donors and the and the people that you’re trying to benefit on a website. That’s very
Transparent but once you get the rules down, it’s not too bad. But just realize you go in
With some requirements and I want you to have your eyes wide open
As you go through the plans that you’re gonna have to implement throughout the year to maintain it. Now number three, I hit it
That’s right. There’s some setup procedure. It doesn’t happen overnight now
I set up charities here at our law firm around the country every month
We’ve got one in the works at all times and I love it
It’s really exciting to talk to these people about their passionate ideas
But again, it might take two to three months to get it approved. Now. There’s a nine month retroactive
Effective date, so if you started it the paperwork on January 1st
And we didn’t get approved until April I can still back date the charity to January 1st
And you could start getting donations right away, but you’ve got to realize that there’s some paperwork involved and it’s time-consuming
There’s also a cost we charge around 3 grand at our law firm. You’re gonna see places charged a little cheaper than that and sometimes
$10,000. Oh and but let’s just do it cheaper and you’ll be part of a larger charity or something like that
There’s a lot of options out there but usually for your own charity
You’re gonna be looking for around two to four grand to get it set up and it’s gonna take you 2 to 4 months
So keep that in mind now for pieces of good news first donors get a tax deduction
so that’s a great way to get people excited about your business because they’re gonna get a tax write-off whenever they give your
Little business, which is really a non-profit really is about is it it’s gonna be ran like a business
so people that donate money to it are gonna want to know where it’s spent and they’re gonna get a tax write-off to give you
money for your charitable purpose
so
Keep that in mind as you go out and sell this ideas that you’re gonna get to do some pretty cool events whether they’re bake
Sales or a golf tournament or a black-tie affair think outside of the box think auction and raising money
Number two related to number one getting those amazing donors to give you money
I want you to really interact and work with some amazing people people that may not normally give you the time of day
But if you’re able to bring up a charitable topic you can work with some pretty fantastic
People that are really well networked. And so I guess there is kind of a side benefit to you and your
Professional life or your business is that you can get some exposure working with some really neat people and I think that’s a good thing
I think that’s an OK thing Xem them gui hang di nhat cua Viexpress
Now you’re not doing the charity just to make connections
But I would consider a side benefit to having to charity is the people that you get to interact with
Number three benefit you get to control where the money goes with this
Now what I mean by control is you’re gonna have a Board of Directors and you’re gonna be a part of a team
This is not your business. There’s no shareholders. No one owns this thing
it’s ran by a board and you might be the chairman of the board for the first couple years and it’s gonna be ran like
A little country. There’s it’s gonna be a democracy
but the neat thing is it’s not like you’re giving a
Thousand dollars to United Way or the Salvation Army or American Red Cross and you may not know exactly where your thousand dollars is
deployed well with your own charity you do and you’re gonna have to like your donors know where the money’s spent – how much of
That thousand dollars actually goes to the bottom line benefit of someone for that charitable purpose
But the exciting thing is is you get to control the overall
operation with your board and this is where a lot of people find the benefit of a
Charity is that they’re not just giving money into some bottomless pit. They’re really really involved in the process
Number four. Yes, you feel good and it’s true
And I think it may sound a little cheesy to say but one of the major benefits of having a charity
Is that amazing benefit of giving back and making?
the world a better place
so be really excited about that charitable purpose because
it’s gonna take a lot of blood sweat and tears but the feel-good benefit payoff at the end is
Amazing now finally a little how-to I talked about the time process and the cost
But in the how-to when we set up a non-profit for our clients around the country
We always start with a nonprofit corporation. Not an LLC not a trust just the way we do it
I think it’s simpler and easier and in all 50 states, you can set up a nonprofit corporation
We get a tax ID number we set up your board we go through your bylaws
I have a memo I give out to our clients of
What I need to get their charity off the ground and I’ll send that to you for free
Just send me an email mark at Mark J Cole or comm and say mark
I want to set up my charity give me that memo and I’ll send you a memo of what we’re gonna need and
where the retainer is at in the process and and get things started but we’re gonna start with a corporation a list of all the
information I need which is in Goodin gonna include budgets and
Forecasts and and kind of what your plan is in a mission statement and a description of your purpose and all that good stuff
That’s what’s going to come out of that list that I’m going to give you for that memo
And then we’re going to start preparing your application for with the IRS
And this is where it takes time and there’s some costs involved and that’s why setting up a non-profit is a process
It’s a project. So that’s how we go through it. We set it up at the state level then
We apply to the IRS then we interact back and forth with the IRS until it’s finished
We charge a flat fee
For a reason because we don’t want you to feel like it’s a bottomless pit of just giving the law firm money you can budget
for that you can raise money for that the filing fee with the IRS could range anywhere from four to eight hundred dollars depending on
The type of charity you’re gonna do it could be a ten twenty three or a 1024 application, right?
It sounds like a lot
Well, that’s why you want to work with a law firm that knows what they’re doing because it is legal documentation
It’s not an accounting firm process
it’s a law firm process and
shop around and
Give our office a call too and shop at shop it out with us to see how much we would charge and how we could
Help you out, but that’s the process. It’s not a sales pitch video. This is not an infomercial
I want you to know what to expect as you go out there and shop around in summary
I think this is amazing idea. Don’t give up on it
Even if it’s a item that you’re planning to do in the next
Three five or ten years put it on your wish list put it on your bucket list
It’s on my bucket list and I’ve got some pretty amazing ideas that I want to implement someday
You know what?
it kind of helps us get up in the morning and keep working hard because someday we’re gonna be able to give back to give
That huge payoff and that feel-good experience. So don’t give up on your dream
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