How can I start a simple non-profit?
April 11, 2019 11:35 AM   Subscribe

Oh- and one that accepts real-estate donations?

I've been wanting to start a charity for some time now that has to do with getting people back on their feet and trained for the workforce, but now I think I'm actually going to do it. My friends and family think it's a good idea. In fact a friend of the family just offered one of his condo's as a donation! That way he can get tax benefits for it without having to deal with fixing it up and selling it and I can use it as charity headquarters.

It needs a few repairs, but the apartment will do nicely for these purposes. I don't know how to raise money yet, but due to the nature of the charity, we can actually serve people in these headquarters for a decent amount of time before having to raise any, so we'd have time to work on that. The condo board said that such a charity would be fine as long as we follow their rules.

Since it's just me for now, I guess what I need to start is a charitable trust? Is that the easiest and fastest way to start?

or should I incorporate it and get 501(3) status? I read in some article we'd have to pay between $400 and $900 to set up the charity as a legal entity.

Can any charity accept a condo as a donation and give the person gifting it their tax benefits, or can only specific types of charities do this?

I find it difficult to get the right information on how to start because there are so many different versions of non-profits (or not for profits if those are any different).
posted by signingoff to Law & Government (10 answers total) 2 users marked this as a favorite
Oh and this is in NYC by the way
posted by signingoff at 11:37 AM on April 11

I am not your lawyer; this is not legal advice. You will most likely want to incorporate as a not-for-profit and then file for 501(c)(3) status. Without that status, contributions like the condo will not be tax-deductible. It can take several months to work through the whole process.
posted by praemunire at 1:03 PM on April 11 [2 favorites]

Yeah, your friend will not able to get a deduction on his donation unless you have 501c3 status.

You should look into fiscal sponsorship. Here is one org in NYC that offers this service but there are many others. This will offload the time-intensive accounting and legal compliance work onto experts and allow you to spend your time actually doing the work.

A perhaps delicate question: if $400-$900 is more than you are able/willing to spend on incorporation, what is your strategy for supporting the fledgling nonprofit - and yourself - prior to building up a funding base?
posted by showbiz_liz at 1:08 PM on April 11

"A perhaps delicate question: if $400-$900 is more than you are able/willing to spend on incorporation, what is your strategy for supporting the fledgling nonprofit "

It is not all I'm able to spend and I can put in more. I just have bad experience with going to lawyers right away before getting certain basic facts down.

If you go straight to a lawyer for advice before you know even the basics, it can take many days and many hundreds of dollars just to find out from that lawyer that they are actually not the kind of lawyer you need and that you have to compile other things first before even starting any of the actual legal work. So I just want to get the info I need first so that I at least have some idea what I want to do before having to pay anyone.
posted by signingoff at 1:18 PM on April 11

There are pro bono services available for this! Try Lawyers Alliance of New York and New York Lawyers for the Public Interest.
posted by showbiz_liz at 1:28 PM on April 11

You will probably want to talk to another charity doing similar work to get the lay of the land, if you haven't already. It may also be possible for a registered 501(c)(3) non-profit to be an "umbrella organization" for your planned charity - it would allow folks to donate to the registered charity for tax benefits and it to pass the donations on to you without you needing to incorporate your charity immediately. This will probably take a few months to work its way through the board of the umbrella organization. I've volunteered for a couple small non-profits that started out under an umbrella organization with a related-but-distinct mission and later pursued their own 501(c)(3) status.
posted by momus_window at 3:15 PM on April 11

Expect $500-$1000 in setup costs. $500 is your base minimum; expect extras in the form of copies, buying books or software, setting up a mail drop, record-keeping costs, and so on.

There are good resources available, including NOLO's guides. Rocketlawyer has a basic rundown of the process - with the expensive part being this:
The IRS charges an application fee of $400 to organizations that expect to earn less than $10,000 in total income over a four-year period. This fee increases to $850 if you expect that your nonprofit will take in gross receipts exceeding $10,000 annually over a four-year period.
posted by ErisLordFreedom at 3:35 PM on April 11

I, too, am not your lawyer and this is not legal advice. In many states, and I believe NY is one, there is a state entity that oversees charities and you may need to register with that entity before you begin soliciting donations. So, state compliance is another reason to investigate and consider going the fiscal sponsorship route.
posted by ElizaMain at 6:54 PM on April 11

FYI, there is currently a backlog in 501(c)3 processing, with months and months of waiting. It can help to know somebody who knows a congressperson.
posted by dum spiro spero at 11:33 PM on April 11

At the beginning, consider the end. Will you accept property? Are there environmental concerns, historically, with the property? Liens? Covenants? Homeowner dues? Special assessments?

These hurdles can be jumped, but will take time and money. You may have financial exposure to your organization and your primary asset.

I think you have an interesting idea for a non profit but, in my opinion, but you may want to tie-down a couple of factors now to prevent a headache later.

Good luck!
posted by zerobyproxy at 1:03 PM on April 12

« Older Cheap Flight Price Tracking and Alerts (2019...   |   They didn't cover this in D.A.R.E. Newer »

You are not logged in, either login or create an account to post comments