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Law Educator, Esq.
Law Educator, Esq., Attorney
Category: Business Law
Satisfied Customers: 116709
Experience:  All corporate law, including non-profits and charitable fraternal organizations.
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I like to set up a donation fund to help Motow events. The

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I like to set up a donation fund to help Motow events. The program will be marketed to certain group of people/demographics. Are there any governing laws? do I need (or when do I need) to set up an non-profit organization? what are the pitfalls of setting up a donation account>
Thank you for your question. I look forward to working with you to provide you with the information you are seeking.

In order to take donations, you would have to be a non-profit organization or you would have to pay taxes as income on all of the money you receive unless you write off the money because you are giving all of it to another non-profit organization. If you are not a non-profit, then the people making donations to you could not write off the donations.

Thus, if you want people donating to you, then you have to set up an corporation or LLC and you would then have to apply to the IRS for a 501(c)(3) exemption stating your charitable purpose to fund Motown events for education of people about the music and you would have to submit a copy of your bylaws/articles of incorporation or organization stating your charitable purpose. You would need to be approved by the IRS and receive an EIN from them before setting up the donation account as you need that number for the account.

You also have to keep an accounting of where all of the money coming into the account goes, for reasonable expenses of operation or for donations to helping Motown events. Every year you have to file a form 990 or 990N (if you make less than $50,000) with the IRS accounting for the money you take in.

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Law Educator, Esq. and 2 other Business Law Specialists are ready to help you
Customer: replied 4 years ago.

I am looking at the Boston events and there are several donations sites and accounts that have been set spontaneously by people who want to help or hace a access to a specfic group; I checked on couple and none of them as actually a non-profit status. how is that different from what we like to achieve?
the non-profit status can take forever. can one start collecting the donations while having a non-profit application underway?

we expect all the money to be donated minus some reasonable costs of PR retained.

In the event teh money is raised for another non-profit organizaton but via our campaign and collection account, do donors benefits from the tax deduction?

Thank you for your response.

You can, as I said, set up an account, which would require then using your own SSN and the donations of the people would not be tax deductible to them and then you can give all the money to some charitable non-profit and on your taxes you have to claim the money as income and then write off the donation. Those donating do not get the write off, even if you donate it to another non-profit (you get the write off).

What many of these last minute accounts do is they form an LLC, which can be done in minutes with the Secretary of State's office and then get an EIN from the IRS and open the account and start taking donations and then submit their 501c paperwork, which gets approved retroactively to the beginning of the year.

Then there are others who do not know what they are doing and use their SSN and not realize that they have to claim all of that money on taxes and the people donating cannot claim a charitable deduction AND that the money has to be given to another charitable organization.