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Richard - Bizlaw
Richard - Bizlaw, Attorney
Category: Business Law
Satisfied Customers: 10607
Experience:  30 years of corporate, litigation and international law
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I am considering starting a non profit to aid Veterans in

Customer Question

I am considering starting a non profit to aid Veterans in Las Vegas. I would like to use the funds that are being donated to operate an ATM business to provide a base income as the non profit begins. I am planning on offering an 8% APR on funds that are invested as opposed to donated. The funds raised would not be spent but rather used to stock the ATM's that I am purchasing.
Would individuals be able to right off donated funds that they are receiving a return on?
Would I be able to operate as a 501c3?
Submitted: 9 months ago.
Category: Business Law
Expert:  Richard - Bizlaw replied 9 months ago.

Hello, my name is ***** ***** I will try to help you. Please remember I just report or interpret the law, so the outcome may not be what you hoped for.

A non profit's operation must be for non profit purposes. To the extent a non profit operates a profit making enterprise it will be taxed on this business income like any other business. Any person that invests in that business would be treated as an investor and would be entitled to all the protections of someone investing in any other enterprise. The investment would not be a charitable contribution. In order for your organization to obtain 501(c)(3) status its activities, unrelated to its ATM business would have to meet all the requirements for a 501(c)(3) organization. This would mean it dominant activity would be providing aid to Veterans. If it starts by operating a for profit business with little or no charitable activity, it probably will not qualify. Your non profit activities would have to be its prinicipal activity with the ATM business being a sideline that operates as and is taxed as a for profit business.

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