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Starting a foundation / non-profit

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  • Starting a foundation / non-profit


    Anyone has had experience setting up a foundation or non-profit?  I have been doing some consulting work, but that along with the research-aspect of my academic position has lead to some opportunities to do non-profit/charity work that in turn indirectly feeds back to expand/continue my research (as often happens with these virtuous, self-reinforcing cycles).  I now have been thinking and in addition/instead of my sole-proprietor consulting LLC, I should also start either a non-profit 501c3 or another form of a foundation.  I want these to fund my own research and to cover healthcare costs for the needy/uninsured and ultimately maybe even build in some college scholarship fund under the umbrella.  I want to be able to donate money to this myself and have others do so too... I don't know, maybe the Clinton foundation 'inspired' me to think of this as an option.

    Has anyone done something similar in the past  What is the most efficient mechanism and legal jurisdiction (presumably US state or territory) to do so?

  • #2
    Filing a form 1023 (to ask IRS to approve you for NPO status) is a bear. NOLO has a great article on the soup-to-nuts process. We assist clients in setting up 501c3 organizations and it is not cheap. You could hire an attorney, too.

    However, the good news is that, a few years back, the IRS came up with a 1023 EZ application you can DIY. In general, you will qualify if you project your gross receipts for the next 3 years will not > $50k/yr and your organization's assets are < $250k. You then file a postcard tax return with the IRS until you "outgrow" your small status.

    PoF might be able to help you with his experience on setting up his "Donor Advised Fund", which is an alternative to a Private Foundation.
    Our passion is protecting clients and others from predatory and ignorant advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087


    • #3
      What about using a donor advised fund to "pre fund" your charitable giving at a later time, however you would be funding your own non profit activities if you set up an official 501c3 organization. Could essentially allow for a transition to semi-retirement with an organization that has reliable funding that you can control (I always hated fund raising for my organization). I suspect that there would be limitations to paying yourself a salary as an employee of a 501c3 that you are also donating to through your donor advised fund, but if there is some wiggle room could this also allow for a well intentioned sort of retirement vehicle with deferred compensation as your activities are diverted towards a public good later in life?

      I believe you can contribute up to 50% of your income, so if you were planning on a large charity role later in life you could really have a lot of fun with this.


      • #4
        We have a donor advised fund which has been a great vehicle for our giving. However, I'm pretty sure you can't donate from these to a charity that you work for or are on the board of. I'm not positive, so double check this.