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Need advice about starting a 501C3 charitable organization

Advisor

David Bisignani Youngstown, OH

I started a small confections business two years ago in response to not being able to find a job in IT. I am 63 years old and my dream was to create a charitable baking company for the purpose of raising funds for other charitable organizations or for scholarships. I would like some information regarding how I might transition my business into a charitable organization. Just some pointers is all I need for now. And thank you for your advice!

28 July 2021 10 replies Small Business

Answers

Advisor

Jim Kennedy Cherry Hill, NJ

GO for, David it! I spent 16 years as a classically trained French chef and I as you probably already know, confections and baking involve pretty much the cheapest staples out there - butter, flour, sugar eggs, and water. Profit margins are significant so you will have a good chunk of profits to donate to your cause.
I left the restaurant business 27 years ago, and am now a CPA, and I work with 501c3's with annual revenues ranging from $20K to $2MM and would respectfully not advise legal zoom because one wrong answer and undoing it is a mess. Instead, ask an attorney or law firm to do it pro bono. Lawyers are supposed to do a certain amount of pro bono work. I am a CPA and worked with an attorney who set the company up properly, for no cost. There may be a filing fee for the state, but they (states) won't budge.
Form 1023 is a daunting 20+ page form with requisite attachments. However you can go with the several page 1023-EZif you can answer "no" to 30 questions. Some are no-brainers and others need a little thought. Here are the biggest ones:
1. Do you project that your annual gross receipts will exceed $50,000 in any of the next 3 years? Gross receipts are the total amounts the organization received from all sources during its annual accounting period, without subtracting any costs or expenses. You should consider this year and the next two years.
2. Have your annual gross receipts exceeded $50,000 in any of the past 3 years? Yes No
3. Do you have total assets the fair market value of which is in excess of $250,000?
Heres the link to the IRS instructions for the Form 1023EZ. Its worth the read thru. Its about 20 pages, but potentially worth the read-thru. https://www.irs.gov/pub/irs-pdf/i1023ez.pdf
I write you not just as a CPA or ex-chef, but also as a grateful US citizen. I am the son of a WWII veteran. My late father's Pacific Southwest bombing missions left him with PTSD for the final 63 years of his life, and this is how I pay it forward.
Like you, I am also 63. Life is short. Go for what's in your heart. Thank you for your service.

Sincerely, gratefully and respectfully
Jim Kennedy CPA
jameskennedy.cpa@verizon.net

13 August 2021 Helpful answer

Advisor

James Watters Norman, OK

Good morning -
Print IRS Form 1023. Make sure it’s the latest version. Study the form. The questions are clear. Some of the questions may not pertain to you. One tip - in your explanation of why the nonprofit is needed, emphasize the benefit of “ lessening the burden of government”. Good luck.

31 July 2021 Helpful answer

Advisor

Jose Roman Norfolk, VA

Look into the Dog Tag Bakery Fellowship program :

https://www.dogtaginc.org/

Veteran

Christine Martinez Phoenix, AZ

Hello David:
Thank you for your service. A fellow Navy Veteran who started up his own non-profit more than a decade ago just released a book, with the intention of helping others avoid the pitfalls and headaches he experienced. Anthony "Doc" Ameen's book is called "Non Profits S.U.C.K. A Love Letter for Future Founders." Doc founded "Wings for Warriors," and he has an amazing heart of service, and real life experience on why avoiding landmines is SO important--wherever one is headed.

Veteran

Grant Lewis Virginia Beach, VA

Contrary to other advice, you do not need a lawyer. Using information available on-line, I easily established a 501.3(c) for a volunteer school association . It was time consuming but not difficult and free. Good luck.

Advisor

Kenneth Lewis Colorado Springs, CO

Hello David,

I am curious of what you mean by wanting to “transition” to a 501(c)3. The information you get will differ if you would like to convert a for-profit business into a non-profit versus a new startup.

Regardless, convert or startup, I would reach out to anyone else already in that market and interview the founder or an exec on the board. Get a feel of what it might look like. Let them know your looking at creating a small non-profit in your community and was hoping to get a 15-min meet. If you’re lucky, perhaps you’ll gain some industry knowledge and maybe copies of their filing docs such as SOPs.

You could also weigh the options if it is better volunteering or donating to a global non-profit that aligns with your values and let them be responsible for the tax paperwork while you focus on the operational side.

Here are a few no-profits I found online for your consideration:

https://www.icingsmiles.org

https://www.bakingforgood.com/our-causes

https://www.cake4kids.org/volunteer

https://www.forgoodnesscakes.org

Good luck with your endeavor!

Ken

Advisor

FRANCIS TEPEDINO, ESQ. San Diego, CA

As a Lawyer I can suggest:

If you are serious: First: Get yourself a Lawyer who is versed in non profit filing and the law..

Sorry, but if its free, one wonders what happens if and when an error is made, particularly a significant error that puts you personally at risk.

You might telephone the Bar Association, (get their number on Google), in your town/city and ask for a reference to Lawyers who practice in that particular area of the Law. Then ask if any Pro Bono time mighrt be available.

Good luck.

Advisor

Barron Evans Ann Arbor, MI

Foremost, thank you for your service.

Secondly, I would concur with Chet's suggestion RE: SCORE... I, too, am a SCORE mentor, and the pro bono consultants can certainly support your efforts.

But further, I would encourage you to explore another organization with which I've been affiliated for awhile: CATCHAFIRE.org. They/we focus exclusively on NFPs, doing pro bono consulting on a project basis -- as broad as business planning, marketing and financing to focused, time-bounded efforts, e.g. creating executive summaries, designing websites, and building Boards/Advisors.

Best wishes for 'sweet success!'

Advisor

Chet Frame El Paso, TX

Good day, David.

Go to Score.org and click on the "Find a mentor" button. Look for 501C3 or Not for Profit. There are several of us listed who can work with you and help you with the form 1023 and the bylaws and the organization. And it is all free!

Advisor

June Webb Washington, DC

Hello David,

Go on Legal Zoom website and ask them about the process of filing a charity nonprofit organization and what it requires for a nonprofit to be file in the state that you want to file it in. They will tell you the process and how much it will cost. Typically it cost between $1500 - $2500 to file a nonprofit. You will then need to know what percentage you want to retain for admin fee to run your nonprofit. Having a great account and tax attorney is also crucial for your nonprofit.

June Webb
healthiesuccess.com
https://www.linkedin.com/in/junewebb

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