Osmosis Mom Posted October 16, 2012 Share Posted October 16, 2012 Can a not yet approved 501©3 organization (pending approval) that has gotten incorporated as a non profit and has an EIN number collect money? I thought the 501©3 status was for this purpose? Can anyone enlighten me? Quote Link to comment Share on other sites More sharing options...
LMA Posted October 16, 2012 Share Posted October 16, 2012 Here's are some sites I found. Keep it mind that these sites should not be considered legal advice. I would ask your organization's accountant/attorney for official answers. http://grantspace.org/Tools/Knowledge-Base/Funding-Research/Fundraising-Planning/Fundraising-during-the-incorporation-process http://www.lawlatte.com/nonprofit/ Quote Link to comment Share on other sites More sharing options...
labst60 Posted October 16, 2012 Share Posted October 16, 2012 Sure - you can collect money. But if you don't have 501©3 status yet: 1) The money is taxable to the organizaiton and: 2) The donation is not tax deductible to the donor. But, there would be no legality preventing the collection of money - just how it is taxed/not taxed. Quote Link to comment Share on other sites More sharing options...
Osmosis Mom Posted October 16, 2012 Author Share Posted October 16, 2012 I was told today by this new org that we could collect money. However, when I previously was doing events with some other humanitarian organizations(for Syria here in MA), then every place asked for their 501©3 status. So now I am confused. I thought that the 501©3 status meant there was governmental oversight over the money collected, something we all want considering how easy it to for money to go astray and into unwanted hands or for officials to say organizations or individuals were donating to terrorist organizations (or bases or folks). Quote Link to comment Share on other sites More sharing options...
LMA Posted October 16, 2012 Share Posted October 16, 2012 Any status means you must follow IRS rules in regard to that status, such as laws about writing up proper tax deduction slips for donors. That is your oversight - the IRS! If you collect money now without the status, the donors cannot get a tax deduction right now. So none of the status privileges, so to speak, will apply until you officially have it. If anyone gives money right now, you must inform them that they cannot have a deduction right now. The oversight includes certain yearly financial statements with certain information that must be made public. That's all I know from working with some non profits. Quote Link to comment Share on other sites More sharing options...
MamaSprout Posted October 16, 2012 Share Posted October 16, 2012 Sure - you can collect money.But if you don't have 501©3 status yet: 1) The money is taxable to the organization and: 2) The donation is not tax deductible to the donor. But, there would be no legality preventing the collection of money - just how it is taxed/not taxed. And most organizations that grant money won't talk to you until your paper work is complete. Ella Quote Link to comment Share on other sites More sharing options...
Osmosis Mom Posted October 16, 2012 Author Share Posted October 16, 2012 OK, so 501© is only for tax purposes. That is what I understand. Please bear with me, but what makes a non-profit organization legitimate then and with governmental oversight? Is that the article of incorporation? What is EIN then? Sorry for all the questions. Not sure if I am dense or just stupid. Quote Link to comment Share on other sites More sharing options...
LMA Posted October 16, 2012 Share Posted October 16, 2012 OK, so 501© is only for tax purposes. That is what I understand. Please bear with me, but what makes a non-profit organization legitimate then and with governmental oversight? Is that the article of incorporation? What is EIN then? Sorry for all the questions. Not sure if I am dense or just stupid. Anyone can start a nonprofit. What makes them legitimate is what they do with the money. Does it all go to someone's salary? How much of it is used for something "useful." The important thing is it is following the IRS regulations? A lot of nonprofits have mission statements and a board of directors for the oversight. The thing is to make enough to promote your mission effectively and still make money. Nonprofits can still make money, though not very much, but enough to pay salaries of the people who work for the organizations. The EIN is the equivalent of the SS number for a non profit. You use it for the tax forms. No you are not being dense or stupid. A nonprofit can be complicated because of the regulations. That's why you still need a business plan and an accountant! Quote Link to comment Share on other sites More sharing options...
Osmosis Mom Posted October 16, 2012 Author Share Posted October 16, 2012 Thanks, LMA. I needed the pep-talk! Quote Link to comment Share on other sites More sharing options...
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