Legal Question in Business Law in California

Re: Charity for an individual

Nice try, dude. If you're 100% upfront about where the money goes, that's OK. (But who would donate?) If your aim is to mislead people into thinking their gifts will buy milk for Moms rather than beer for your buds, you're into criminal fraud. There are such things as "charities" that are run very close to the line, and sometimes over it. But the successful ones have lots of high priced lawyers to advise them.

Re: Charity for an individual

Setting up a charity (as you probably mean it) is a two-step process. First, you form a California (or other state) nonprofit corporation or association. That creates the entity. You might be able to do this, because the process is pretty mechanical and no one screens the filings for valid purposes.

However, the next step is where the idea fails. A true charity needs to get tax-exempt status from the Feds, and that means filing an application for exemption under Internal Revenue Code section 501(c)(3) (or another closely related provision of IRC 501).

The IRS will scrutinize the application, and if it appears that the "charity" is for the benefit of one person, or any closely-identified group of persons, the application will be rejected.

Eventually, even though it could be created in the first place, on-going operation of the California entity without IRS tax-exempt status would run afoul of some restriction or other imposed by the state on its operations and finances.

So, in the long run, the idea doesn't work.

Re: Charity for an individual

Going to jail. Charities are regulated by state and federal laws, with penalties for fraud.