Legal Question in Business Law in New York
Foundation Forming & Fundraising
Some questions preliminary to starting a not-for-profit foundation based in Queens:
1. Are the basic requirements to apply for a
a) Certificate for Assumed Name,
b) Certificate for Incorporation, and then
c) 501(c)3 (for IRS tax-exemption)?
2. I'd like to launch the foundation with a benefit banquet in a few months, shortly after acquiring the aforementioned certificates, and possibly prior to determination by the IRS of 501(c)3 status.
a) Are there time restrictions as to when certain fundraising activities can occur? For instance, could we hold a silent auction at the banquet, or would the foundation have to have been in existence and/or have its 501(c)3 tax status for a specific length of time before it can engage in certain activities?
b) Would donations to the foundation be tax-deductible for donors only after 501(c)3 determination?
3. Would there be anything that would legally prohibit the fundraising banquet from taking place?
2 Answers from Attorneys
Re: Foundation Forming & Fundraising
1. You can go directly to incorporating your not-for-profit and skip the Certificate of Assumed Name. The organization must be formed (incorporated) before filing for 501(c)(3) status.
2. A 501(c)(3) filing is a long and complicated matter and may take longer than "a few months." Until the 501(c)(3) status is granted, donors cannot deduct donations to the organization. It's therefore generally a lot easier to get donors to give to a fully registered 501(c)(3) organization rather than to one that's in the works.
3. The fundraising banquet would have to comply with federal, state and local statutes and regulations. You should HIRE A LAWYER to handle this matter for you, since it's actually way to complicated for this board. Call the Queens County Bar Association, the NYC Bar Association or the NYS Bar Association for a referral if you need one.
Good luck with it.
THE INFORMATION PRESENTED HERE IS GENERAL IN NATURE AND IS NOT INTENDED, NOR SHOULD IT BE CONSTRUED, AS LEGAL ADVICE. THIS POSTING DOES NOT CREATE ANY ATTORNEY-CLIENT RELATIONSHIP BETWEEN US. FOR SPECIFIC ADVICE ABOUT YOUR PARTICULAR SITUATION, CONSULT YOUR ATTORNEY.
Re: Foundation Forming & Fundraising
Nancy is partially correct.
Contributions made after an application for recognition as a 501(c)(3) exempt organization will be deductible back to the date of application, the filing of IRS Form 1023.
Beginning in 1992, deductibility can be further retroactive, to the date of incorporation, if the Form 1023 was filed within 27 months of the incorporation.
If the banquet gives food and services in excess of $75, it may be deemed a "quid pro quo" contribution. A "quid pro quo" contribution is one made partly as a contribution and partly in exchange for services provided by the charity. If this is the case, only part of the contribution is charitable while the other party is payment for the dinner and not deductible.
Mike.
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