Opening a Non-Profit/Charity to access the 500 Billion+ USD/GBP Tax Write Off Economy

[Daozen]

Registered Non-Profts are able to take donations from businesses and self-employed individuals, who can write those donations off against their tax bill.

There's a lot of potential here. Why didn't I think of this sooner? I want to make a non-profit that writes open source software to help plant trees, redistribute food, make organic material houses, filter water etc. I already have a few web-app prototypes in development.

A few of us are researching this on emails. It takes a few weeks to a few months of paperwork, some forms and legal background checks (to guard against money laundering), and a 3-500GBP fee, but it's worth the effort.

From my research, it's easier to open a non-profit in the UK than the US.

Does anyone have experience doing this? All ideas and stories are welcome.

http://www.thenonprofittimes.com/news-articles/nonprofits-worth-887-3-billion-u-s-economy/

[Satori]

Be sure you understand the laws on this subject in the jurisdiction(s) you will do this. Non-profits often sound good in theory but the realities place limitations on a number of things. Often what is given in one area by tax laws etc. is taken away in another area. Also, there are limitations on what can be deducted from taxes. These limitations cause potential donors to not donate because there is no tax benefit to them. Typically a donor cannot deduct the full amount of the donations, but rather only a small percentage of the adjusted gross income above a certain threshold. ( I'm speaking of USA law but this is typical because the oligarchs make these laws, rules and regulations more or less uniform around the globe.) This makes what you as the operator of the non-profit (there are no owners of non-profits) actually receive in donations substantially less than what you expected to receive as donations. Frankly non-profits and especially foundations are tax and financial havens only for the wealthy.

Not to rain on your parade. Just a heads up. Good luck.

[Daozen]

Be sure you understand the laws on this subject in the jurisdiction(s) you will do this. Non-profits often sound good in theory but the realities place limitations on a number of things. Often what is given in one area by tax laws etc. is taken away in another area. Also, there are limitations on what can be deducted from taxes. These limitations cause potential donors to not donate because there is no tax benefit to them. Typically a donor cannot deduct the full amount of the donations, but rather only a small percentage of the adjusted gross income above a certain threshold. ( I'm speaking of USA law but this is typical because the oligarchs make these laws, rules and regulations more or less uniform around the globe.) This makes what you as the operator of the non-profit (there are no owners of non-profits) actually receive in donations substantially less than what you expected to receive as donations. Frankly non-profits and especially foundations are tax and financial havens only for the wealthy.

Not to rain on your parade. Just a heads up. Good luck.

Thanks for the post. I'm aware that there are lots of legal intricacies. I already spent a few weeks researching it in 2015. The laws in the US are significantly more restrictive and byzantine than those in the UK.

While I agree that there are issues, I think the sweeping statement
"Frankly non-profits and especially foundations are tax and financial havens only for the wealthy."


... is exaggerated, and a little black and white. There are thousands of non-profits operating all over the world. They have to work within laws and guidelines, but many of them are doing vital work. If certain restrictions are in place, that's just the way it is for now.

Freecodecamp is one example of an organisation that works with non-profits:

https://www.freecodecamp.com/nonprofits

And just for context, if anyone was looking to start positive economic change, is there a more realistic and acheivable path? i.e. can you suggest a workable alternative?

[TargeT]

Does anyone have experience doing this? All ideas and stories are welcome.

http://www.thenonprofittimes.com/news-articles/nonprofits-worth-887-3-billion-u-s-economy/


I run a non-profit horse rescue in the US.

It's a lot of paperwork hoops to jump through, but not impossible by any means. (did a lot of it via google searches)

Everyone with money and brains has some sort of tax shelter very much like my non-profit.. (the "clinton foundation" for example) I think that's why the tax laws in the US are so crazy, it's a known tax shelter.

[Daozen]

Does anyone have experience doing this? All ideas and stories are welcome.

http://www.thenonprofittimes.com/news-articles/nonprofits-worth-887-3-billion-u-s-economy/


I run a non-profit horse rescue in the US.

It's a lot of paperwork hoops to jump through, but not impossible by any means. (did a lot of it via google searches)

Everyone with money and brains has some sort of tax shelter very much like my non-profit.. (the "clinton foundation" for example) I think that's why the tax laws in the US are so crazy, it's a known tax shelter.

Hmmm. Money and Brains? I have a little of one, and some of the other. I can fill out a form, or a dozens forms if I need to.


I run a non-profit horse rescue in the US.

It's a lot of paperwork hoops to jump through, but not impossible by any means.

This is the kind of answer I was hoping for. I'm prepared for a few months of tedious paperwork and hoop jumping. That's the way it is. The advisor I spoke to in the UK was very helpful. I will probably start with a CIO, a Charitable Incorporated Organisation.

This is what I'm wondering:

1) How many forms are there to fill in, over how long? I heard the US can take over a year, but the UK can be closer to 40 days.
2) Can you then take donations from businesses? After adjustments, for every 100USD of donations, how much does the non-profit collect?

Are there any tricky or irritiating clauses, or small print?

[Satori]

Be sure you understand the laws on this subject in the jurisdiction(s) you will do this. Non-profits often sound good in theory but the realities place limitations on a number of things. Often what is given in one area by tax laws etc. is taken away in another area. Also, there are limitations on what can be deducted from taxes. These limitations cause potential donors to not donate because there is no tax benefit to them. Typically a donor cannot deduct the full amount of the donations, but rather only a small percentage of the adjusted gross income above a certain threshold. ( I'm speaking of USA law but this is typical because the oligarchs make these laws, rules and regulations more or less uniform around the globe.) This makes what you as the operator of the non-profit (there are no owners of non-profits) actually receive in donations substantially less than what you expected to receive as donations. Frankly non-profits and especially foundations are tax and financial havens only for the wealthy.

Not to rain on your parade. Just a heads up. Good luck.


While I agree that there are issues, I think the sweeping statement[QUOTE] "Frankly non-profits and especially foundations are tax and financial havens only for the wealthy."


... is exaggerated, and a little black and white. There are thousands of non-profits operating all over the world. They have to work within laws and guidelines, but many of them are doing vital work. If certain restrictions are in place, that's just the way it is for now.


Ok. A case can be made that a better word was "often" not "only." Dig down deeper and you'll gain an understanding of what I meant by that phrase. Again, good luck.

[TargeT]

Does anyone have experience doing this? All ideas and stories are welcome.

http://www.thenonprofittimes.com/news-articles/nonprofits-worth-887-3-billion-u-s-economy/


I run a non-profit horse rescue in the US.

It's a lot of paperwork hoops to jump through, but not impossible by any means. (did a lot of it via google searches)

Everyone with money and brains has some sort of tax shelter very much like my non-profit.. (the "clinton foundation" for example) I think that's why the tax laws in the US are so crazy, it's a known tax shelter.

Hmmm. Money and Brains? I have a little of one, and some of the other. I can fill out a form, or a dozens forms if I need to.


I run a non-profit horse rescue in the US.

It's a lot of paperwork hoops to jump through, but not impossible by any means.

This is the kind of answer I was hoping for. I'm prepared for a few months of tedious paperwork and hoop jumping. That's the way it is. The advisor I spoke to in the UK was very helpful. I will probably start with a CIO, a Charitable Incorporated Organisation.

This is what I'm wondering:

1) How many forms are there to fill in, over how long? I heard the US can take over a year, but the UK can be closer to 40 days.
2) Can you then take donations from businesses? After adjustments, for every 100USD of donations, how much does the non-profit collect?

Are there any tricky or irritiating clauses, or small print?

its not even close to that hard; getting some of the forms filled out takes time (you have to wait for a business license to be signed by everyone (processed) , you have to have a bunch of stuff notarized, you have to form a board, you have to incorporate.. ) but it's just a bunch of stuff, none is overly hard individually and it took us about 4 months because we didn't rush it (didn't have a lot of time to work on it) it's not hard at all.

I take donations from anyone that wants to donate, 100 percent of the money I take, I keep (I don't have a fiduciary or any other over arching organization that does paper work for me currently, though one is tempting as its nice to offload that work)

its going to be probably so much different for you than it was for me I'm not sure how much I can answer that will be helpful.

[Daozen]

Ok. A case can be made that a better word was "often" not "only." Dig down deeper and you'll gain an understanding of what I meant by that phrase. Again, good luck.

In my opening post I wrote that money laundering was an issue with non-profits. You've assumed I've done no research. From my reading, I'm aware that many wealthy people use non-profits as a means to hide their assets, and evade paying full taxes. I'm not interested in that, I just want to take legal donations from businesses to fund open source programmers.


( I'm speaking of USA law but this is typical because the oligarchs make these laws, rules and regulations more or less uniform around the globe.)

From my experience, laws are nowhere near uniform across the globe. In Taiwan, for example, anyone can start a home restaurant or business with little or no government interference. In California, doing so will land you heavy fines. From what I've seen, Taiwan and the UK have less restrictive laws than the EU and US.

If no one has any ideas for a credible, workable alternative, this seems the best way forward.

It's much more productive for me to talk to people who have real experience setting these charities up.

[Daozen]

Does anyone have experience doing this? All ideas and stories are welcome.

http://www.thenonprofittimes.com/news-articles/nonprofits-worth-887-3-billion-u-s-economy/


I run a non-profit horse rescue in the US.

It's a lot of paperwork hoops to jump through, but not impossible by any means. (did a lot of it via google searches)

Everyone with money and brains has some sort of tax shelter very much like my non-profit.. (the "clinton foundation" for example) I think that's why the tax laws in the US are so crazy, it's a known tax shelter.

Hmmm. Money and Brains? I have a little of one, and some of the other. I can fill out a form, or a dozens forms if I need to.


I run a non-profit horse rescue in the US.

It's a lot of paperwork hoops to jump through, but not impossible by any means.

This is the kind of answer I was hoping for. I'm prepared for a few months of tedious paperwork and hoop jumping. That's the way it is. The advisor I spoke to in the UK was very helpful. I will probably start with a CIO, a Charitable Incorporated Organisation.

This is what I'm wondering:

1) How many forms are there to fill in, over how long? I heard the US can take over a year, but the UK can be closer to 40 days.
2) Can you then take donations from businesses? After adjustments, for every 100USD of donations, how much does the non-profit collect?

Are there any tricky or irritiating clauses, or small print?

its not even close to that hard; getting some of the forms filled out takes time (you have to wait for a business license to be signed by everyone (processed) , you have to have a bunch of stuff notarized, you have to form a board, you have to incorporate.. ) but it's just a bunch of stuff, none is overly hard individually and it took us about 4 months because we didn't rush it (didn't have a lot of time to work on it) it's not hard at all.

I take donations from anyone that wants to donate, 100 percent of the money I take, I keep (I don't have a fiduciary or any other over arching organization that does paper work for me currently, though one is tempting as its nice to offload that work)

its going to be probably so much different for you than it was for me I'm not sure how much I can answer that will be helpful.

That's very helpful. I can probably hope that whatever you went through will be easier in the UK. Long term, I have plans to open up in the US too, but not til at least 2017. I think a lot of creative types are scared of paperwork, but as you said... it's just a "bunch of stuff", a process of filling in forms over a few months. Nothing too hard, just tedious hurdles and bureaucracy.

It's inspiring that someone actually got their act together and made a non-profit...

[TargeT]

It's inspiring that someone actually got their act together and made a non-profit...

Whats that? Shameless self plug time?

Why yes, it's a horse rescue (http://www.cruzancowgirls.com/cruzan_cowgirls_horse_rescue/) that I fund by using some of the horses (the ones that like people.. haha) to take tourists on guided tours on the beach (http://www.cruzancowgirls.com/), we then use that money to buy water/grain/hay etc.. plus we accept donations from who ever wants to help out; we also have a rotating pool of volunteers and employee two local "youths" on a part time basis. We have served on the local Animal shelter board & now head up the Virgin Islands Thoroughbred Owners and Breeders Association (VITOBA} (http://www.merchantcircle.com/vitoba-frederiksted-vi) in an effort to assist with the local race track & other local horse ownership issues.

We leverage social media HEAVILY (it's free!) and have generated most of our business this way.

More on that here:


Social Media used for the first two years:

www.cruzancowgirls.com

https://www.facebook.com/cruzancowgirlshorserescue

https://www.facebook.com/cruzan.cowgirls

http://www.tripadvisor.com/Attraction_Review-g147403-d5602746-Reviews-Cruzan_Cowgirls-Frederiksted_St_Croix_U_S_Virgin_Islands.html


Additional Social media being added by DEC 2015:

https://twitter.com/cruzancowgirls

https://twitter.com/periscopeco

https://www.youtube.com/user/CruzanCowgirls



Keeping up on the first set of social media is where my wife excels




We went from struggling to feed the few horses that were surrendered to us to expanding to a total of 24 horses under our care right now with around 60 total worked with over the past 3 years (plus hundreds of dogs and cats, we foster those too.. currently have 7 island mutts if anyones looking (https://www.facebook.com/cruzan.cowgirls) ;) )


don't be afraid to just do something

[Daozen]

Please plug away, TargeT. That looks awesome. I'm kicking myself I didn't think of this 3 years ago. Have we all been psy-oped? I'm not afraid of doing something, it's more that that the paperwork is convoluted. But I should just get on with it, instead of making excuses. The whole process can't take more than 30-40 hours of research.

Constructive ideas from anyone welcome.

[TargeT]

Please plug away, TargeT. That looks awesome. I'm kicking myself I didn't think of this 3 years ago. Have we all been psy-oped? I'm not afraid of doing something, it's more that that the paperwork is convoluted. But I should just get on with it, instead of making excuses. The whole process can't take more than 30-40 hours of research.

Constructive ideas from anyone welcome.

Most powerful one I've found:

NEVER tell someone what you are going to do before you do it, DO IT and then tell them. (You are giving away your power, you are giving up a small piece of your motivation).




WRITE **** DOWN

I have probably 7 white eraser boards on various walls of my house (4 in my bed room)... short term (week/month goals) Mid (next 6 months to a year) Long term goal (10+ years) Lots of notes, lots of projects to be crossed off the list ;)

Fixing 20 percent of a problem normally cures 80% of the issues, use your time wisely & pick your battles.

None of this is anything magical or new, lots of good advice books out there; you gotta find out what works best for you.

It takes something like 10,000 hours to become a master at something.

but doing is always better than not doing.

[shaberon]

I haven't done this yet, and it is probably not the same in other countries.

What the heavy-hitters use: a "Charitable Trust".

This is probably the guts inside a non-profit organization. Unlike *most* trusts which have strict charters and controls regulating what the funds can be dispensed for (i. e., trust fund--you turn eighteen, receive $100,000), all this needs is to have the expenditure resemble the directives. In the hands of some people, $100,000 for education could be a crate of machine guns to mow down a convent--in other hands, "education", "agriculture", etc., could be much better things.

It wouldn't be obligatory ("$100,000 to Business X for Product Y). From what I understand, it's highly discretionary. Since it's "Charitable", I believe it would follow the standard thing that contributors could deduct donations from taxes. Note that this is a financial instrument, not a business.

I believe this is what a lot of the big foundations use and hence, how they seem to outflank laws, regulations, and most standards of civilized behavior. But without this specific kind of trust, I believe an NPO could be a "Charity" with an ordinary bank account, which might suit your needs adequately. The main advantage to this thing is the lack of accountability/traceability, conjoined with the high degree of flexibility for disbursements.

[Flash]

I know some quite good programmers here. Any needs those business would have, because they will ask for specificities, open source or not, I can refer people. Your idea is very good, sometimes a company want their needs fulfilled but do not mind that the software built for them is made open source or not. And having tax deductions for things that serves them, they may jump in the bandwagon. Software programming or writing is expensive to them.





Ok. A case can be made that a better word was "often" not "only." Dig down deeper and you'll gain an understanding of what I meant by that phrase. Again, good luck.

In my opening post I wrote that money laundering was an issue with non-profits. You've assumed I've done no research. From my reading, I'm aware that many wealthy people use non-profits as a means to hide their assets, and evade paying full taxes. I'm not interested in that, I just want to take legal donations from businesses to fund open source programmers.


( I'm speaking of USA law but this is typical because the oligarchs make these laws, rules and regulations more or less uniform around the globe.)

From my experience, laws are nowhere near uniform across the globe. In Taiwan, for example, anyone can start a home restaurant or business with little or no government interference. In California, doing so will land you heavy fines. From what I've seen, Taiwan and the UK have less restrictive laws than the EU and US.

If no one has any ideas for a credible, workable alternative, this seems the best way forward.

It's much more productive for me to talk to people who have real experience setting these charities up.

[Baby Steps]

Hi,
see charity commission.

You need to be doing £10k turnover to be able to register, so initially start on a more informal basis, then once established - apply for registered status.

https://www.gov.uk/topic/running-charity/setting-up

Once registered it will be easier to attract Corporate donors, as they probably need the Registered Charity Status to justify the tax deduction.

Also, once registered there are groups who match donations, so say you got in £20k, and could document it's successful use, the other donor might put another £20k your way.

It is a good idea to have trustees with credibility, a CV and track record.
It seems in this sector, its essential to have participants with good website development abilities.

Best regards.

[norski]

Hi Daozen,

I am an attorney and accountant licensed in Wisconsin. I do tax work for multi-million dollar entities and individuals. I have set up many non-profits, help in the administration of non-profits, assist in fundraising, etc. Since I am only licensed in Wisconsin, I can only speak to setting up a non-profit in Wisconsin. My tax background covers the US and the UK. With this initial disclaimer, I am happy to help in any way I can. Here is some basic information:

As TargeT said, it is fairly simple to achieve non-profit status in the US. You begin by choosing a jurisdiction to establish your non-profit. In Wisconsin, as in most states, you file Articles of Organization with the state. This is a very simple process which can often be done on line. From there, you create Bylaws for the organization which set up the parameters for operations. These can be a little more complicated but certainly does not present an insurmountable task. You just need to know what your organization is about and how you will operate. Then, you have a meeting of your board of directors who vote in the initial board and officers and adopt the bylaws. From there, you apply for tax-exempt status with the IRS. This used to be done by filing a Form 1023, which was a very long form. Now, you can file a Form 1023 EZ which is a breeze. You can find that form here:

https://www.irs.gov/uac/about-form-1023ez

After gaining tax-exempt status, it is VERY important to file annual returns with the IRS. If you have less than $50,000 of income, you can file a postcard with the IRS which is extremely simple. You don't want to miss filing an annual return because you can be slapped with steep non-filing penalties. So, they make it easy to get your status but institute heavy penalties if you don't file your annual report. Here is the link for filing a 990-N:

https://www.irs.gov/charities-non-profits/annual-electronic-filing-requirement-for-small-exempt-organizations-form-990-n-e-postcard

Now, with regard to tax deductions:

1. Individuals are able to deduct up to %50 of their adjusted gross income (with very few exceptions). Any amounts not deducted can be carried forward in future years. The deduction is taken as an itemized deduction on Schedule A. Therefore, the benefit of the deduction is related to your tax bracket.

2. Corporations can take a charitable deduction as long as it doesn't exceed 10% of the corporation's taxable income. See https://www.irs.gov/publications/p542/ar02.html#en_US_2011_publink1000257846

3. S-corporations and partnerships pass the charitable deductions on to their shareholders who then take the deduction on their individual returns.

Charitable trusts are mostly used as estate planning devices and tools for mitigating the taxation of qualified retirement plans at death. They are also used as tools to handle highly appreciated assets. Since the grantor of a charitable trust identifies his or her charitable organizations at the outset (with some ability to substitute), I don't think you need to go down that path. (As an aside, there are charitable remainder trusts, charitable lead trusts, CRATS, CRUTS and NIMCRUTS. The permutations are almost endless.)

Some larger non-profits use charitable gift annuities that function much like charitable trusts. However, in order to offer charitable gift annuities, the charity needs to be licensed by the insurance commissioner in the state of the non-profit's residence. Again, I don't think you need to go down that path now.

A final note:

Non-profits are ubiquitous in the United States. Many people think that by getting non-profit status, the money will start rolling in. This is almost never the case. In my experience, fundraising is a process that takes a considerable amount of time and personal investment. You can try the grant writing route; however, this again is extremely time consuming for marginal results.

I think your idea is fantastic. I think you are just as likely to find investors who will support your mission regardless of non-profit status, although having a non-profit arm probably wouldn't hurt. If you put together a good business plan, you can then think about the best way to fund that plan. You might want to take a look at the ideas funded by Kickstarter and similar organizations.

If you start with a business plan, you can better assess what activities are best structured under a non-profit and what activities make more sense under a traditional business structure. The non-profit activities must serve the tax-exempt purpose of the entity. Otherwise, you run the risk of having unrelated business taxable income. For this kind of income, you would want to use a regular business entity.

Hope this helps!

[Daozen]

Thanks to everyone for the posts. I'll respond when I get time.


Hi Daozen,

I am an attorney and accountant licensed in Wisconsin. I do tax work for multi-million dollar entities and individuals. I have set up many non-profits, help in the administration of non-profits, assist in fundraising, etc. Since I am only licensed in Wisconsin, I can only speak to setting up a non-profit in Wisconsin. My tax background covers the US and the UK. With this initial disclaimer, I am happy to help in any way I can. Here is some basic information:

As TargeT said, it is fairly simple to achieve non-profit status in the US. You begin by choosing a jurisdiction to establish your non-profit. In Wisconsin, as in most states, you file Articles of Organization with the state. This is a very simple process which can often be done on line. From there, you create Bylaws for the organization which set up the parameters for operations. These can be a little more complicated but certainly does not present an insurmountable task. You just need to know what your organization is about and how you will operate. Then, you have a meeting of your board of directors who vote in the initial board and officers and adopt the bylaws. From there, you apply for tax-exempt status with the IRS. This used to be done by filing a Form 1023, which was a very long form. Now, you can file a Form 1023 EZ which is a breeze. You can find that form here:

https://www.irs.gov/uac/about-form-1023ez

After gaining tax-exempt status, it is VERY important to file annual returns with the IRS. If you have less than $50,000 of income, you can file a postcard with the IRS which is extremely simple. You don't want to miss filing an annual return because you can be slapped with steep non-filing penalties. So, they make it easy to get your status but institute heavy penalties if you don't file your annual report. Here is the link for filing a 990-N:

https://www.irs.gov/charities-non-profits/annual-electronic-filing-requirement-for-small-exempt-organizations-form-990-n-e-postcard

Now, with regard to tax deductions:

1. Individuals are able to deduct up to %50 of their adjusted gross income (with very few exceptions). Any amounts not deducted can be carried forward in future years. The deduction is taken as an itemized deduction on Schedule A. Therefore, the benefit of the deduction is related to your tax bracket.

2. Corporations can take a charitable deduction as long as it doesn't exceed 10% of the corporation's taxable income. See https://www.irs.gov/publications/p542/ar02.html#en_US_2011_publink1000257846

3. S-corporations and partnerships pass the charitable deductions on to their shareholders who then take the deduction on their individual returns.

Charitable trusts are mostly used as estate planning devices and tools for mitigating the taxation of qualified retirement plans at death. They are also used as tools to handle highly appreciated assets. Since the grantor of a charitable trust identifies his or her charitable organizations at the outset (with some ability to substitute), I don't think you need to go down that path. (As an aside, there are charitable remainder trusts, charitable lead trusts, CRATS, CRUTS and NIMCRUTS. The permutations are almost endless.)

Some larger non-profits use charitable gift annuities that function much like charitable trusts. However, in order to offer charitable gift annuities, the charity needs to be licensed by the insurance commissioner in the state of the non-profit's residence. Again, I don't think you need to go down that path now.

A final note:

Non-profits are ubiquitous in the United States. Many people think that by getting non-profit status, the money will start rolling in. This is almost never the case. In my experience, fundraising is a process that takes a considerable amount of time and personal investment. You can try the grant writing route; however, this again is extremely time consuming for marginal results.

I think your idea is fantastic. I think you are just as likely to find investors who will support your mission regardless of non-profit status, although having a non-profit arm probably wouldn't hurt. If you put together a good business plan, you can then think about the best way to fund that plan. You might want to take a look at the ideas funded by Kickstarter and similar organizations.

If you start with a business plan, you can better assess what activities are best structured under a non-profit and what activities make more sense under a traditional business structure. The non-profit activities must serve the tax-exempt purpose of the entity. Otherwise, you run the risk of having unrelated business taxable income. For this kind of income, you would want to use a regular business entity.

Hope this helps!

That was very useful Norski, Im sure it would've set someone on the right path. When I open in the US in 1-2 years, i'll bear that all in mind.

I know it'll take hard work to get funds. I wanted to remind people that doing 4 months of paperwork can open them up to a potentially good revenue stream, and an interesting career. I may start off on Kickstarter, like you said.

I think I'll be OK with making all activities above board and honest. I'm writing a 'constitution'/business plan/parameter document right now. It'll take about a month to finish.


1. Individuals are able to deduct up to %50 of their adjusted gross income (with very few exceptions). Any amounts not deducted can be carried forward in future years. The deduction is taken as an itemized deduction on Schedule A. Therefore, the benefit of the deduction is related to your tax bracket.

So if a programmer earned 50, or 100 grand a year, how much money could he write off to charity?

In the UK, I will need to start with a CIO, but I know there will be Americans interested in what you wrote. It's good that US residents can file a postcard tax return for incomes of less than 50,000USD.

You've given me a lot to think about, I'll use this post as a guide for the future. Thanks.

[Daozen]

Hi,
see charity commission.

You need to be doing £10k turnover to be able to register, so initially start on a more informal basis, then once established - apply for registered status.

https://www.gov.uk/topic/running-charity/setting-up

Once registered it will be easier to attract Corporate donors, as they probably need the Registered Charity Status to justify the tax deduction.

Also, once registered there are groups who match donations, so say you got in £20k, and could document it's successful use, the other donor might put another £20k your way.

It is a good idea to have trustees with credibility, a CV and track record.
It seems in this sector, its essential to have participants with good website development abilities.

Best regards.

Hi Babysteps,

From what I read, a CIO is the best 'out of the box' solution for a UK resident right now. If revenue increases, it's possible to upgrade to full charity status. There are websites that help you do that. There are types of non-profits for less than 5,000GBP income per year, others for 5,000-25,000 pounds and more. So you start small and change to another type of charity if your income increases. It just takes a bit of study to undertand the tricky legal steps.

https://en.wikipedia.org/wiki/Charitable_incorporated_organisation
https://www.gov.uk/guidance/charity-types-how-to-choose-a-structure
https://www.gov.uk/guidance/change-your-charity-structure

Donation matching would be good for the future. I'm living in Taiwan right now, so money goes a long way. I've found some experienced Indian programmers for 15-35 USD per hour who can help me prototype. I honestly don't need much to get this thing rolling, and any surplus will go straight to making more fintech and donation apps. I'll be as transparent and frugal as I can. :cake:

[Daozen]

I know some quite good programmers here. Any needs those business would have, because they will ask for specificities, open source or not, I can refer people. Your idea is very good, sometimes a company want their needs fulfilled but do not mind that the software built for them is made open source or not. And having tax deductions for things that serves them, they may jump in the bandwagon. Software programming or writing is expensive to them.


Hi Flash,

Right now I'm creating a document full of designs and prototypes. I'm working on gamified crowdfunding, among other things.... When the prototype User Interfaces and part of the code is ready, I'll release them here. Right now I am writing the pseudocode for a Tron Clone based in a sphere instead of a 3D plane. I have a mock UI made in HTML5 and JS.

I will just link to the Github Repo from here, so people can work directly without going through me on PMs. It's a lot faster and simpler than arranging things on emails. I'm mainly interested in Javascript, Elixir/Phoenix and React/React Native, but Python and C++ are also good for games. http skills are useful, as these are live multiplayer games. I'll also find people on Reddit. If I don't find anyone here, I can hire Asian programmers easily.

Once the API is built, any game can sit on top of it. I'll also prove the concept of gamified crowdfunding with multiplayer chess. I'll use chess variants like Fishers Rules and Maharajah and the Sepoys.

I have a lot more interesting things coming, but thanks for the ideas. I hope to share something soon.

Best Wishes.

[amor]

After all these posts from very informed people, I am embarrassed to ask: Would someone tell me what the GBP represents? There should be a rule that where ever letters are used in an article, what they represent should be stated at least in the beginning of the article and on every new page. It is becoming extremely difficult to understand what is being said when these myriad abbreviations are quoted endlessly and there is no relief in sight.

[TargeT]

what the GBP represents?

From the context (USD/GBP) I'd assume that it's the currency in England the British Pound (http://www.xe.com/currency/gbp-british-pound).. I use context to figure out a lot of things, and internet searches, maybe internet searches more.

[norski]

Hi Daozen,

I have no doubt you can do anything you set your mind to.

In the US, the charitable deduction offsets taxable income. Page one of the individual income tax return gives you the AGI (adjusted gross income) upon which the 50% maximum deduction is calculated. Page two is where the AGI is reduced by the personal exemption and standard or itemized deduction which leads you to your taxable income upon which your first level of tax is based (before the AMT (alternative minimum tax) and NIIT (net investment income tax)).

The simplest way to envision the benefit of say a $5,000 charitable deduction against AGI of $50,000 or $100,000, is to find out the person's tax rate. If the person has a tax rate of 15%, the tax savings for $50,000 of AGI would be $750. If the person has a tax rate of 25%, the tax savings for $100,000 of income would be $1,250. So, you can see that it's not a huge break for a $5,000 gift. The benefits get larger when people are in the higher income brackets.

The US tax system is a bit more convoluted than the UK's VAT (value-added tax).

GBP = British Pound.

[Daozen]

Hi Daozen,

I have no doubt you can do anything you set your mind to.

In the US, the charitable deduction offsets taxable income. Page one of the individual income tax return gives you the AGI (adjusted gross income) upon which the 50% maximum deduction is calculated. Page two is where the AGI is reduced by the personal exemption and standard or itemized deduction which leads you to your taxable income upon which your first level of tax is based (before the AMT (alternative minimum tax) and NIIT (net investment income tax)).

The simplest way to envision the benefit of say a $5,000 charitable deduction against AGI of $50,000 or $100,000, is to find out the person's tax rate. If the person has a tax rate of 15%, the tax savings for $50,000 of AGI would be $750. If the person has a tax rate of 25%, the tax savings for $100,000 of income would be $1,250. So, you can see that it's not a huge break for a $5,000 gift. The benefits get larger when people are in the higher income brackets.

The US tax system is a bit more convoluted than the UK's VAT (value-added tax).

GBP = British Pound.

Thanks Norski, that makes sense. I'll look into it further, to see more example use cases. Research into the CIO continues. Right now, my focus is on legal issues surrounding crowd-funding. Where is the line between a charity and a crowdfunding site? It seems obvious, but there are some interesting edge cases.

I'm also researching how to set up a charity in Taiwan, which is where I live currently. I'll post more when I get time... If I knuckle down and get through the legal hurdles, a whole world awaits.

[Daozen]

As I said in the WebRTC thread, I'm making some prototypes, so I have something to show when I apply for charity status. Thanks for the ideas and support, everyone.