Starting a charitable organization can be a great way to give back and to make a positive impact in your local community or society as a whole.
It can also have significant benefits from a tax perspective, allowing your money to go further toward reaching your charitable goals.
However, starting a charity requires that you understand the difference between the different types of charitable organizations.
Doing so will help you to select the best option for your needs.
If you are considering creating a charitable organization – for tax planning or any other purpose – Bashian P.C. can help.
Private Independent Foundations
Private foundations can be formed as a corporation or trust by a business, an individual, or a family. These foundations tend to be financially supported by the party that incorporated it, and they usually redirect the funds held within the foundation to other charitable organizations.
Publicly Supported Charities
The most common types of charity are ones that are supported by funds from the public. Schools, churches, and organizations within the community can fit into this category. In order to qualify, the organization must generate at least one-third of support from public donations.
Charities supported by gifts, dues, and fees
These charities often provide services for a fee that helps to fund their activities. Business income investments should not exceed one-third of their total support, and at least one-third of support should come from gifts, dues, and fees to qualify.
Creating a charitable organization could help you to do good in the world and similarly help you to be more efficient with your taxable income. You should take the time to understand charities and non-profits in more detail before taking action to incorporate one.