3 ms·

> An underlying bank account with 501(c)(3) status, so donations to events are tax deductible I'm not sure why the bank's tax status is relevant, since the ban

by allenz 8y ago

> An underlying bank account with 501(c)(3) status, so donations to events are tax deductible I'm not sure why the bank's tax status is relevant, since the bank doesn't own the funds. Also, most credit unions are nonprofit.

zachlatta 8y ago
Important thing here is that events working with us can offer tax deductions to donors through our 501(c)(3) tax status. Most sponsors for high school events want to see some sort of non-profit status when giving and it takes over a year and thousands of dollars to create a new entity in the US. With Hack Club Bank, they can get set up under our parent entity in under a week.
- allenz 8y ago
  I see, donations are technically made to Hack Club. That's a cool hack, though I believe that you need some level of oversight over spending.
  - zachlatta 8y ago
    Yeah, absolutely. This is really where the automation comes in - there's no way we could run this if we had to manually approve every transaction. All the debit cards are pre-paid from event account balances and have a system in place to collect receipts and restrict categories that can be spent in, if needed. We're planning on doing a gradual roll out where we can be extraordinary careful to make sure we catch all the kinks early on.
- ganoushoreilly 8y ago
  "takes over a year and thousands of dollars to create a new entity in the US" This is a very misleading statement. 4 years ago I setup a 501(c)3 non profit and was able to get state and federal recognition, as well as all licensing necessary handled in a 4 month period from start to finish for under $400. What it does take is persistence and patience.
  - zachlatta 8y ago
    Sorry, should definitely clarify better - it comes down to whether you're filing a 1023 or a 1023EZ. Many events need to file 1023 due to expected annual budget being over $50K. I'm happy you were able to get your status so quickly. It took us about a year. The filing fee for the 1023 alone is $600. The IRS has an overview of the expected timelines at https://www.irs.gov/charities-non-profits/charitable-organizations/wheres-my-application https://www.irs.gov/charities-non-profits/charitable-organiz..., though they often get backlogged by months. The filing instructions for the 1023 are also a fun read: https://www.irs.gov/pub/irs-pdf/i1023.pdf https://www.irs.gov/pub/irs-pdf/i1023.pdf
    - ganoushoreilly 8y ago
      If you are running events in the 50k range you have capital to manage the process. I still fail to see the argument you are making, few groups as you mention here are running 50k events.
      - villnn 8y ago
        The funds are best disbursed through a non-profit because most high school students do not know about legal and accounting procedures. Say an after-school club raises 20k intended for the annual budget. Sponsors which might be individuals but more than likely are companies will not write a check to any student but rather write a check to the school. Schools alone have many bureaucratic hurdles that make managing club funds inefficient. Therefore, although Clubs might have in paper 20k or say even 50k that money is being held by the school or another organization whose priority is not acting as the middleman, therefore, causing delays and all sorts of problems. Tackling a very cumbersome challenge, congrats Hack Club!

by allenz 8y ago

zachlatta 8y ago

Important thing here is that events working with us can offer tax deductions to donors through our 501(c)(3) tax status. Most sponsors for high school events want to see some sort of non-profit status when giving and it takes over a year and thousands of dollars to create a new entity in the US. With Hack Club Bank, they can get set up under our parent entity in under a week.

allenz 8y ago
I see, donations are technically made to Hack Club. That's a cool hack, though I believe that you need some level of oversight over spending.
- zachlatta 8y ago
  Yeah, absolutely. This is really where the automation comes in - there's no way we could run this if we had to manually approve every transaction. All the debit cards are pre-paid from event account balances and have a system in place to collect receipts and restrict categories that can be spent in, if needed. We're planning on doing a gradual roll out where we can be extraordinary careful to make sure we catch all the kinks early on.
ganoushoreilly 8y ago
"takes over a year and thousands of dollars to create a new entity in the US" This is a very misleading statement. 4 years ago I setup a 501(c)3 non profit and was able to get state and federal recognition, as well as all licensing necessary handled in a 4 month period from start to finish for under $400. What it does take is persistence and patience.
- zachlatta 8y ago
  Sorry, should definitely clarify better - it comes down to whether you're filing a 1023 or a 1023EZ. Many events need to file 1023 due to expected annual budget being over $50K. I'm happy you were able to get your status so quickly. It took us about a year. The filing fee for the 1023 alone is $600. The IRS has an overview of the expected timelines at https://www.irs.gov/charities-non-profits/charitable-organizations/wheres-my-application https://www.irs.gov/charities-non-profits/charitable-organiz..., though they often get backlogged by months. The filing instructions for the 1023 are also a fun read: https://www.irs.gov/pub/irs-pdf/i1023.pdf https://www.irs.gov/pub/irs-pdf/i1023.pdf
  - ganoushoreilly 8y ago
    If you are running events in the 50k range you have capital to manage the process. I still fail to see the argument you are making, few groups as you mention here are running 50k events.
    - villnn 8y ago
      The funds are best disbursed through a non-profit because most high school students do not know about legal and accounting procedures. Say an after-school club raises 20k intended for the annual budget. Sponsors which might be individuals but more than likely are companies will not write a check to any student but rather write a check to the school. Schools alone have many bureaucratic hurdles that make managing club funds inefficient. Therefore, although Clubs might have in paper 20k or say even 50k that money is being held by the school or another organization whose priority is not acting as the middleman, therefore, causing delays and all sorts of problems. Tackling a very cumbersome challenge, congrats Hack Club!