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Why is this an LLC and not a 501c? Can someone comment on if this is truly charitable in nature? Or something else? edit: thanks for the alert on mixing up m

Why is this an LLC and not a 501c? Can someone comment on if this is truly charitable in nature? Or something else? edit: thanks for the alert on mixing up my acronyms

wtvanhest 7y ago
I'm not an expert in this, but maybe the LLC is easier to setup and since it doesn't have fundraising, the money isn't taxable so it doesn't need to be a 403b. In other words, its more like a trust than a non-profit. To expand, non-profits are created to raise money for a cause, not just give it away.
KerryJones 7y ago
403b is a tax shelter, similar to a 401K... LLC is a corporate structure, more in line with C-corp. Maybe you meant 501c? There are a lot of articles out there arguing that non-profits are pretty heavily restricted and to make strong change you need a for-profit company, probably related to the rise of "Impact Investing"
jdmichal 7y ago
I believe the only difference would be whether income is taxable or not. If there is no intended income for this fund -- that is, it's completely prefunded by the founder -- then there's no advantage to jump through the hoops that are necessary to get 403b status. That status is not freely handed out to everyone who walks up and claims their a non-profit. There's quite a bit of work that goes into it.
gamblor956 7y ago
An LLC can be a non-profit now, so long as it elects to be taxed as a corporation for federal income tax purposes. Based on the very brief description provided, it appears to have a charitable intent but it's not clear if it will be a true standalone charity or a private foundation.
sjburt 7y ago
Assuming you mean 501c and not 403b (a type of retirement plan), it's because you need to have the IRS approve your 501c status before you can advertise as one. They also have a large number of restrictions.
KerryJones 7y ago
Also, he commented: > Why is #startsmall a LLC? This segments and dedicates my shares to these causes, and provides flexibility. Grants will be made from Start Small Foundation or the LLC directly based on the beneficiary org. All transfers, sales, and grants will be made public in tracking sheet.

Why is this an LLC and not a 501c? Can someone comment on if this is truly charitable in nature? Or something else? edit: thanks for the alert on mixing up my acronyms

wtvanhest 7y ago

I'm not an expert in this, but maybe the LLC is easier to setup and since it doesn't have fundraising, the money isn't taxable so it doesn't need to be a 403b. In other words, its more like a trust than a non-profit. To expand, non-profits are created to raise money for a cause, not just give it away.

KerryJones 7y ago

403b is a tax shelter, similar to a 401K... LLC is a corporate structure, more in line with C-corp. Maybe you meant 501c? There are a lot of articles out there arguing that non-profits are pretty heavily restricted and to make strong change you need a for-profit company, probably related to the rise of "Impact Investing"

jdmichal 7y ago

I believe the only difference would be whether income is taxable or not. If there is no intended income for this fund -- that is, it's completely prefunded by the founder -- then there's no advantage to jump through the hoops that are necessary to get 403b status. That status is not freely handed out to everyone who walks up and claims their a non-profit. There's quite a bit of work that goes into it.

gamblor956 7y ago

An LLC can be a non-profit now, so long as it elects to be taxed as a corporation for federal income tax purposes. Based on the very brief description provided, it appears to have a charitable intent but it's not clear if it will be a true standalone charity or a private foundation.

sjburt 7y ago

Assuming you mean 501c and not 403b (a type of retirement plan), it's because you need to have the IRS approve your 501c status before you can advertise as one. They also have a large number of restrictions.

KerryJones 7y ago

Also, he commented: > Why is #startsmall a LLC? This segments and dedicates my shares to these causes, and provides flexibility. Grants will be made from Start Small Foundation or the LLC directly based on the beneficiary org. All transfers, sales, and grants will be made public in tracking sheet.