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> and these "charities" can pay out to their owners from tax-exempt gains on the back-end. I pretty certain that legally these charities can only give to cause

by SamBam 4y ago

> and these "charities" can pay out to their owners from tax-exempt gains on the back-end. I pretty certain that legally these charities can only give to causes that furthers their exempt purpose. [1] E.g. a charity claiming to be devoted to saving children's lives in Africa can only spend money on exactly that, governance costs and fundraising. The charity may be paying the owners as employees, and/or the owners may twist the spending to pretend it is in line with the purpose, but I don't think they can literally give the owners the tax-exempt gains. 1. https://www.irs.gov/charities-non-profits/charitable-organizations/exempt-purposes-internal-revenue-code-section-501c3 https://www.irs.gov/charities-non-profits/charitable-organiz...

notjulianjaynes 4y ago
What's your take on these newer "economic development" 501c3's? Example: https://archgrants.org/ https://archgrants.org/ I've talked with the founder of Arch Grants, and I don't doubt their intentions are pure (there's others I'm more skeptical of), but either way it's difficult for me to wrap my head around the concept of a non profit that is by most metrics operating as a startup accelerator giving seed funding to for-profit businesses. *Edit:grammur
- jcheng 4y ago
  Not taking any equity is a pretty important distinction.
  - s1artibartfast 4y ago
    Even if they did take equity, I'm not sure that would be a problem. Charities and non-profits can make investments. For example, foundations have huge market investments. The distinction is that the owners can never cash out and put the money in their pocket. At most, they can take a salary with justification.
    - SQueeeeeL 4y ago
      If you can't cash out of equity it makes a deeply insecure situation for everyone involved. It basically becomes a weird way to perform stock buy backs and would almost certainly be immediately exploited
      - s1artibartfast 4y ago
        I dont think I understand what you are saying. Companies can already do stock buybacks with pretax money, and non-profits can already invest and hold equity. I don't understand why a company would want to use a non-profit to buy back stock. The point of a buyback is to destroy the stock, driving up the price. If a non-profit holds the stock, then it doesnt work.
    - SamBam 4y ago
      The company can invest. The charity owner itself certainly can't take equity using the charity's money.
giantrobot 4y ago
But there's few restrictions on fundraising and administrations. So if the billionaire wants to throw a party, the charity throws the party. There's all sorts of shady bullshit billionaires do with their charities. So long as they turn in receipts and don't funnel the money directly into their pockets it's typically completely legal.
- RhysU 4y ago
  Plenty of normal folks go to parties to which they contributed via a 501c3. Go to the orchestra or the ballet to see it in action. This isn't billionaire-only stuff.

by SamBam 4y ago

notjulianjaynes 4y ago

What's your take on these newer "economic development" 501c3's? Example: https://archgrants.org/ https://archgrants.org/ I've talked with the founder of Arch Grants, and I don't doubt their intentions are pure (there's others I'm more skeptical of), but either way it's difficult for me to wrap my head around the concept of a non profit that is by most metrics operating as a startup accelerator giving seed funding to for-profit businesses. *Edit:grammur

jcheng 4y ago
Not taking any equity is a pretty important distinction.
- s1artibartfast 4y ago
  Even if they did take equity, I'm not sure that would be a problem. Charities and non-profits can make investments. For example, foundations have huge market investments. The distinction is that the owners can never cash out and put the money in their pocket. At most, they can take a salary with justification.
  - SQueeeeeL 4y ago
    If you can't cash out of equity it makes a deeply insecure situation for everyone involved. It basically becomes a weird way to perform stock buy backs and would almost certainly be immediately exploited
    - s1artibartfast 4y ago
      I dont think I understand what you are saying. Companies can already do stock buybacks with pretax money, and non-profits can already invest and hold equity. I don't understand why a company would want to use a non-profit to buy back stock. The point of a buyback is to destroy the stock, driving up the price. If a non-profit holds the stock, then it doesnt work.
  - SamBam 4y ago
    The company can invest. The charity owner itself certainly can't take equity using the charity's money.

giantrobot 4y ago

But there's few restrictions on fundraising and administrations. So if the billionaire wants to throw a party, the charity throws the party. There's all sorts of shady bullshit billionaires do with their charities. So long as they turn in receipts and don't funnel the money directly into their pockets it's typically completely legal.

RhysU 4y ago
Plenty of normal folks go to parties to which they contributed via a 501c3. Go to the orchestra or the ballet to see it in action. This isn't billionaire-only stuff.