4 ms·

It may happen, but it’s not legal, it’s called inurement and the IRS can hammer you or strip the organization of its tax exempt status if it finds out. This app

by jcheng 4y ago

It may happen, but it’s not legal, it’s called inurement and the IRS can hammer you or strip the organization of its tax exempt status if it finds out. This applies not only to ridiculous salaries but also use of the charity’s assets for private benefit. https://www.501c3.org/dangers-of-nonprofit-inurement-and-private-benefit/ https://www.501c3.org/dangers-of-nonprofit-inurement-and-pri... For instance: https://apnews.com/article/campaigns-donald-trump-us-news-ap-top-news-lawsuits-7b8d0f5ce9cb4cadad948c2c414afd57 https://apnews.com/article/campaigns-donald-trump-us-news-ap...

bane 4y ago
What makes a charity "fake"? If I start a charity, make myself chairperson and CEO or President or whatever, I "deserve" a reasonable salary. If my fundraising events bring in my salary + event expenses + what I can use for charitable activities, what does it matter if what actually goes out the door is 5% of all donations? I have to pay staff salaries and I have to pay event hosting fees. In other words, for most of these things the difference between an A-grade charity like the American Red Cross (which puts out something like 90% of its charitable donations to actual charitable activities and the CEO makes over $700k/yr) and a charity with a CEO who makes $200k, but that's 50% of their overall donation income, but still moves their money forward towards their stated goal, the legal difference is imperceptible. The second charity may just be small, or not good at raising funds, or has limited reach, or has a charitable focus nobody cares about, or could just be a way for some socialite to make an extra $200k a year while hosting fundraising "parties" every quarter...it's just not possible to really tell. Even in this example, the charity looks more legitimate than what the original posting is about, and there are tens of thousands of these.
- jcheng 4y ago
  Doesn't the CEO (i.e. yourself) pay income tax on the $200K? What was the point of this again?
  - bane 4y ago
    So? It's free money.

by jcheng 4y ago

bane 4y ago

What makes a charity "fake"? If I start a charity, make myself chairperson and CEO or President or whatever, I "deserve" a reasonable salary. If my fundraising events bring in my salary + event expenses + what I can use for charitable activities, what does it matter if what actually goes out the door is 5% of all donations? I have to pay staff salaries and I have to pay event hosting fees. In other words, for most of these things the difference between an A-grade charity like the American Red Cross (which puts out something like 90% of its charitable donations to actual charitable activities and the CEO makes over $700k/yr) and a charity with a CEO who makes $200k, but that's 50% of their overall donation income, but still moves their money forward towards their stated goal, the legal difference is imperceptible. The second charity may just be small, or not good at raising funds, or has limited reach, or has a charitable focus nobody cares about, or could just be a way for some socialite to make an extra $200k a year while hosting fundraising "parties" every quarter...it's just not possible to really tell. Even in this example, the charity looks more legitimate than what the original posting is about, and there are tens of thousands of these.

jcheng 4y ago
Doesn't the CEO (i.e. yourself) pay income tax on the $200K? What was the point of this again?
- bane 4y ago
  So? It's free money.