4 ms·

I have a question on non-profits in general. What exactly is the advantage of being incorporated as a non-profit, when all you have to do to not be taxed as a f

by vFunct 1y ago

I have a question on non-profits in general. What exactly is the advantage of being incorporated as a non-profit, when all you have to do to not be taxed as a for-profit corporation is spend all your money each year and not show any profit? It seems you'd have more privacy as a for-profit corporation, since you don't have to disclose donors.

hollerith 1y ago
If I donate to a 501(c)(3) organization, the donation gets very favorable treatment by the tax code, reducing my taxes (provided I have income that can be cancelled out by the donation).
- 0x457 1y ago
  hmm, please correct me if I'm wrong, but donations just decrease your tax liability by the amount you've donated. It's the same as if you donated your pre-tax dollars to 501(c)(3) org.
  - deleted 1y ago
    [deleted]
  - toast0 1y ago
    The second sentence is mostly accurate, but the first implies something else. If your taxable income was $50,000 and you donate $10,000, and (some other conditions) your taxable income would now be $40,000; same as if you managed to move the money pre-tax. However. If you donate aprechiated capital assets, you get two benefits. Your taxable income is offset by the value of the asset, and the capital gains disappear. It's much better than selling the asset and donating the proceeds; and it's handy if you don't have good records for your cost basis.
    - 0x457 1y ago
      Sure, but my point is - I'm parting ways with my money (be it cash or an asset with monetary value) either way without anything in return. It's just from tax perspective it essentially looks like I never had those money. I see your point about cost basis tho, I didn't think of this and definetly will use this from now on. Thank you.
  - bluGill 1y ago
    Right but you get to choose where your money goes.
droopyEyelids 1y ago
Eligibility to receive grants & tax deductible donations, public perception & credibility
dragonwriter 1y ago
Charity non-profits -- 501c3 organizations -- have donations that are tax deductible for their donors. Other kinds of nonprofits have other advantages to their stakeholders, but usually the attention around "nonprofits" is specifically about 501c3 orgs.
snowwrestler 1y ago
Nonprofits have privacy too: https://en.m.wikipedia.org/wiki/NAACP_v._Alabama https://en.m.wikipedia.org/wiki/NAACP_v._Alabama That said, there are a lot of operational advantages to being a for-profit corporation. Chan-Zuckerberg is organized this way. Other nonprofits try to have it both ways where the for-profit entity operates the business while being owned by a nonprofit. It has not worked out great for OpenAI. Patagonia converted to this model recently.

by vFunct 1y ago

hollerith 1y ago

If I donate to a 501(c)(3) organization, the donation gets very favorable treatment by the tax code, reducing my taxes (provided I have income that can be cancelled out by the donation).

0x457 1y ago
hmm, please correct me if I'm wrong, but donations just decrease your tax liability by the amount you've donated. It's the same as if you donated your pre-tax dollars to 501(c)(3) org.
- deleted 1y ago
  [deleted]
- toast0 1y ago
  The second sentence is mostly accurate, but the first implies something else. If your taxable income was $50,000 and you donate $10,000, and (some other conditions) your taxable income would now be $40,000; same as if you managed to move the money pre-tax. However. If you donate aprechiated capital assets, you get two benefits. Your taxable income is offset by the value of the asset, and the capital gains disappear. It's much better than selling the asset and donating the proceeds; and it's handy if you don't have good records for your cost basis.
  - 0x457 1y ago
    Sure, but my point is - I'm parting ways with my money (be it cash or an asset with monetary value) either way without anything in return. It's just from tax perspective it essentially looks like I never had those money. I see your point about cost basis tho, I didn't think of this and definetly will use this from now on. Thank you.
- bluGill 1y ago
  Right but you get to choose where your money goes.

droopyEyelids 1y ago

Eligibility to receive grants & tax deductible donations, public perception & credibility

dragonwriter 1y ago

Charity non-profits -- 501c3 organizations -- have donations that are tax deductible for their donors. Other kinds of nonprofits have other advantages to their stakeholders, but usually the attention around "nonprofits" is specifically about 501c3 orgs.

snowwrestler 1y ago

Nonprofits have privacy too: https://en.m.wikipedia.org/wiki/NAACP_v._Alabama https://en.m.wikipedia.org/wiki/NAACP_v._Alabama That said, there are a lot of operational advantages to being a for-profit corporation. Chan-Zuckerberg is organized this way. Other nonprofits try to have it both ways where the for-profit entity operates the business while being owned by a nonprofit. It has not worked out great for OpenAI. Patagonia converted to this model recently.