Options

Azimuth Project as nonprofit organization

edited January 29 in - Strategy

I need to create a nonprofit organization so that the donations to our Kickstarter project don't get eaten up by income tax.

I've received an offer of help from Logan Greenlee, who wrote the following.


We should consider setting up an nonprofit corporation. How about: "Climate Data Preservation Society"?

https://www.irs.gov/charities-non-profits/charitable-organizations/exempt-purposes-internal-revenue-code-section-501c3

Sounds like us right? This will provide us with a credible image and there are some other benefits. The most basic reason, would be taxes. The money that is received from Kickstarter is income. When the campaign ends and the money is paid out - it will go to someone or an entity. At the end of the tax year, taxes will be paid on it if it is a for profit institution or personally. https://www.kickstarter.com/help/taxes Under current rules this could be as high as 39.6% federally and whatever the state income tax rate is of the individual or entity. Nearly half of our operating capital would be wiped out at years' end. It would be more advantageous for us to have the money paid to a nonprofit where we won't pay tax - preserving the operating capital. Additionally, "contributions" made to the nonprofit are tax deductible. We can pass this on to the Kickstarter individuals. For full disclosure this is advantageous to me as my hardware contribution will be tax deductible. From a control perspective we would become "stakeholders" in the nonprofit and elect ourselves to the Board.

Organizing as a nonprofit has another benefit - it provides some legal protection to us individually and it also allows us to get liability insurance. Liability insurance can provide real financial protection for these activities. Generally, these are the items that we are not individually protected from acting under a nonprofit, but some of these may be protected (up to a limit) by liability insurance.

  • personally and directly injures someone

  • personally guarantees a bank loan or a business debt on which the corporation defaults

  • fails to ensure that the nonprofit deposits taxes (such as payroll and property taxes) or files necessary tax returns

  • does something intentionally fraudulent, illegal, or clearly wrong-headed that causes harm, or

  • co-mingles nonprofit and personal funds.

http://www.nolo.com/legal-encyclopedia/nonprofit-directors-personal-liability-32357.html

I can provide the necessary financial support for incorporating, obtaining tax exempt status and I can pay for accounting and tax services until such time the organization is no longer needed. I'm also familiar with establishing businesses, bank accounts and the other items that are required for the operation of an organization.

Comments

  • 1.

    Here's part of my first reply:


    Basically I want there to be a nonprofit called Azimuth Climate Data Backup Project, with me as treasurer so I can trust the person who is dealing with the money - but with public, transparent finances so everyone else can trust me too, including the IRS.

    Our finances are already visible here:

    https://bitbucket.org/azimuth-backup/azimuth-inventory/wiki/Budget and spending

    So far we only have expenses, coming mainly out of my pocket. We won't actually receive our Kickstarter donations until around January 31st or maybe a day afterwards. Unfortunately these will go into my personal bank account - there's no way to change that now. However, the total amount of donations is publicly visible (though the fee charged by Kickstarter is somewhat less so.) So, I'm hoping if I transfer all that money to the nonprofit we'll be okay.

    Comment Source:Here's part of my first reply: <hr/> Basically I want there to be a nonprofit called Azimuth Climate Data Backup Project, with me as treasurer so I can trust the person who is dealing with the money - but with public, transparent finances so everyone else can trust me too, including the IRS. Our finances are already visible here: https://bitbucket.org/azimuth-backup/azimuth-inventory/wiki/Budget%20and%20spending So far we only have expenses, coming mainly out of my pocket. We won't actually receive our Kickstarter donations until around January 31st or maybe a day afterwards. Unfortunately these will go into my personal bank account - there's no way to change that now. However, the total amount of donations is publicly visible (though the fee charged by Kickstarter is somewhat less so.) So, I'm hoping if I transfer all that money to the nonprofit we'll be okay.
  • 2.

    Later I added this:


    I've been wondering if maybe we should call this nonprofit simply The Azimuth Project, so I can use it for other environmentalist activities after this project is done, or settles down.

    I wouldn't transfer money from the backup project to other projects - indeed I have no other projects in mind at this time! But it would be useful, if we ever want to expand the scope of the Azimuth Project's activities, to have a nonprofit already created.

    Comment Source:Later I added this: <hr/> I've been wondering if maybe we should call this nonprofit simply The Azimuth Project, so I can use it for other environmentalist activities after this project is done, or settles down. I wouldn't transfer money from the backup project to other projects - indeed I have no other projects in mind at this time! But it would be useful, if we ever want to expand the scope of the Azimuth Project's activities, to have a nonprofit already created.
  • 3.
    edited January 30

    I agree that The Azimuth Project would be better as an all purpose name.

    I would avoid creating any more structure than is necessary. As the Kickstarter explains, you can deduct your expenses, and the only tricky part is how to do that if it extends beyond one year. But I think your donors supported a short term fix to a pressing problem. So it would be perfectly fine to dedicate all of your money during this year.

    Personally, I think it would be nice if you focused on your talents as a math visionary and educator rather than do too much organizing drudge work. I came here hoping to engage you on the big picture subjects in math. Regardless, you have certainly spent enough time on the Azimuth Project to know whether you want to commit to it even deeper. Still, for me it would be nice to see more activity and interaction and less structure.

    Comment Source:I agree that The Azimuth Project would be better as an all purpose name. I would avoid creating any more structure than is necessary. As the Kickstarter explains, you can deduct your expenses, and the only tricky part is how to do that if it extends beyond one year. But I think your donors supported a short term fix to a pressing problem. So it would be perfectly fine to dedicate all of your money during this year. Personally, I think it would be nice if you focused on your talents as a math visionary and educator rather than do too much organizing drudge work. I came here hoping to engage you on the big picture subjects in math. Regardless, you have certainly spent enough time on the Azimuth Project to know whether you want to commit to it even deeper. Still, for me it would be nice to see more activity and interaction and less structure.
  • 4.

    +1 for The Azimuth Project.

    Comment Source:+1 for The Azimuth Project.
  • 5.
    edited February 6

    Andrius wrote:

    Personally, I think it would be nice if you focused on your talents as a math visionary and educator rather than do too much organizing drudge work.

    That's actually what I'd enjoy most. Unfortunately Trump is preventing it. I can no longer expect other people to do things like save precious climate change data. This is not a moment in American history when responsible people can do what we enjoy, or what we're best at. We have to face some very grim challenges.

    Since I'm fairly well-known among science lovers on the internet, I was able to rapidly gather a team of volunteers to back up this climate data, get $20,000 in donations, and get a number of institutions interested in holding this data over the longer term. It turns out I was rather uniquely placed to accomplish this, just because I've blogged about science and climate change. So I had to do it.

    Still, for me it would be nice to see more activity and interaction and less structure.

    I wasn't eager to start a nonprofit. But since we are unlikely to spend $20,000 in one year unless we foolishly waste it, I need to, to prevent 1/3 of it from going to taxes.

    I'm still thinking a lot about math - but mainly with my grad students, whom I meet for 5 hours each week and a 1.5-hour lecture. I found that this is more productive than talking about math here on the Forum. That's sort of sad, and it took me a few years to accept it, but it's true. Grad students can be forced to write lots of papers!

    Comment Source:Andrius wrote: > Personally, I think it would be nice if you focused on your talents as a math visionary and educator rather than do too much organizing drudge work. That's actually what I'd enjoy most. Unfortunately Trump is preventing it. I can no longer expect _other people_ to do things like save precious climate change data. This is not a moment in American history when responsible people can do what we enjoy, or what we're best at. We have to face some very grim challenges. Since I'm fairly well-known among science lovers on the internet, I was able to rapidly gather a team of volunteers to back up this climate data, get $20,000 in donations, and get a number of institutions interested in holding this data over the longer term. It turns out I was rather uniquely placed to accomplish this, just because I've blogged about science and climate change. So I had to do it. > Still, for me it would be nice to see more activity and interaction and less structure. I wasn't eager to start a nonprofit. But since we are unlikely to spend $20,000 in one year unless we foolishly waste it, I need to, to prevent 1/3 of it from going to taxes. I'm still thinking a lot about math - but mainly with my grad students, whom I meet for 5 hours each week and a 1.5-hour lecture. I found that this is more productive than talking about math here on the Forum. That's sort of sad, and it took me a few years to accept it, but it's true. Grad students can be forced to write lots of papers! <img src = "http://math.ucr.edu/home/baez/emoticons/tongue2.gif" alt = ""/>
Sign In or Register to comment.