Know-How Exchange : Strategy

First you have to undestand non profits. You have to have a purpose benefitting some part of society. I have been part of a start up NP, and the IRS just doesn't award status for any good cause.

For example, the one I started was for green building. Everything -- every program had to educate on our mission, or the income would be considered unrelated and taxable. So, if we put together a program with a speaker on GB, we do not pay tax. Hold a garage sale with our members donations as a stand alone event-- we have to pay tax on the income. Our humane society runs a resale shop-- it's taxable income to them as it does not related to their core mission.

People who donate their cars just want to get rid of it. If they could sell them for a profit -- they would. And if they wanted to give part of their proceeds to a charity, they would. Donating it to charity used to be the biggest red flag for the IRS, but they have new restrictions.

Rather than make it a stand alone NP, I'd hook up with an existing one (or several) and offer to conduct the sale. You can work under their umbrella. I'm not sure as a stand alone you would be granted nonprofit status. Selling cars for charity probably as a NP. So while your service benefits NP's -- you would probably be a for profit entity.

Dear Bebo47,

First, read this: https://www.snpo.org/resources/startup.php

Then, read this:

https://www.wikihow.com/Start-a-501c3-Nonprofit-Organization

Next, read this:

https://smallbusiness.findlaw.com/business-structures/non-profit/incorporat...

Now, read this: and NOTE this and NOTE IT WELL: everything you read from me in this post has one objective: to keep your backside out of jail. Bear this in mind as you read.

The people you've asked? The ones that have told you that your "idea is unintelligent, stupid, and that nobody would do such a thing"?

Seems to me that you ought to listen to 'em!

I've worked with, in, on, and for non profits for a long time.

Your plan to "keep" 40 percent of donations in order "to support our charity and to give to others in need (like sponsoring events, giving to charities of our choice, etc)"?

Huge red flag there old boy. Huge.

I've no idea where you are geographically but I can hear that red flag cracking in the wind here in Delaware.

Tax-wise, God alone knows what the IRS would make of this but I'll wager that if you go ahead with your plan, come the time for your books to be audited, that the Feds will be all over you like a cheap suit.

To launch a non profit you MUST have a mission, something to nail your colours to. Leave vague statements that in ANY way resemble "to support our charity and to give to others in need (like sponsoring events, giving to charities of our choice, etc)" a VERY long way from where you are and from where you want to be.

Missions need specificity, and the more specific you can be in terms of who you will serve and how you will serve them the better for you, AND for your donors.

For most people GIVING to non profits, it's the MISSION they
give to, not the organization. It's the RESULT that their donation BRINGS ABOUT that brings in the big bucks, and no non-profit I've ever heard of or worked with gives money back to its donors.

To my ear, that aspect has SCAM written all over it and if you
want to keep your face out of the papers and your backside out
of the hoosegow, you'll tread VERY carefully on that one.

I'll go farther than BARQ (Hi BARQ, how's tricks?), and say that any non-profit that spends more than 10 percent on administration from revenue and income is on a very slippery slope.

Where's your endowment? Where are your investments? Where's your capital and how is all that money invested and managed? It's from THOSE sources you'll pull your operating budget, NOT from earned income (which includes donations).

And your operating budget must never—NEVER—equate to more than 5 percent in terms of a draw from your investment income, and even then, that calculated 5 percent draw must be on a rolling average of the PREVIOUS 36 months.

Pull stunts like that and your capital (if you have any, which might not be the case) will evaporate in less than five years. Then it's bye, bye non profit and hello Mr. Taxman because you and your trustees will have a whole pile a 'splaining to to!

There's another thing.

Who's on your board of trustees? Who will you use to help you bring in high ranking donors? That's a whole other rat's nest to deal with and your original question seems to have missed that issue, which to me is another red flag.

Dearie me! We're not doing very well here, are we? (Remember, I'm not trying to shoot down your ballon with all this, I'm trying to keep your butt out of the chokey).

From what you've said, apart from yourself, you appear to have the scantiest of detail as to your funding, who you might serve, how your operating budget is managed, how your governance committees work, and how your policies help and support your mission, which also seems to be missing-or at the very least, a
tad vague.

That's not good. That's not good at all.

And if you're going to be using phrases along the lines of "giving
to charities of our choice, etc", prepare yourself for LOTS of probing questions about the Bebo47 Beer and French Fries Fund.

When I give to charity, which I do MONTHLY, despite cash flow, I give to organizations that have a solid, defined, agreeable mission, which for me, and for the last 20 years, has been Oxfam.

Although it's a nobel thing to do, setting up a non profit is FRAUGHT with fiscal and taxation booby traps. You need to do LOTS more homework I'm afraid, which means you must NOT
pass GO.

I hope this helps. Good luck to you.

Gary Bloomer
The Direct Response Marketing Guy™
Wilmington, DE, USA

Not. Basically it sounds like you're going to request that (a minimum) $500 of the sales price goes to/through you. How will you guarantee that happens? What about the person with the $23,000 BMW who thinks it should really sell at $50,000 and thinks you ripped them off? Why don't you simply offer your brokerage service and join organizations like: https://www.onepercentfortheplanet.org/en/ ?