@Josh Owen the IRS has a number of non-profit entities (not all are charities). For example - sports organizations, clubs, etc. You may be able to read the various descriptions and see where your model would fit. But @Leon D. is correct - ALL the money has to go into the non-profit and then salaries are paid out. Salaries must be within the range of what the average person would earn doing the same job in the private sector.

Correct me if I am wrong, But if you set up the nonprofit without owners but with board members. You can draw a salery from your efforts to run the nonprofit it takes time and money... but ALL the earnings have to go to the purpose of the nonprofit. its not donating a percent, its simply the purpose of the orginazation. I am in the process of starting a nonprofit and one day, I would like to draw a salery to run it, I do not wish to work 40-50 hours a week at my day job and another 40 hours at the nonprofit. The basic idea is to BRRRR inner city vacant homes, but keep it affordable housing for low income families. Use all the income above expenses to go back into community programs and mission work to share the gosple of Jesus. A salery is an expense most likley 10% of the rents like a managemant company. any input would be appreciated.

That won't qualify as a nonprofit. What you're proposing is just a for-profit corporation that donates to charity. To quote the IRS: "To be tax-exempt under section 501(c)(3) of the Internal Revenue Code, an organization must be organized and operated exclusively for exempt purposes set forth in section 501(c)(3), and none of its earnings may inure to any private shareholder or individual." If you organize as a non-profit anyway, the IRS will hit you with tax fraud.

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Updated over 3 years ago on 08/21/2021. Most recent reply

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Josh OwenPoster

Flipper/Rehabber
Cleveland, Oh

Starting Out

forming a nonprofit?

Josh OwenPoster

Flipper/Rehabber
Cleveland, Oh

Posted February 06, 2016 11:37

He BiggerPockets what's all your take on forming a non profit and donating a percentage of monies from deals to a cause? Any input would be appreciated?

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