Some of the most satisfying and rewarding work we do at the Law Office of Finley Stetson is working with public charities.
You have good intent, you’re ready to work hard and have a strong desire to help others. Therefore, it seems like it would be easy to quickly start your own charity. Not so fast! It takes much more than a spirit of philanthropy to even form a public charity.
Here are some of the intricacies to consider when forming a public charity:
- Articles of Incorporation: Most charities we deal with form a corporation by filing Articles of Incorporation with the state of Florida.
- Magic Words: When incorporating, federal law requires that charities must use specific language. If these “magic words” are not present in the articles of incorporation, the charity won’t qualify for a tax exemption.
- Definition of Charitable Purpose: Each charity must specifically define its charitable purpose. This enables a charity to qualify under Section 501(c)(3) of the Internal Revenue Code to receive a federal income tax exemption.
- Exemption Application: The Internal Revenue Service’s application form is very detailed and complicated. One needs to be familiar with the form and with federal tax law to properly complete it.
- State Law Compliance Issues: When fundraising, the charity must register with the applicable state authorities. This requirement is commonly overlooked.
- Tracking Public Support Ratios: To maintain public charity status, your organization must generally comply with certain fundraising ratios. One-third of all financial support must come from the general public. What goes into calculating that ratio is extremely complex.
At the Law Office of Finley Stetson, we represent public charities through each stage of its life cycle. Some of the services we provide:
- Working with clients in developing the purpose and mission of their charity.
- Forming the charity under state law.
- Applying for a federal income tax exemption with the IRS.
- Advising charities on all aspects of their operations, including governance, tax compliance, fundraising and carrying out their charitable purposes.
- Structuring compensation arrangements with the leaders of the charity.
- Compliance with state fundraising requirements.
- Assisting charities with their public support calculations to ensure they do not lose their status as a public charity and become a private foundation.
- Structuring gifts to the charity to preserve its public support ratios.
- Dissolving the charity when it is time for it to wind up its affairs.
The Law office of Finley Stetson will help guide you through the process of creating a public charity.
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