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Ask Dave

Become a Not-For-Profit Ministry?

Labiba may not need to set up her own non-profit ministry, if it's easier for her to set up an arrangement with her church.

QUESTION: Labiba makes gifts for women in the hospital, new mothers, babies and the homeless.  She wants to become a not-for-profit ministry, but doesn’t know what to do.

ANSWER: If you want people to be able to make a tax-deductible donation to your ministry, also known as a not-for-profit donation, you need to set up a 501 C3 corporation.  That will cost about $500.

The IRS also has several guidelines that you have to follow, such as setting up a board of directors for your ministry and filing tax returns for the ministry.  In your situation, it may be more trouble than it is worth and you won’t have as much time to actually focus on the ministry. 

You may be able to make an arrangement with your church where people can give to your ministry through the church.  That way it’s still tax deductible.  That could be the best way for you to fund your ministry instead of going through setting up a non-profit organization.

Non-profits by definition do not make a profit.  If your donations exceed your expenses, just put the money toward future supplies or pay yourself some sort of a fee and that’s how you continue to be a non-profit organization.