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World Community Grid Forums
Category: Support
Forum: Suggestions / Feedback
Thread: Should I set up a non-profit for WCG work? |
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Thread Status: Active Total posts in this thread: 11
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ericinboston
Senior Cruncher Joined: Jan 12, 2010 Post Count: 265 Status: Offline Project Badges: 
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Hi all,
----------------------------------------I am trying to decide if I should set up a non-profit (or Charity or similar entity)...mostly depending on my project as well as the time/energy to set up and maintain a non-profit. The project: I belong to the World Community Grid and dedicate my computer to finding a cure for cancer. I would like to solicit donations to raise roughly $7500 so that I can purchase 10 powerful computers to contribute to the World Community Grid (I get a great employee discount). After I raise the money and purchase the computers, that's it. There will be no further solicitation. The computers will reside in my home (I live in CT) so there is no leased office space or employees to manage the computers, etc. Since the computers will run 24x7 and the software is extremely simple, there really is no management of the computers at all unless the power goes out and they need to be turned back on. I believe my project acting as a non-profit is quite different from most non-profits that have office space, employees, yearly fundraisers, etc. My questions: 1)Is it possible for me to raise the money, purchase the computers, and simply list $7500 as additional income on my personal tax form at the end of the year? I understand I will pay both Sales Tax and Income Tax since I would not be a non-profit. 2)Compared to #1, is it a lot of time/effort to set up and maintain a non-profit?...especially given my project. I really don't want to spends weeks/months filling out paperwork, new tax forms or modifications to my personal tax form (for example if the gov't now classifies my home as a "business" because I have non-profit computers in it). Lastly, if this project were a non-profit, would the project pay any taxes at all (sales tax as well as income tax)? To gain an Exempt status can take 3-12 months for a new non-profit, so I'm also not very keen on raising donations and then waiting up to a year to buy the computers! 3)I understand donors would feel more comfortable if they saw an official non-profit name/organization/id during my solicitation, but in general I don't want to spend a lot of time on running a non-profit to save ($400 for example) on taxes...nor do I want my personal income taxes affected by a non-profit business address at the same location as my home address. 4)Has anyone done an similar project for the WCG? Can you help? I'm more of a "Just Do It" person...I want to do things according to taxes, of course...and am all for saving money...but I don't want to make tons of work for myself to save a small amount of money.  |
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mikey
Veteran Cruncher Joined: May 10, 2009 Post Count: 826 Status: Offline Project Badges: 
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Hi all, I am trying to decide if I should set up a non-profit (or Charity or similar entity)...mostly depending on my project as well as the time/energy to set up and maintain a non-profit. The project: I belong to the World Community Grid and dedicate my computer to finding a cure for cancer. I would like to solicit donations to raise roughly $7500 so that I can purchase 10 powerful computers to contribute to the World Community Grid (I get a great employee discount). After I raise the money and purchase the computers, that's it. There will be no further solicitation. The computers will reside in my home (I live in CT) so there is no leased office space or employees to manage the computers, etc. Since the computers will run 24x7 and the software is extremely simple, there really is no management of the computers at all unless the power goes out and they need to be turned back on. I believe my project acting as a non-profit is quite different from most non-profits that have office space, employees, yearly fundraisers, etc. My questions: 1)Is it possible for me to raise the money, purchase the computers, and simply list $7500 as additional income on my personal tax form at the end of the year? I understand I will pay both Sales Tax and Income Tax since I would not be a non-profit. 2)Compared to #1, is it a lot of time/effort to set up and maintain a non-profit?...especially given my project. I really don't want to spends weeks/months filling out paperwork, new tax forms or modifications to my personal tax form (for example if the gov't now classifies my home as a "business" because I have non-profit computers in it). Lastly, if this project were a non-profit, would the project pay any taxes at all (sales tax as well as income tax)? To gain an Exempt status can take 3-12 months for a new non-profit, so I'm also not very keen on raising donations and then waiting up to a year to buy the computers! 3)I understand donors would feel more comfortable if they saw an official non-profit name/organization/id during my solicitation, but in general I don't want to spend a lot of time on running a non-profit to save ($400 for example) on taxes...nor do I want my personal income taxes affected by a non-profit business address at the same location as my home address. 4)Has anyone done an similar project for the WCG? Can you help? I'm more of a "Just Do It" person...I want to do things according to taxes, of course...and am all for saving money...but I don't want to make tons of work for myself to save a small amount of money. "Non Profit" Corps can be REAL picky on their taxes, you MUST have a REAL GOOD tax guy to set it up and MAKE SURE you follow ALL the rules!! It would be far easier to just set up a regular business and then count the money as income and deductions. There could even be ongoing tax deductions for depreciation and expenses etc, contact a tax guy for what works best for you!   |
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astrolabe.
Senior Cruncher Joined: May 9, 2011 Post Count: 496 Status: Offline |
4)Has anyone done an similar project for the WCG? Can you help? Sorry, I won't advise you, but I just want to say I think the WCG forum is one of the best places to get free US federal and Massachusetts state tax advice. Can't go wrong here.  |
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Former Member
Cruncher Joined: May 22, 2018 Post Count: 0 Status: Offline |
Hello ericinboston,
Shudder. The IRS registers non-profit organizations with a 501 (c) 3 designation. The WCG is not designated as a non-profit. There are too many hurdles to meet that would separate WCG from IBM, vastly increasing support costs while reducing IBM's oversight. Creating a non-profit to donate to an organization that is not a non-profit would raise so many red flags at the IRS that I don't want to think about it. We had the non-profit discussion in 2004-2005. During the years since then, I have thought of many issues that we never covered in the threads discussing this matter. Lawrence |
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Coleslaw
Veteran Cruncher USA Joined: Mar 29, 2007 Post Count: 1343 Status: Offline Project Badges: 
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As a FOR-profit, you would have to claim it as income. However, each state/country will have its own take on how you would need to claim it and whether you would need to actually get a business license or not. Also, some counties (here in the USA) also require licensing while others do not. I would highly recommend speaking with not just an CPA, but rather a lawyer that handles this kind of work. They will tend to be more informed on the legal aspect then a "book cooker".
----------------------------------------Edit: Found this on a quick Google search https://www.lawpivot.com/questions/1ae839753e...usiness-accept-donations/ Edit2: You may find it a much simpler effort if you merely listed the money as a "gift" on your regular taxes. You would however have to be very clear when asking for money that this was not going to a non-profit organization just to cover your rear. From what I have read it is also advised to use the terms sponsored/sponsorship or contribution rather then donation to clear those murkey waters.     [Edit 2 times, last edit by Coleslaw at Jul 17, 2012 3:39:33 AM] |
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ericinboston
Senior Cruncher Joined: Jan 12, 2010 Post Count: 265 Status: Offline Project Badges:
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Thanks all for the replies...I would like to re-state that I am not forcing myself to become a for-profit or non-profit BUSINESS...I'm looking for general advice on how I would list the $7500 on my tax form(s).
----------------------------------------One way would be to start some kind of business/charity/etc. but that seems like a lot of work, loopholes, etc. given the TYPE of project I am performing. The second way is for me to just collect the money and somehow list this "income" on my tax form. I do not believe the Gift area would be allowed since I am soliciting money. The Gift area is really for a family member to give another family member, say, $10,000 which would be tax free. The Gift area is not just for family members, but the main point is that it's *supposedly* not to be used to soliciting money from people...but maybe I'm wrong. So what I really need to know is not so much HOW to raise the money, but more about the TAX ramifications. Hopefully someone here has already done what I am trying to do. |
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pirogue
Veteran Cruncher USA Joined: Dec 8, 2008 Post Count: 685 Status: Offline Project Badges:
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I don't think it matters if you're soliciting or not, as long as whoever gives you the money doesn't expect anything in return and what they give you is less than the limit.
----------------------------------------Gift Tax The gift tax is a tax on the transfer of property by one individual to another while receiving nothing, or less than full value, in return. The tax applies whether the donor intends the transfer to be a gift or not. The gift tax applies to the transfer by gift of any property. You make a gift if you give property (including money), or the use of or income from property, without expecting to receive something of at least equal value in return. If you sell something at less than its full value or if you make an interest-free or reduced-interest loan, you may be making a gift. http://www.irs.gov/businesses/small/article/0,,id=164872,00.html |
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Coleslaw
Veteran Cruncher USA Joined: Mar 29, 2007 Post Count: 1343 Status: Offline Project Badges:
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The "gift" is for ANY money that was given to you that wasn't as part of a job. So if your best friend helps you start your business as a helping hand and isn't considered an investor, that would be a gift. Also, you can't be a non-profit without applying for a business license accordingly, so you can't get the tax exemption benefits, etc... on your personal taxes that way. You would in essence be filling out a seperate tax return for the business and it is a huge headache. As stated above, the advice I was given when I brought it up in general discussion once with a lawyer was that you would be better off just asking for a contribution or sponsorship. Avoid the word donation like the plague because too many people don't read/listen/research what they give money towards and will feel cheated later if they find out they just handed you hundreds or thousands of dollars for nothing. Todays society associates donating with not-for-profit organizations.
----------------------------------------Edit: You may also want to ask your accountant how it would work if someone donated hardware instead of cash. Afterall, we are pushing GPU for HCC and that should be a much better investment once it is here then the i7's. There are a lot of gamers tossing capable cards out all the time that may give you a few. But, until that day happens, your current plan actually returns real results...lol  [Edit 1 times, last edit by Coleslaw at Jul 17, 2012 9:01:41 PM] |
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Former Member
Cruncher Joined: May 22, 2018 Post Count: 0 Status: Offline |
You may also want to ask your accountant how it would work if someone donated hardware instead of cash. It really is possible to donate computer equipment to a local school district, if it has a program set up to make use of such donations. There are *some* tax benefits. But this is unusual and very standardized. I would be uneasy about trying to talk a school board into running WCG through such a donation. The local boards here are heavily politicized, obstreperous and fragmented. In other words, not to be depended upon. |
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Sgt.Joe
Ace Cruncher USA Joined: Jul 4, 2006 Post Count: 7849 Status: Offline Project Badges: 
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You may also want to ask your accountant how it would work if someone donated hardware instead of cash. It really is possible to donate computer equipment to a local school district, if it has a program set up to make use of such donations. There are *some* tax benefits. But this is unusual and very standardized. I would be uneasy about trying to talk a school board into running WCG through such a donation. The local boards here are heavily politicized, obstreperous and fragmented. In other words, not to be depended upon.Besides which, with public school budgets as tight as they are, the first thing they would complain about would be the additional electric cost. Cheers
Sgt. Joe
*Minnesota Crunchers* |
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