Can I be a for-profit business but have a non-profit corporation collect donations for our customers?

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Can I be a for-profit business but have a non-profit corporation collect donations for our customers?

I have a website where users ask for money. One service I offer allows users to pay me to contact businesses on their behalf to help attract donors. The main business is for-profit however most businesses do not want to donate without the deduction. Can I create two corporations, a for-profit, and a non-profit. The for profit would earn on the users, the non-profit would allow donors to send the money to the non-profit, allow me to send 100% of the money to the user, and the donor gets a nice write-off. Is this set up allowed?

Asked on July 29, 2012 under Business Law, Iowa

Answers:

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

You personally cannot be a tax exempt business. You need to create a corporation and qualify under Internal Revenue Service guidelines to be a tax exempt corporation for starts.

Under the business scenario you have discussed you can have one tax exempt charitable corporation and the other a for profit corporation. It is important to keep the entities separate and distinct, no commingling of matters and assets.

I suggest that you have a business attorney assist you further in structuring what you want to achieve.


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