Forming a Charity

Forming a Charity

Forming a Charity: How do I form an unincorporated association for a charitable purpose. Total annual income of $5000 or less.


If you want to form a charity that will earn $5,000 or less per year in income, the principal could be about $100,000. For that amount of money you might be best off not forming a separate charity in light of the legal, accounting and other costs. You might be better off using a public charity such as the Fidelity Gift Fund or a similar charity. If you are intending to make grants to other public charities that would be far simpler and easier.

If you are looking to set up your own charity you really need a lawyer to form the charitable entity (typically a corporation or trust) and an accountant to file the annual tax returns Form 990 PF. There are some exceptions and deminimis rules (i.e. if small enough) that might enable you to avoid the filings. To get the charity recognized by the IRS you'll have to file Form 1023 which is rather complex and involved and will require the collaboration of your attorney and accountant.

You inquired as to whether you should organize the charity as an unincorporated association. If the charity is a religious charity you might be able to do this at a county level for modest cost. If not you will have to evaluate the benefits of using a trust or corporation with an attorney in your state. During that evaluation process you should also review the various exceptions from the various filing requirements to see if any can be availed of.

You need a local lawyer and CPA familiar with charities if you want to form one, but carefully evaluate the ease and lower cost of working with an existing charity.

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