How to save money for a future nonprofit tax-free
Setting aside money for a future organization before it officially exists makes it difficult to secure tax-advantaged charitable deductions while retaining control over the funds. Traditional vehicles like donor-advised funds enforce strict rules on holding timelines and prevent future personal salaries, forcing founders to choose between tax benefits and complete control over how the capital is eventually deployed.
What people tried
Every workaround mentioned in the threads below. We haven’t tested any of them — and nobody here is claiming they worked.
- 1Setting up a donor-advised fund (DAF) through a commercial sponsor or community foundation
- 2Registering the 501(c)(3) nonprofit immediately and creating an Investment Policy Statement
- 3Partnering with or donating to already established organizations instead of building a new one
- 4leaving money sitting in an ordinary bank account
In their words
Unedited, most upvoted first, each linked to the thread it came from.
“Money parked in a DAF cannot go towards personal salaries/benefits later and a lot of them have rules about how long you can hold the money without giving it away.”source ↗
“Recently I've been thinking about investing lately with 4k sitting in my ordinary bank. I've also thought about trying to find better interest rates- initially I was thinking about doing banking and investing on sofi, and I'm still rather new to the whole investing and banking things but I want to see if my plan is solid”source ↗
“Our main concerns are; 1) Maintaining control over the fund and its future use. We want to make sure the money is invested responsibly, untouched until we open the sanctuary, and 100% of it will be used for the sanctuary. 2) Making the account tax advantaged, and counting as charitable contributions. We want to fund this account as much as possible, which is why we are not simply saving it privately.”source ↗
Where this came up
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