Can I hold a fundraiser for a business I am trying to turn into a nonprofit?
I have a magazine for children in waiting rooms and in hospitals. We have incorporated the magazine and are trying to go nonprofit. The state hasn't let us know if it will accept us as a non-profit and we had to discontinue publication of the magazine. I would like to hold a fundraiser for the business and would like to know if that is legal and ethical?
You can hold a fundraiser for the business -- but you must be absolutely transparent about the purpose of the fundraiser. You will also need to let people know that their "donations" are not tax-deductible.
Without the not-for-profit status in place, you're a for-profit company and the rules for charitable deductions do not apply. You might be better served working with a marketing professional who might be able to find you appropriate corporate sponsorship or advertising revenues for the magazine.
Nina L. Kaufman, Esq. is an award-winning New York City attorney, edutainer and author. Under her Ask The Business Lawyer brand, she reaches thousands of entrepreneurs and small business owners with her legal services, professional speaking, information products, and LexAppeal weekly ezine. She also writes the Making It Legal blog.