The Ultimate Guide To Starting Your Non-Profit (From Scratch)

It feels great to donate to charity and you're giving that opportunity to other people to feel great about donating to your charity. So if you feel strongly about it and you have that passion, you can express that passion to other people. They're gonna love giving you money.

Your board members should be generally be wealthy people. They know other wealthy people. This is why I don't want your brother in law and best friend on your board. That's not the goal unless they're super rich. Any machination of a nonprofit that you're trying to do to build your business, open doors for your business, or make money individually, it ultimately is going to fail. Welcome everybody to another amazing episode of the Main street business podcast. I've got a special guest here with me today, Devin Muns. Flying shotgun. Is it flying shotgun? Riding shotgun. Depends on if we're in an airplane or a car. Right? Okay. So Devin Muns, one of our senior attorneys at the law firm KQS Lawyers. He has worked on countless charity formations, fundraising projects. I myself have served on multiple nonprofits, five 1C3s. So together we're going to try to help educate you on all the ins and outs of getting your own charity started. Excited to have you here. Thanks for being in here.

No, this is an exciting topic, so thanks for inviting me to be here. This is one a part that touches home for me. Charities were a big part of my life growing up. Nonprofits were. And I just, you know, happy to help anybody follow their dream to help other people.

I love it. I love it. It's going to be good. We got five points that I think will be supremely important. A lot of this is on the front of setting up your charity. And then what to do on day two is the second part of this. But a lot of times people get into their charity and then they realize, man, I could have done this a little different. Let's go back to square one. So that's okay. So for many of you that already have a charity, don't get frustrate of, well, I'm already halfway down the road. No, it's cool. Don't worry about that. Let's look at all these principles because you can apply these at any time. I think it's a good mix.

Absolutely. If you didn't start out right, you might as well get organized later. That's better late than never.

Yeah. Hit reset. Okay. So Utah group, by the way, I've got to say, I'm wearing my Utah hat. It is game day today. It's the first Day of college football season. Utah Place, Florida. I'm very hopeful. We'll see. So I gotta wear my game day hat today. We got a red solo cup. So I'm just, I'm going red today.

Hey, the SEC came to the Mountain West. That's like, I mean, we gotta throw a parade or something.

When did they go to the Mountain West?

Well, that's Florida today. Utah.

Oh my word. Pac 12. I'm sorry, Utah. Pac 12. Mountain West.

I mean the area, they never come up here to play. We always have to go to the south to play that.

Yeah, fair enough. Fair enough. There is a Mountain west conference. So I was like, are you kidding me? You don't know? Utah's on PAC 12. All right. Okay, so number one share with us, what you think the number one first step in a nonprofit rebuild or grow or startup.

Right. So if you haven't already, if you've already started a non profit and you haven't done this, it's going to make things rough for you. The first step is to find your why. Now, finding your why, it's a Simon Sinek idea, right? That find your why, figure out why you're doing your business, what service are you providing that nobody else is providing? And in an operational business, that's a lot of times the find your why is I'm trying to feed my family. And so you don't necessarily need more than that to get yourself motivated in the morning. But in a non profit, you're not taking any of that money home. So finding your why is even more important here in this scenario than it would be in an operational business.

Yeah, you just stole the words right out of my mouth at the end of this. Because it is true. We find a lot of people that are like, oh, well, I want to get a job out of this. This is going to. I'm going to make the world a better place, but it's also going to support my family.

People.

That is not a good reason to start a nonprofit. I don't like donating to nonprofits where there's salaries for the founders by any means. Now maybe if it's United Way that has a worldwide presence and almost a billion dollar donation proceed scenario, then they're going to need staff on payroll. I get it. But this is not a nonprofit to help build wealth, create income for you. If that's on your list of why, I'd say start over because make sure you're okay financially first. Then let's talk about the nonprofit you dream of.

Yeah, a lot of People who set up nonprofits. A lot of the clients that I help, they're already successful in their daily lives. They already. They've already shown some level of success. They're already donating to charity anyway, and they're trying to find. Maybe there's not a charity doing what they want to do. We have a former employee of the firm who set up her own nonprofit because her daughter had some health issues. And she was noticing that there were a lot of charities out there that were helping the child with health issues, but there weren't a lot of charities that were turning around, turning to the sibling of the child with health issues and giving things to them. So she had. It's called Maggie's Sibling Star. If you want to look that up and donate, it's a great charity. She helps the siblings of

the terminally

ill. Terminally ill, yeah, exactly.

Yeah. It's exciting to see what she's done.

Now.

One last point on this issue, which I think is really common, is you may have started your charity and found out, oh, there's 10 other charities doing the same thing, or you found out this takes way too much work, or it's not really feeding. It's evolved into something that's not feeding. That desire of why it's okay, you're not a bad person. It's step one, when you go back to reevaluate your why, to say, I'm going to align myself with another charity and shut this down. Anything we have in the bank, let's donate it to this charity and maybe even get involved on their board of directors. Maybe it will relieve me of a lot of stress. I like their structure a little bit better. For the why I'm looking for, it's

okay to get reset perfectly fine. Changing your purpose. Right. If the purpose that you were involved in, you want to keep running your own charity, you want to keep running your own nonprofit, you're really good at doing the operations of it, but you've just lost the focus on why you can change. The purpose of your nonprofit is something that can be done. Just refocus yourself.

Yeah, I love it. Okay, now we've got five here, and we've been debating our five. I like to call an audible on the order of the five. Are you okay?

Go for it.

You'll go with it. Okay. If you will endorse this, I like to go with number three as number two.

Love it.

Okay, so I will say, this is number two step. And again, this can be in a rebuild scenario. I was just on a Plane the other day with a guy that was saying, hey, help me with my nonprofit. And it was this core issue, and that is having the right team, building a team, revamping your team, starting with the right team. And the key word for team is board of directors. A charity has to have a board of directors. It makes sense. People feel like I'm serving on the board of a charity, so. So use the term board of directors, and you're going to find board members that are best suited for the stage you're at in your nonprofit. If you're in the startup phase, you may find a different type of person to help you get going. If you're two years down the road in a fundraising mode and all the infrastructure and operations are working well in deliverables and production or whatever, you're doing services for your charity, now it's time to just go raise money. You're gonna have a different type of team on your board. So you're. And you're gonna have a blend of people on your board. But this is. It's not your friends and family. Can I just say that? It's not your friends and family. It's going out and finding the right people, right?

Absolutely. And find somebody who, like you and Matt. Right. You complement each other. You do different things, different personalities and whatnot. Now, on top of the board of advisors, I'm gonna recommend also strategic partners. Maybe people who are not on your board of advisors, but people who maybe have ran charities before who you can turn to if you have some guidance. Hiring the right law firm, that's not a selfless plug at all, but finding that group of people around you who can compliment your strengths and weaknesses and make the charity a little bit better, who maybe aren't ready to serve on the board. They're not that committed, but people you can turn to to help build this thing.

And don't be territorial if there are other charities that kind of complement yours, corporations for profit operations that would provide an integral piece to your production or service. I was involved in toy factory for years and making toys for children around the world. And wood suppliers were a big strategic partner. Getting donations of wood, what type of wood, machinery, and for the saws and all the different sanders and manufacturers that we wanted alignment with. So they don't want to be on the board, but we need them as a partner to help us get to where we need to be. So that is so important along the way, if you feel like you're stalled out and no one's helping you, you turn to your board and your board. If you're trying to talk them into showing up, you've got the wrong board members. Just say thank you for your service and go out and find new ones.

And your board and your strategic partners are going to help you in all the rest of these steps. So you're going to be working together in the rest of these steps. Which it's good that you put that second rather than my second, which was plan effectively, number three, plan effectively.

I love it.

So we're pushing to number three, plan effectively. But yeah, plan effectively with your team. Have your team involved in that planning process because they're going to bring new insights and new ideas and help you plan effectively. Now, when I say plan effectively, what does that mean? Well, you're starting essentially a business of providing these services for nonprofit purposes. What is that going to look like? Are we going to run the nonprofit ourselves or are we going to donate to other people's nonprofits? Are we going to solicit funds through public organizations and grants, or are we going to find, you know, find money from small donors? Are we providing the money ourselves? Those types of planning items need to be gone through and at least prepared for so that you're ready when the time comes to start soliciting those funds.

Yeah. And this is not just for you folks that are thinking of starting a charity. You may have had a charity the last 15 years. What's your plan for the next year? What's your plan for the next three years? Having board meetings with strategic plans of when's our next fundraiser, what grants are we going after? What's our next production goal? How many people are we going to help? How much are we going to deliver? And having that calendar and that plan on a regular basis. Oh, my gosh, I love that. Shameless plug.

Shameless plug right here. Yeah. The calendar Mark puts out has a 10 year, a five year and a one year plan. Is that right? Yeah, yeah, 10. Try one. And you put your plan together, write it down. Right. And then hold yourself to it. Hold yourself accountable to that and your team will help hold you accountable.

Totally. And we're gonna. Spoiler alert. Number five is gonna be raising money. So we're gonna come to that. But that's gonna be a key part of your plan is what are our goals for raising money? What is our goal? What are our goals for distribution? And are we in a build up mode? Are we in a let's get rid of our money and inventory or whatever we're doing for our charity? So it's constant planning is so important. And I want to kind of say this, too, in this planning section. Don't kill yourself. Be very reasonable about it. You don't have to be the next Salvation Army. You don't have to be huge to be effective. It's the quality of the experience for you and your board members and the people that receive the benefit. Worry about that. I'd rather serve one person really well and have an amazing experience than serve 10 mediocre in a mediocre way. And so a lot of people start to shame themselves that I'm not doing a good enough job. This was my dream, and I'm failing. I'm not doing people. The fact you've even started is great. Pat yourself on the back. Enjoy the ride. Let God and the divine take it to the next level. If that's where it's supposed to go, just chill.

Yeah. And if you haven't, maybe you only help one person before you hang it up. That person was extremely grateful. Right. So even if you can just help one person or one group of people, that's more than a lot of people are doing out there. So good job.

Okay, now, number four, this is going to definitely go back to those that are the startup phase. Number five. We're going to talk about operations and fundraising for those that are in the thick of it and really want to go next level. I got. We got a lot to say there. But back to the startup phase, number four is the right structure. For some reason, someone in the other day just said, oh, well, you need an LLC for your nonprofit. No, we're not going to go with an llc. And there's a lot of misinformation out there. And there's a lot of companies out there charging way too much, taking advantage of people in their dream. We've got to talk about structure and cost and budget for that. Where do you start?

Right. Well, I mean, obviously starting with the right structure starts with the entity itself. In order for you to get nonprofit status, you have to have an entity that applies for nonprofit status with the irs. That entity can be a variety of entities, but an LLC is not one of them. You can use an LLC in a nonprofit that's 100% owned by the nonprofit, and then it's a disregarded entity, and it can be taxed like a nonprofit because it's disregarded for tax purposes. But you need to have that foundational structure, that corporation in place. And for most of my clients, we're going to go with a corporation just a Standard corporation, which in a lot

of states there's a nonprofit corporate act. So you're filing as a nonprofit corporation in the state you're in?

Absolutely. And so it's just like a corporation where it functions similarly. It has a board of directors, a board of officers, CEO, Treasury Secretary. Treasury Secretary. But there's some differences, some major differences. In some states we have to file a different form in order to establish this. There are no shareholders in this corporation because there are no owners of a corporation, of a non profit corporation. So we're going to take out some of the language, we're going to add other language into the document. But it's important that we don't just jump on Google and find a corporate document and use it as our nonprofit corporation. Because if we ever get audited by the IRS and they look at the document, if we're trying to raise funds and we go with a sophisticated like a federal grant or something like that, they're going to ask for our bylaws, they're going to ask for the documents and we show them these Google specials. They're not going to work. You're not going to get the grant. You've got to have specific documents laid out and structured in a way to facilitate your non profit goal.

So let me give you the list. I think for most companies or operations there's kind of a down and dirty list and then there's I'm gonna go to the nth degree and be anal about this and do every little thing. So you've gotta decide what your approach is to that. I wanna give you kind of the down and dirty of what you need to get this non profit going. And I'm gonna kinda create my list here. This will be great to add to one of my articles I already have on this. I know that you are in the works on a book on this topic.

Just started.

Oh, I love it. It's gonna be good. So, so you guys need to stay tuned for that. Of course this is oftentimes the legacy and the pinnacle of a lot of business owners and what they're trying to do in their life is I may not start a non profit now, but I'm going to do it in the next 10 years. It's on your bucket list. And so Today's podcast and YouTube video may be very, very helpful to some of you. Just be thinking of what's coming. So okay, I'm going to give it my best shot. You're the expert. So I'm going to throw down one. You're going to file with the state articles of incorporation, typically articles of nonprofit incorporation. They're going to look very, a little different than a regular corporate filing. You're going to have bylaws. Who's my board of directors, who's my officers? You're going to have a corporate kit. You're going to have your initial minutes, your first meeting, and you're going to the lawyer that sets this up. Did you hear the word lawyer? You're not using some company that thinks they're great at this. That's not a lawyer. This is legal work. This is the practice of law. And so when we're going to come to what you should expect pricing wise here in a moment. But get that formation done at the state. Step one, number two is, and I think this is even in the planning stage, before you file that, what's your URL, what's going to be your brand? What does your logo look like? Have you gone out and searched for all the other nonprofits, at least in your area, that might resemble yours? So when you're going through this formation stage at the state, stop and think, what's my website going to look like? What's the website going to be? Does it match the name of my nonprofit? Some people have a different name or brand than they do the name of the corporation because it could be the Red Cross association of America, but their brand and logo is Red Cross and RedCross.com. so you've got to think through this before you just go file at the state. Next you're going to have to file with the irs. I'll let you maybe comment on some of the forms that you might choose from. There's 1023, 1024. There's a lot of variations there. Are we a private foundation or not? I'll let maybe you comment on that. The filing with the IRS is the biggest hurdle, but you're also going to have to file with the state. Especially in the states where you want to raise money. You might be doing raffles or kind of a that could border on gambling. You might be doing silent auctions. And states want to know who's in their state trying to raise money because there's a lot of scams in this area as well. So you're registering with the state to have a company. You're going to formally form all the documents with your board and all those internal documents file with the irs, file with the state. Get your website up and the IRS wants to see your website. Website's going to be one of your Primary ways to raise money and let people know what you're about. So own it. That's going to be a big deal right out of the board, right out of the gate. You might want a board member assigned to that duty. Anything you'd add? And I'd love you to expand on the IRS filing.

Yeah. And this is why it's important to plan before we get to this stage. Because depending on what you're planning on doing, what your strategy in this nonprofit is, it's going to affect what forms we file and what we do. So first of all, a private foundation, I'm going to go over two different types of nonprofits.

It's a big fork in the road at the very beginning.

And if we don't know which direction we're going, it can make it difficult to fill out these documents. And I'm going to. I've gone back and forth with clients and, and had multiple conversations trying to decide between whether they're going to go down the private foundation route or the public charity route. A public charity is what it seems like. It's going to run a non profit organization, generally giving food to the homeless and providing housing for cancer patients.

Well, a private foundation could have similar purposes too. So it's not about the purpose, it's how you're going to raise money. Would you say?

Well, I'm actually going to step, take a step back and give you three options. So we have private foundations, public charities, and actually a private operating foundation. So if you're actually going to operate your charity, but most of your funds. So the difference between the public charity and the private foundation is where the money comes from. So if more than a third of the money comes from public sources, grants people donating less than 2% of the total donations to the company to the nonprofit, then it's going to be classified as a public charity. And a public charity has certain rules and certain guidelines, has to file certain tax returns every year.

So if over a third of the money comes from the public.

Exactly.

Then I can be a public charity, which gives them better write offs. It's called typically a 501C3. There's a lot of variations, people. They're all not 501C3s, but the public charity. Over a third of my money comes from outside sources. I'm doing my golf tournaments, my black tie affairs, I'm auctions, I'm raising cap. Over a third comes from outside sources. I get to be a public charity. Everybody gets a better write off and I'm going to Follow those rules. Okay.

The foundation, though, foundation is slightly different. Right. A foundation is where more than a third or more than 2/3. So less than a third comes from public sources. More than 2/3 comes from either a single family or a single group.

Well, two thirds or more comes from

two thirds or more.

Yep, yep.

Two thirds or more comes from a single family. And in that situation we have. I mean, that's a major fork in the road. Let's go over just like a handful of the differences because there's probably dozens of differences here. But one of the major differences is which form I file to register the corporation with the irs. If it's a public charity, I have several options. If it's a private foundation, it's a long form, 1023 long form, 1023. It's like 14 pages long. And they're going to ask for a blood sample and what you did in the third grade to get detention. And they're going to dive into your personal life very deeply in that 1023 long form. It's also going to take months to get a response back from the irs because they have to go in there and look up all the information and make sure that you're accurate. But they're going to ask for a lot of information. It's more expensive, it's a larger filing fee with the irs. It creates a lot of issues for, for some of our clients just trying to get off the ground. That's the public charity, that's the private foundation.

Oh, hold it. That's the private foundation.

It's actually easier if you're taking other people's money. If you're taking other people's money, it's actually easier to qualify for a non profit because you're filing the 1023EZ. Possibly. Now there's other criteria. If you're planning on raising more than $50,000 a year, it kicks you back over to the 1023.

That's what I'm used to. Most people want to raise more than 50, 50 grand. So I'm in the 1023 long anyway. But I did. That's interesting. I thought the private foundation. In all of my career, I've never set up a private foundation. Most of my people want to go raise money. Public charity, 1023 long. That's where I've spent all my life. But private foundations are a little harder to form.

They're a little harder to form and they have more restrictions on them as time goes on.

Why do I want a private foundation?

Well, if you can get a public charity. Get one.

It's because if you don't want to go out and fundraise, you're stuck with a private foundation.

There are people who just want to donate their own family money and they just want to run it that way. And it's not something they want to run as a full time business where they're out soliciting funds from other people or applying for grants. And a private foundation, again, I'm going to hold this in abeyance, this private operating foundation. A private foundation generally isn't operating a charity. It's not operating any giving. All it's doing is collecting funds from the family, putting the funds in together, and then donating those funds generally to other charities.

And the kids get to be on the board. Mom and dad and uncles and grandma and grandpa come together. Where do we want to deploy our money? Everybody gets a write off. Not as good a write off as the public charity, but they're more involved in where the money's going.

Yeah, absolutely. And you're required in a private foundation to distribute 5% of the of the endowment per year. So If I have $100,000 sitting in my nonprofit this year, I have to give 5% of it to charity every year. That's a minimum, right? I can give more than that, but I have to give at least 5% to some other charity or to some charitable organization. Now, you touched on the better tax write off. What do we mean by a better tax write off in a public charity versus a private foundation? Well, there's actually four tiers, right? There's four tiers of write offs. We have the 60% bucket, the 50% bucket, the 30% bucket and the 20% bucket. Okay, stay with me. Okay, Getting into the weeds a little bit. This is gonna be fun. How do I get. What do I mean by 60%? You're allowed to donate up to 60% of your adjusted gross income as an individual or as a married couple. 60% of your adjusted gross income to charity every year. If you're giving to a public charity and you're giving them cash, that's the first bucket. 60%. If you're giving cash to a public charity. If you're giving non cash items, clothing. Think of the Goodwill desert industries. Right? Yeah. Npr, Cars for kids, whatever. That falls in that second category. If you're giving non cash items, you're limited to 50% of your adjusted gross income. So now you could give 50% of your AGI in non cash items in year one and then in the same year, give 10% of additional funds, cash, to a nonprofit, and they can combine and you still get the 60% because at least 10% of it was cash. But that's your first two tiers. The third tier is where we start down the private foundation route. And Tier 3 and 4 are both private foundations. If I'm donating money to a private foundation and, and it's cash, that puts me in that 30% category. I'm limited to 30% of my AGI. So again, why would I set up a private foundation if I can only donate 30%? But it's still a lot. That's still 30% of your AGI.

And let me throw this out too. What we're saying, you can donate more than those percentages, but anything over that is carried forward for up to five years and written off.

Great point.

So some people, you could donate 100 grand to charity. Then we look at your AGI. Oh, it's limited to this. Next year you'll get the rest. And so people that are looking for a big write off, they get more bang for their buck in the current year with a public charity. That's what these rules are about. And so anyway, when you're out soliciting funds, people kind of want to know this, are you a foundation or are you a. Because foundations will still take money. It's just the person giving to the foundation might be limited on how much they can write off in the current year. And then they got to spread it out over five, four more.

Yeah. And these rules apply whether you're donating to a private foundation as a small contributor or as the family who's running it. Those same, those same rules apply.

And then the 20% was the last one.

It's the same thing as the public charity. It's if I'm giving non cash items, non cash items to a private foundation, then I lose that extra 10%.

Wow. So with all this said, the point being is in this area of the right structure, you can modify your nonprofit. Right now you may be in the public charity space and you're like, I hate raising money. I didn't realize how much work this was. I don't want to do this. I just want to go the private foundation route and take money when it falls in my lap and run my own show. You can change your charity. You can apply to the IRS to go modify it a little bit. This, that and another. Sometimes it automatically happens if you're not, if you are putting all the money in, the IRS is going to Go, whoa, whoa, whoa. You're not a public charity. You are a foundation and they force you into that bucket. So anyway, the lots to talk about there. That's okay. Let's talk cost too. What do you see out there as people paying for this initial setup? There's a range. What do you think?

Yeah. So I mean, I know in our office it's $5,000 as the initial setup cost. That doesn't include the filing fees with the IRS or the state. But our costs are $5,000. So this is not something you get into lightly.

Right.

It is, you know, something you got to be serious about. But it's also going to be a lot of work. There's going to be a lot of phone calls back and forth. We're going to help you with your website, we're going to help you with organizing that board of advisors. We're going to help you a lot along the way. Now, going out and finding some other organization to help you set it up. I mean, I've seen them anywhere between 5,000. We're really on the low end of this.

We really are.

5,000, 10,000, 15,000. Especially if you're trying to, if you're raising more than more than $50,000 a year, filing that long form 1023 is a nightmare. Nancy can tell you. Call our office. It takes a long time and then it takes a long time for it to get accepted. And we're sitting in limbo for a very long period of time doing this. But still, $5,000 isn't that bad.

Yeah. And you're going to get pitched if you're in this realm, the donor advised fund because some financial advisor, investment advisor, yada yada, is going to come along and say, oh, you don't need to do a charity. If you're just looking for a write off and want to be a little more specific on where the money goes on a regular basis. You can do a donor advised fund. Doesn't cost you anything or whatever. Just going to say the donor I advise fund was a machination created by Wall street so they can make money on your charity. That's the gist of it. There's going to be money in a fund that they're going to be able to invest and make money off of while it's waiting to be deployed now. Yeah. You get flexibility on where you deploy it. Sure. It's all great. I don't know. I just again have a bad taste in my mouth when Wall Street's trying to make money on my charity, which A donor advised fund is all about.

So I don't know and I'm not. So there are two types of donor advised funds. And what Mark's talking about is the first type where you're in charge of the fund and you mat you, you manage that. But there are charities that will set up the donor advised fund within the charity. And so you're not paying for that to be set up. You're just, you're donating the money to the charity.

Basically right now there's no Wall street person involved.

Exactly. And then that charity, under certain. There are specific. That charity is going to set parameters on what you can, what controls you have, but you can have some control over. I wanted to go to this group, not that group, because a lot of public charities out there have more than one charitable purpose.

Right.

And so I want it to go to this purpose specifically. A donor advised fund can work for that.

I love it. And my hat today, sponsored by the University of Utah. If you want to give money to University of Utah, they have a list of where that money can be spent. Oh, you want it in the science department, you want it over in the accounting department, you want it on the football field, you want it in the swimming area, the rec center, whatever. This is why you see names of people on buildings all over universities. So that's a form of donor advice. But you're going to the charity directly. You're going to the charity saying, hey, I want to give you money, but here's where I want it spent within your organization. It could be a church again, a school, or even a specific type of charity.

All right, now can we get to the fun part?

Yes. Number five, go ahead.

Got to get to the fun part. This is where we go out and make money. Now this is raise money. Raise money. Careful. If you make money, we'll talk about you, but in another podcast. But go out and raise money. So this is the fun part about having a nonprofit.

Well, I love the way you say that. Have some people complain about it and some people embrace it. So very good. You're being very positive.

I'm being very positive because, I mean, I've donated to a non profit and. And I felt really good about it. Right. I see nonprofits that are helping people. Get real with you for a minute. Okay.

Yeah.

I mentioned early in the podcast that nonprofits had a big part of my life growing up. My oldest sister. So I was born with a situation already in place. My oldest sister had cerebral palsy. Right. She was confined to a wheelchair. She Couldn't feed herself. She couldn't change herself. She couldn't her whole life. She just died in February. She was at 44 years old.

Wow.

But nonprofits were a major part of our life growing up. We stayed the Ronald McDonald House. We took her to Shriners Hospital. Nonprofits were constantly part of our lives growing up. So for me to have the opportunity to donate to a charity that I think is doing something amazing, it's just.

Wow.

Right?

I can just see it in you.

It feels great to donate to charity and you're giving that opportunity to other people to feel great about donating to your charity. So if you feel strongly about it and you have that passion, you can express that passion to other people. They're going to love giving you money. It's not going to be pulling teeth trying to get people to come over to your charity. If you've got a good cause and you're doing good things, I love it.

I love it. That's a great. Your mindset when you go into the fundraising section is so important because if you already have a bad taste in your mouth, I hate asking for money. Da da da. You got to do some life coaching. Get some thought work done. Figure out your why and why you're raising money and why it's a good thing for the person giving the money. I like the way you just described that. And so okay, now boy. Step one, make sure you're in or fundraising with the right mindset. Step two is, I really want to say is have a fundraising plan integrated and built with your board. Your board members should be generally be wealthy people. They know other wealthy people. This is why I don't want your brother in law and best friend on your board. That's not the goal. Unless they're super rich. But you want wealthy people that believe in your charity on your board because they're going to, they know how to raise money. They have money for a reason. So. And now if you're also a wealthy individual, that's great. Then you're going to have a little better perspective on how to approach other wealthy people. People. But having a board building a plan of what are we going to do? We got to have a good website. Are we going to go after people's paychecks with regular donations? Are we going to do the black tie affairs and the golf tournaments and the 5Ks and we're going to do that whatever your methodology is. And there's grant writing. Have a plan. Get your board involved. Delegate each one of those options or those avenues to a different board member. You yourself, if you're doing it right, should not be raising money. You've got a team of people raising money for you and you're gonna go in and close the deal on the big fish. But it's gotta be comprehensive.

Yeah. I just had a conversation a few weeks ago about a client who was setting up a nonprofit to help the victims in Lahaina. Right. Just a recent tragedy. Tragedy that just happened. Jumped right on it, Set up a non profit right away. Great guy. He's got a great plan to try to help the school kids that are out there displaced from their school right now because the school got burned down. Right. And so he's trying to help these public school kids get back to school. And he was going through his board of directors and I was like, okay, what does this guy do? And he's like, oh, well, he's basically the richest guy on the island. I was like, perfect. We want him. We want him. And it's not because we're expecting him to just donate his money. It's because he knows other people and he knows how to raise money. And you put his name on the document saying, this guy's behind this charity. Right? That gives somebody who just donate, you know, just Joe Schmoe down the street. It gives them some confidence in this charity. Well, that guy's backing this charity. It's got to be good.

Yeah. No, I love it. Some people want to ask to put us on their charity as a board member. And Devin and I do. And the attorneys in our office do serve on various boards here and there. And they're like. And it's hard. Sometimes people come to us and go, well, you're going to waive your fee because you believe in our charity, don't you? I'm like, we can't waive our fee for you because we get due at other charity next week. And they ask the same thing. So we do donate. We love to serve, we love to give where we can. The way we felt we have given back is keeping our price so low. It is very rare to see a full service law firm do a charity. Start to finish people. This is a process that could take easily nine months for five grand. These are not big money makers for us. I know five grand seems like a lot, but you're going to see law firms go 10 to 15 to 20 grand on a nonprofit because they're a lot of work. So we really are trying to give. But asking a lawyer to be on your board so they can do all the legal and tax work. That's great. If they know how to do the legal and tax work. And if they do know how to legal and do the legal and tax work, they're probably setting up charities everywhere. So they're going to be hard to find. But getting your best friend that does divorces or does DUIs down the road to be on your board because either a lawyer, that's not the right choice. So again, be very careful.

Absolutely. Now we're still talking about fundraising and

how do we go about last point on fundraising? You bring us home on this one.

Bring us home. In the self directed world, we deal a lot with UBIT unrelated business income tax. And so people think that inside your charity you can't run a business at all or else you're going to pay a lot of taxes. That's not necessarily true. Right. You can more or less run a business as long as that business is tailored to your nonprofit cause. So I'm going to run a school and that school is going to have tuition. Well, is that tuition taxed as you but unrelated business income tax? Probably not. Because the purpose of this school is to is or the purpose of this charity is to run the school. And if I'm charging tuition, if I have my local elk lodge or whatever and the purpose is to get, you know, people together and I have an admission fee, I have things like that, a lot of times that's not going to be tax deductible or that's not going to be taxable, that's not going to be subject to ubit. Now if in my school I also have a gift shop and I'm selling backpacks or AirPods or whatever, that's going to be subject to UBIT because that's not furthering my non profit cause. That's extra stuff that's on the side. The big case that we study in law school is the museum that charges for admission to the museum and then you get to the end of it and you've got the gift shop. Okay, the gift shop. Any income earned in the gift shop is going to be subject to Yuba. And we're going to want to set up a blocker corporation and we're going to want to. And we're going to want to, you know, have all these different things, completely separate organization. But the museum admissions, yeah, they're making money in those admissions, but those admissions are all getting turned back into the charity that's part of the charitable cause.

We're good to go.

Those are not subject to Yuba and

I'm going to finish with this last point is that which is kind of a cousin or sister brother to your. What you just talked about is that we have clients come in all the time that say I want to set up a nonprofit and it's going to open doors for my business or my business is going to be able to work for the nonprofit, the nonprofit is going to pay my business. So I'm not getting a salary. We're going to make it really clean. But this nonprofit allows me to get access to loans to help do this because I'm in construction or I'm a real estate flipper or I'm a realtor and I need a nonprofit to get at the table to get these type of things done. And there's companies out there that are going to sell you a nonprofit to and promise you that you're going to get access to these non performing notes or loans because you're a nonprofit. You get those and then somehow it's going to get into your bank account. People stay away from any of that. Any machination of a nonprofit that you're trying to do to build your business, open doors for your business or make money individually. Ultimately it's going to fail. It's not going to work. And I don't like to talk about it. I don't want to deal with it. It's a pain in the butt. And whoever's telling you it's okay is going to be trying to make money off you or it's a scam. Whoever's trying to sell you this is a good idea. Ask them how much they're charging you and if they're a lawyer and if they're going to stand behind you with malpractice insurance if it goes south. Oh well, I don't do that, but I know it works till I'm down the street. It's been doing it for you. No, don't go there. So keep it clean. Make money in your own life. Come over here on the weekends and nights. Build your charity. Fine. They're separate.

Absolutely.

Devin, thanks for being here.

Appreciate it, Mark, thanks for having me.

Okay, well, Devin is a regular contributor in our newsletter. He helps our Main Street Tax Pro program constantly helping train other CPAs, enrolled agents and accountants around the country, lawyers as well. So you're going to hear more from him and we're excited to see this book when it comes out on Making the World a Better Place coming in

fall of 2027, I think is the.

Oh my gosh, we'll get it down. Well, thanks everybody for watching and paying attention, listening, sharing and if this has impacted you in any positive way, please share it with me, your friends, family and associates. Give us a five star if you could. It helps others find the same incredible content that we're trying to get out there and appreciate your time. Enjoy the end of your summer and college a game day. Thanks.