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501c3 and funding

    • 107 posts
    August 28, 2012 8:30 AM EDT

    It's easier to get seed money from your relatives and friends.

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    • 1 posts
    February 25, 2009 11:16 AM EST
    Hello,
     
      As an aspiring diabetic food product manufacturer, I am seeking $200K in seed money. The other day, a business consultant suggested that I form my company as a 501c3 so that investors would get a tax deduction for donating money to my company.
     
     What do you think? Good idea or bad idea?
     
     
     
    • 927 posts
    February 25, 2009 1:27 PM EST
    Without more details - I can only give general answers.
    1. There is some time and effort involved in getting approved as a charitable non profit.
    2. Charitable organizations cannot sell stock or other securities. You may be forever dependent upon receiving donations.
    3. People give to charities for different reasons than they invest in new companies
    4. The dynamics of starting and expanding a charity are much different.
     
    Generally, if your primary reason for establishing this as a charitable business is to allow for a tax deduction, I`d say it`s probably not going to get the results you want.
     
    Send me a PM or contact me directly if you want to discuss the details of your specific situation.

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    • 41 posts
    August 6, 2012 3:30 AM EDT

    It sounds like you just want to make it easier to get the $200K.  Sadly, there is no easy way to raise that kind of money.  You are going to have to work very hard to get it.  I would focus instead on proving that you have a great business idea and getting in contact with the right people.

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    I help entrepreneurs to start and run the small businesses they always dreamed of owning so they can fire their bosses and gain the freedom they deserve.