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501c3 and funding

NewstartNewstart subscriber Posts: 1
edited February 2009 in Startup Funding
  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?


  • robertjrobertj subscriber Posts: 0 Member
    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.
  • infinique1infinique1 subscriber Posts: 0 Member
    It's easier to get seed money from your relatives and friends.
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