IRS Rejects 501c3 Status!

[Michael Fisher]

Well, the 3 scholarships have been mailed out, and we refunded the $50 application fee for the 4th applicant.

I received a letter in our PO Box today.? The IRS has rejected our application for 501c3 tax-deductible charity status.

Their grounds for rejection are:

-"Your purpose is simply to provide an avenue for individuals to pursue a personal preference of pursuing an education under the pretext of providing scholarships that are meant to be subsidized by tax deductible contributions.? Pursuing a personal preference (or preferred lifestyle) is almost akin to pursuing a private benefit which in itself is proscribed under section 501c3.? Therefore it is our initial determination that your purpose as described, does not appear to qualify as an exempt purpose under the exempt provisions of section 501c3 because of its non-exclusive charitable and/or educational intent.? However, if our understanding of your intended purpose based on our analysis as presented above is incorrect, please provide and explain your reasons."

-A random selection process is "not an acceptable method of determining award recipients."

-They want more info about the recipients.

-They want background info about the members of the Board.

-They want info about any business relationships between the Board and the officers.

[cathleeninnh]

Does any of that surprise you? I wonder if many who understand our wanting to encourage "personal preference" are not donating because of the lack of 501c3 status? Maybe there are loads of middle of the roaders who wouldn't hesitate to comply with those requirements.

But I don't see them moving to NH for freedom. We, who want to do something and aren't middle of the roaders, are a little nauseated by the prospect.

I sent another small check today. I can set up a paypal scheduled payment now. I don't care about tax deductibility.

Cathleen

[Michael Fisher]

Does any of that surprise you? I wonder if many who understand our wanting to encourage "personal preference" are not donating because of the lack of 501c3 status? Maybe there are loads of middle of the roaders who wouldn't hesitate to comply with those requirements.

But I don't see them moving to NH for freedom. We, who want to do something and aren't middle of the roaders, are a little nauseated by the prospect.

I sent another small check today. I can set up a paypal scheduled payment now. I don't care about tax deductibility.

Cathleen

It was surprising initially, but not in retrospect.? I agree that 501c3 status is a request to be subsidized by tax deductions.

I personally do not want 501c3 status anymore, but the Board will have to discuss it.? Hopefully there will be no split in the Board like there was with the FSP during their 501c3 discussions.? If we decide to be strict to our principles, we really should not have applied for this status in the first place, and we definitely should not pursue this further.

We need to discuss whether our principles should override the "greater good" of the charity.

Thank you both very much for your support, Cathleen. 

[Otosan]

The following are a dumb questions?

Do the recipient of the schoolarship fund have to report it as income?
If you get a 501c3 status, would the recipient have to report it as income?

My 2 cents..... Do not involve the IRS, or the gov in any way shape or form.  Aint none of their buisness. 

[Michael Fisher]

Do the recipient of the schoolarship fund have to report it as income?
If you get a 501c3 status, would the recipient have to report it as income?

Good questions.

Nope, we are still an NH Non-Profit, so we don't need to pay taxes and the recipients don't report it as income as far as I'm aware.

[Russell Kanning]

Bugger 'em

This is a good tool for appeals ...... "We are so dangerous to government control that they rejected our 501c3 application"

[Russell Kanning]

-They want more info about the recipients.

-They want background info about the members of the Board.

-They want info about any business relationships between the Board and the officers.

-Evil
-Evil
-What would it matter .... it is not like all the money ends up in the pockets of the officers like the United Way .... you don't get a penny

What about all the 501c3 private schools? ..... that you can donate to and they provide .... heaven forbid ..... personal preferences

The stinkin government figures that it is "subsidizing" anything it doesn't tax to death.

[Kat Kanning]

What they said doesn't even make sense...weird doublespeak.  I'm leaning toward avoiding the government involvement.  People have said they'd give large donations if we're 501c3, and we can't solicit businesses too well without it.

[FSPinNY]

I do not understand the statement by the IRS employee.  The notice certainly does not seem clearly written.  Aren't 'all' scholarship Funds doing what we're doing, and aren't they 501c3 approved?  I don't know.

I suppose the only people that really understand the implications of things like this are the lawyers who specialize in it.

I think we should no longer pursue this and move on.

Brian Sullivan

[KBCraig]

I do not understand the statement by the IRS employee.  The notice certainly does not seem clearly written.  Aren't 'all' scholarship Funds doing what we're doing, and aren't they 501c3 approved?  I don't know.

I suppose the only people that really understand the implications of things like this are the lawyers who specialize in it.

Well, there's your difference. LSF didn't pay a specialty lawyer $10,000-50,000 to submit the exact same information.

The denial was nonsensical. Pack up, move on. I understand that many people want to make (deductible) donations to 501(c)(3) charities, but honestly... you don't want to count on anyone who lets deductibility be the deciding factor.

Which reminds me... I have been meaning to send a donation. I file, but I don't itemize. I don't care about the tax impact. The check will soon be on its way.

Kevin

[Kat Kanning]

Thanks so much, Kevin!

[tracysaboe]

Does any of that surprise you? I wonder if many who understand our wanting to encourage "personal preference" are not donating because of the lack of 501c3 status? Maybe there are loads of middle of the roaders who wouldn't hesitate to comply with those requirements.

But I don't see them moving to NH for freedom. We, who want to do something and aren't middle of the roaders, are a little nauseated by the prospect.

I sent another small check today. I can set up a paypal scheduled payment now. I don't care about tax deductibility.

Cathleen

It was surprising initially, but not in retrospect.  I agree that 501c3 status is a request to be subsidized by tax deductions.

I personally do not want 501c3 status anymore, but the Board will have to discuss it.  Hopefully there will be no split in the Board like there was with the FSP during their 501c3 discussions.  If we decide to be strict to our principles, we really should not have applied for this status in the first place, and we definitely should not pursue this further.

We need to discuss whether our principles should override the "greater good" of the charity.

Thank you both very much for your support, Cathleen. 

Well, the only thing that makes me sad is that my employer would have matched any donation up to $250 if you had 501c3 status   Oh well.

I just got a new Full-Time job, maybe these people aren't so picky but I kind-of thing they are.

Tracy

[Dave Ridley]

well mike it looks like your instincts against working within the system continue to be vindicated.

BTW how are those $10 worth of liberty dollars I donated doing?

[Michael Fisher]

well mike it looks like your instincts against working within the system continue to be vindicated.

BTW how are those $10 worth of liberty dollars I donated doing?

Thanks for the donation!   

We're still trying to redeem it for cash.  I believe Tony, our Treasurer, has written letters and called several Liberty Dollar people multiple times.

Nobody wants to give him cash for it.  We'll probably end up cashing it in at a coin shop for the $6.50 worth of silver.

[Michael Fisher]

How many do you have?? I'll buy them from you.

Really?  Thanks!

Please send your address and contact info to Tony:  tonyl@lsfund.org