To go non profit....or not?
Many of you already know I am in the process of pursuing opening up a therapeutic riding facility under the guidelines of NARHA (North American Riding for the Handicapped Association) . It's been a life long dream for me. I had always planned it as a "someday" venture, but now I have the right property, (of which I am in full ownership of, so no mortgage complications) I am located where such a facility is desperately needed, I have the right horses to pursue this, and I've decided the "someday" has no good reason to be put off any longer.
I'm still very much in the planning stages, but I've made the right connections with the right people, to get this off the ground. In my prior daydreams, I had always just assumed this to be a non profit endeavor, but now that it has come to putting pen to paper, I find a lot of people are advising me to avoid the 501(c). Everyone says to avoid the hassle, the headaches, the paperwork and the fundraising. I find it hard to pinpoint a precise answer out of those advising me against it, but when they ask me to pinpoint why I would want to be 501(c) I also cannot give a good answer other than, it just seems right, seems like the way it should be? Which is obviously not good enough. I know some of the pros to having a non profit....
that 501(c)(3) status makes a big difference in the main grant I would be hoping for
I would then be exempt from federal income tax (though not from filing)
I would be able to provide charitable donation tax deduction to donors of the program
But what I am unclear on, I guess, is what is defined under 501(c) - earnings not able to benefit individuals, but must all be retained for self preservation, expansion and future plans of the program. Obviously I would want the program to be able to pay for itself, to pay for care of the horses involved, and maintenance of the facility, etc, but I'd also need to be able to make at least a manageable living off of it for myself and my son, and I am assuming that part of it waivers outside the guidelines. So maybe the better choice is to NOT go in terms of non profit...but to me it feels wrong somehow?
Not sure what to say about the actual topic but well done for getting this all sorted to set this up
Non-profits are able to provide their employees with a salary. However, that salary must be justifiable. So you can't pay someone to muck out stalls $65 an hour for example.
You also can't adjust the salary of an individual to match their personal financial issues. So for instance you set up a non-profit and determine that a reasonable salary for yourself is $35k a year. If you run out and buy yourself a Porsche the next day, you cannot increase your salary to $75k a year so you'll have the funds to pay for that Porsche whereas if you were a for-profit business you *could* do that if you so chose.
Non-profits do not *have* to fundraise. If you are charging for your services and that income is sufficient, you wouldn't need to fundraise.
A for-profit business is less likely to receive donations from individuals simply because they feel like they are supporting *you* not your organization.
You'll really want to consult with an Accountant, he'll be able to provide more information for you in-terms of tax benefits/liabilities and be better able to advise you as to which status would be best for you.
haha, I would certainly not be running out to buy a porshe! I have over the years learned to very carefully live within my means, and would not be really aiming to increase my net income as it is right now, but to be able to continue to make what I have, when other income sources are lost as I dedicate myself to this project. I didn't realise a self salary was an option within a 501(c), see this is why I am asking these questions! I am meeting with an accountant next week, provided by the foundation I am trying to get my grant from, to help me draw up a business plan and figure out what will actually be needed in terms of start up costs for grant purposes, so I will have her go over all the details at that time.....just was looking for what heads up you all could give me in advance. Thanks so much!
If it were my choice I would go with profit. Times are tight and many rescues are falling under because they don't have the donation money to keep running. Steady income is more dependable, and I'd bet if you had the right facility people would be willing to pay.
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