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Nonprofit Law/Donating the funds to start a non-profit corp


QUESTION: My company (a for-profit LLC) is starting a non-profit corporation. We have contributed the incorporation costs and are funding a website that explains the goals of the non-profit.

Will those contributions be deductible when the non-profit achieves 501 (c)(3) status?

ANSWER: I suggest that the funders for start-up costs arrange a loan to the 501(c)(3) organization and, after the organization pays back the funds, then the funders can donate what they want.  But the LLC has already made some payments.  Were any of those payments made to the nonprofit after the incorporation?  I understand that the incorporation costs were probably paid before the incorporation but I do not know, from what you wrote, whether the LLC funded the nonprofit so that it could pay the website development costs or whether the LLC paid the website development costs directly to the website people. After you give me that information I will reply further.

Harvey Mechanic, Attorney at Law -

P.S. This response is intended to be a general statement of law, should not be relied upon as legal advice and does not create an attorney/client relationship.    

---------- FOLLOW-UP ----------

QUESTION: My company paid for the incorporation (expected to be completed next week). Funding of website (paying website developer directly) will be after the incorporation.

It sounds like the initial incorporation costs and the initial website costs should be loans to be paid back. After the non-profit incorporation is up then my company would donate to it.

Does that sound more appropriate?

As I wrote earlier, loans are a good idea before, but then the documentation has to be done correctly. After the incorporation, though, within a day or two the 501(c)(3) organization should be able to set up its own bank account and then it is better that it pays its own bills, for example website developer directly.

Harvey Mechanic, Attorney at Law -

P.S. This response is intended to be a general statement of law, should not be relied upon as legal advice and does not create an attorney/client relationship.  

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Harvey Mechanic


DO NOT GIVE ME INFORMATION THAT YOU WANT KEPT CONFIDENTIAL. I am an attorney and I volunteer time to answer general questions about U.S. Federal income tax issues of nonprofit 501(c)(3) public charities only. Those questions could be about establishing and maintaining legal requirements for such non-profit organizations in the United States, including Internal Revenue service filings and requirements. I will not be working on this free forum to answer questions about Nonprofit's possible unrelated or for-profit businesses or how to fill out forms. This forum is only for general questions about federal tax law, not as the law applies to your specific situation. If you do not make your question public then I will not be spending much of my donated time on answers that would not benefit the public. If you have other questions, please contact me at I will reply from my email. In any case, do not reveal confidential information to me until after I have contracted with you to provide personal legal services. My responses on this forum are intended to be general statements of law, should not be relied upon as legal advice, and do not create an attorney/client relationship. For me to consider your individual situation and how the law applies, I would need to gather extensive information about the situation. To search my previous answers you can do a Google search by "" without the quotes and then add your search terms before hitting enter.


I have been practicing law and especially the law of nonprofit organizations since 1990 when I was admitted to the New York Bar and I have maintained my status with the Bar since that time.


B.S. Columbia University in New York City, 1970

J.D. (Law Degree) Brooklyn Law School, 1990 -- Cum Laude.

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