Direction on Creating an Umbrella under our church's non-profit structure, please.

[mrbob13]

What is the name of your state (only U.S. law)? Maryland

Good afternoon.

My family is interested in starting a small-scale ministry promoting Christian and/or Family-based entertainment in our region. If successful, we would likely register as a not-for-profit as we continue ahead. However, we would like to explore the creation of an Umbrella or otherwise-termed Subaccount under our home church's non-profit structure while we launch and function for our first 12-18 months.

Thank you.

 

[adjusterjack]

However, we would like to explore the creation of an Umbrella or otherwise-termed Subaccount under our home church's non-profit structure while we launch and function for our first 12-18 months.

Well, there is no question that you can operate a non-profit religious organization as soon as you get started.

But that sentence is incomprehensible.

Please explain what your goal or purpose is for this "Umbrella" or "Subaccount."

 

[mrbob13]

"Incomprehensible?" Let's go with "Run-on"

Well, there is no question that you can operate a non-profit religious organization as soon as you get started.

But that sentence is incomprehensible.

Please explain what your goal or purpose is for this "Umbrella" or "Subaccount."

The goal is to utilize the current non-profit's protections and related benefits for the time being. I'd hate to take all of the steps to create a new non-profit only to decide that we aren't going to move ahead after a few months due to lack of local interest. It's a fickle concept. Could fly instantly or it could land like a dud no matter how well prepared we are.

thanks.

 

[FlyingRon]

There are non-profit and then there are ones recognized by the IRS as charitable (or religious) organizations with tax preferences.
The latter has a lot of restrictions on what sort of business you can transact.

You haven't (and likely can't) provide sufficient details to us to determine if this will fly or not. You need an attorney.

 

[Taxing Matters]

The goal is to utilize the current non-profit's protections and related benefits for the time being.

What protections and benefits would that be, exactly? And what would be the purpose of this “subaccount”? Understand that the term “nonprofit” is not the same as tax exempt, though many people think they refer to the same thing. If your goal is for the organization to be recognized as tax exempt by the IRS under Internal Revenue Code (IRC) § 501(c)(3), which is the exemption for religious, scientific, and charitable organizations, there are a number of rules your organization must follow to qualify. Among those rules is that the organization must be organized primarily for an exempt purpose, it must get a substantial part of its revenue as donations from the public, and the persons who organized or run the organization cannot get any private benefit from the organization (known as private inurement). The organization still pays tax on any unrelated business income (UBI) that it has, and if it generates too much UBI it will get disqualified from exemption. Note that if the organization fails and dissolves, the assets of the organization must be transferred to another IRC § 501(c)(3) organization; the organizers cannot take those assets back for themselves. For more information on the requirements, see IRS Publication 557, which you can get from the IRS here:
https://www.irs.gov/pub/irs-pdf/p557.pdf

There are some states that have a special type of corporation known as a nonprofit corporation. Maryland is not one of those states. It does have a special type of corporation for certain charitable activities known as a benefit corporation. It also has a number of laws that apply to charitable organizations (whether or not they are benefit corporations). The following page from the Maryland Attorney General may be useful to learn about the Maryland law:
http://www.marylandattorneygeneral.gov/Pages/Nonprofits/default.aspx

I recommend you consult a tax attorney who practices in the area of exempt organizations if you wish to form an organization exempt under IRC 501(c)(3). You want to be sure you don’t run afoul of any of the laws and regulations that apply to these types of organizations.