In this transcript, Wes Carter (Attorney who represents highly respected organizations throughout the nation) and business coach Clay Clark (U.S. Chamber National Blue Ribbon Quality Award Winner) discuss the importance of starting a non-profit on Thrive15.com, the business sales training program.
In this transcript, Wes Carter (Attorney who represents highly respected organizations throughout the nation) and business coach Clay Clark (U.S. Chamber National Blue Ribbon Quality Award Winner) discuss the importance of starting a non-profit on Thrive15.com, the business sales training program.Clay Clark: Wes Carter. How are you, my business coach client sir?
Wes Carter: I’m doing wonderful. How are you doing?
Clay Clark: I am doing well. I’m going to be honest with you, I, as a general rule, and I mean this, I have worked with attorneys for years as a business coach. I mean this, I’ve never told you this before, but I’m telling you now. It’s not like an endless love moment here, but I mean this. I’ve worked with attorneys for years and you’re one of the only ones that I do not dislike.
Wes Carter: I will take that as a compliment.
Clay Clark: Yeah. I mean it. The more I’m around you, the more I continue to not dislike you more.
Wes Carter: I will take that, thanks business coach clay.
Clay Clark: All right, so here we go. Today we’re talking about how we actually going to go out and start a nonprofit. Now just to be clear, I know entrepreneurs, one lady … One dude in particular who was not obviously in Oklahoma. He had a business that generated a serious and staggering loss for years and was supported by his wife. That is not what we’re talking about. Thrive15.com has many sales training videos.
This is we’re talking about a business where you are intentionally saying I’m creating this entity for the purpose of what? What is a nonprofit? If you could kind of describe it in layman’s terms.
Wes Carter: Well, most of the time it’s for a charitable purpose, educational, scientific. A purpose other than a profit motive.
Clay Clark: Okay. Now to me, when I think about a nonprofit and how to start one, I get quickly overwhelmed and kind of confused. If you could just help me work through this a little bit?
Wes Carter: Okay.
Clay Clark: Just take me through this. What in the world is a 501(c)(3)?
Wes Carter: Well, like some other things in our legal jargon, a 501(c)(3) is the number of the statute that describes what the federal government considers a nonprofit. In that little sub-paragraph, 501(c)(3) …
Clay Clark: PO?
Wes Carter: No. That’s where they talk about organizations that are organized exclusively for a charitable, educational, religious, scientific purpose don’t have to pay income tax.
Clay Clark: When people are running around going, “I going to start a 501(c)(3), dawg.” People say that a lot. “I’m going to start a 501(c)(3), dawg.” You’re saying you’re starting an organization that’s a nonprofit. It has to do with the actual statute, that’s where that name comes from?
Wes Carter: Right. That’s where the name comes from. You have 501, that statute has a whole laundry list of types of nonprofits, 501(c)(4), (5), all the way through a 501(c)(25) and a 501(c)(3) is the one that is a charity or a religious organization.
Clay Clark: Wes, those people, the fun people at the IRS, when I say fun people because I have been audited and I want to say thank you. I want to say thank you. I’ve been audited. It’s a great business coach experience and I was excited to show my patriotism and I could actually help donate more money to our federal and local and state governments.
Wes Carter: Good for you.
Clay Clark: Yeah, it’s a needed process and I’m thankful for that opportunity. These guys, the fun police at the IRS, they say, “Organizations described in Section 501(c)(3) are commonly referred to as a charitable organization. Organizations described in Section 501(c)(3) other than testing for public safety organizations are eligible to receive tax deductible contributions in accordance with the code Section 170.” What are we talking about here?
Wes Carter: Well, the big reason you have a nonprofit, a 501(c)(3) is two things. One, you’re exempt from paying income tax.
Clay Clark: Oh yeah.
Wes Carter: Not necessarily sales tax and employment tax, but income tax and people who donate money to you get to write it off on their taxes.
Clay Clark: Okay, so let’s talk about this because in my mind there’s a huge issue here. Some people are watching this saying I’ve heard about these 501(c)(3)s and I know what they’re doing. They’re trying to get donations from me and not pay any income so it’s a bunch of freeloaders running around trying to get my money to buy a bunch of stuff and not pay taxes for it.
Other people, I would say the overwhelming majority of people, are saying no, a 501(c)(3) is a great organization dedicated to helping people. How do people get in trouble with a 501(c)(3)? How does somebody, those ones you hear about on the news, how does someone get in trouble? What are some things that they can’t do, that they do, that tend to get them in trouble?
Wes Carter: The most common way to get in trouble is they take the charitable assets, the cash, the property and they use for their own stuff. They hope on a jet to go to Hawaii without a good reason or they …
Clay Clark: Atlantis is a hot spot.
Wes Carter: Right. Bentley’s in the driveways, those kinds of things where they’re making more than what’s reasonable or not using the stuff for a charitable business coach purpose.