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Is it true that any one can set up a website for fundraising without declaring a legal entity?

For example, my church needs to raise fund for repair work, the project would cost about $40K. If I want to create a website for people to send me money for that cause, do I have to declare a business?

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    Isn't the church already a legal entity? Is the church raising the funds or are you doings so on behalf of the church? – phoog Jul 17 '15 at 21:42
  • The church needs money but they hesitate to ask. I am not part of the church but I want to help without affecting my personal tax. I think crowd funding could be a good model for this. But I am not sure about the legal requirements for crowd funding website owners. – Believe2014 Jul 29 '15 at 15:04
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There's nothing that makes it illegal to ask others to give you money to donate to a third party.

But if you want to say you're fundraising on behalf of another organization, obviously you need its permission. And if you want contributions to be considered charitable for tax purposes, and you want to make sure you don't wind up paying taxes on contributions "sent to" you but then passed on, then you may need to start worrying about a separate entity.

It would be more straightforward to offer to create, host and administer the website for the church, with it receiving the contributions directly.

  • I am sorry that I could not accept this very good response as the final answer. The original question was about regulations applied to owner of crowd funding websites. Even though in this particular case, the crowd funding website is for a church. But that's just an example. – Believe2014 Jul 29 '15 at 15:07
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Churches are available for tax-exempt status, and if your church is filed this way then you should work with them to determine how you will legally transfer money in this tax-exempt manner.

Donors (or many of them) will likely be interested in receiving a tax letter than they can claim for write-offs at year-end. You, not being an officer or representative of the legal entity that is the church, cannot write this letter and will need to coordinate with the Church officers to have them write said letters.

I think you can do all of this informally. People can give you money and trust that you'll be honorable with it. You need transparency regarding online processing fees, and their actual total donation.

You expose yourself to suit if someone claims malfeasance. No entity has obligation to support nor represent you in this regard. I cannot cite and fiduciary laws here – I am just giving general guidance.

In general, it's probably better that you have some written agreement with the Church stating your intent and obligations, and their intent and obligations, in the relationship with you.

  • If I want to help more than 1 church, I can't do it informally. This is why I am asking about crowd funding regulations. I hope I can make the website once and use it for many churches. – Believe2014 Jul 29 '15 at 15:11
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    Sounds like you need contractual relationships with the business managers / board / etc for each legal entity (church). Don't make these negotiations with anyone not authorized as a officer (preferably a financial officer) of the entity. Don't be afraid to ask for and talk with these people — this is the legal correct way to go. – New Alexandria Jul 29 '15 at 20:13

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