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My interest is to diminish co2 emissions in the city. Would that be considered an actual cause for a non-profit?

  • Are you wanting some kind of tax break for being a non-profit? How do you intend to pay yourself? What country is this in? – Ron Beyer Jan 14 at 20:43
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It depends on what country you are in, and whether in addition to being non-profit you want a tax exemption. In the US, anybody can sell cars, or other things. A "nonprofit" usually refers to an organization that is officially recognized by the IRS as exempt from paying federal income tax though it could be simply an organization that isn't out to make a profit. Assuming you mean "officially tax exempt", then you either already are tax-exempt, or you want to be tax-exempt. If you are already tax-exempt, then you have a specific designation, such as a "501(c)(11)" (Teachers' Retirement Fund Association). This indicates the allowed purposes for the organization – selling electric cars as a means of raising money for the retirement funds. The pertinent question is whether this is unrelated business income, in the view of the IRS. A crucial distinction is that a 501(c)(11) can sell an electric car and not pay tax on te profits, since this is a one time activity (like a bake-sale), but it can't regularly sell electric cars, since that is unrelated to the purpose of the organization.

Or, you could start a new organization, specifically for some environmental-type purpose (where car sales would be part of the organization's purpose). Then you would probably be a 501(c)(3), under the premise that you are "lessening the burdens of government" or "combating community deterioration" (mostly the latter). However, not everything that can be called "environmental" satisfies the rules. For example it is reports (private letter ruling 201210044) that providing particular solar panels to low and middle class income households provides indirect and tangential benefits to select individuals and not the general community. Given the economics of electric cars, the benefit to the the general community is arguably tangential. But that is a judgment that is made by the IRS. It's not obviously outside the scope of 501(c), so you would have to get a tax lawyer with expertise in environmental spin, to get an official determination (regardless of whether you have 503(c) status already).

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Non-profits can run businesses

What matters is that any surplus that business generates is used for a legitimate non-profit purpose.

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  • How does one define "legitimate non-profit purpose"? – RockPaperLz- Mask it or Casket Jan 14 at 23:47
  • @RockPaperLizard the way the NFP regulator and Tax Office in your jurisdiction does. – Dale M Jan 15 at 1:43

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