162: No, Not the Tomatoes! | Are Nonprofit Startup Costs Tax-Deductible Donations for the Founder?
About this episode
The episode discusses whether startup costs for a nonprofit can be considered tax-deductible donations for founders before obtaining 501c3 status.
You scraped together your own money to start a brand-new nonprofit. You're out the money, but can you at least take a tax deduction? Meghan and I are back with a question from a new nonprofit founder who wants to know if the startup cash they put in before getting their 501c3 status counts as a tax-deductible donation. It's one of the most common questions we hear from new founders, and the answer involves a pretty handy IRS rule most people don't know about. Real Listener Question: "In June 2025, two friends and I created a housing placement nonprofit and each put our own money in to get it started. We earned our 501c3 status that September. Does that startup cash count as a tax-deductible donation even though it happened before our status was official?" Meghan and I break down the IRS backdating rule, the chicken-and-egg problem of nonprofit startup costs, and what founders need to know before they file their taxes. What You'll Learn: Why starting a nonprofit costs more than most founders expect The IRS backdating rule and how it protects early donors and founders What the 27-month window means for your tax-exempt status How founders can get reimbursed for the startup costs Why…
More episodes of Charity Therapy
- 168: Oh, You Dreamers | Can a Flat Organizational Structure Work for a Nonprofit? with Dr. Pablo Otaola
- 167: A Lawsuit Magnet | Do Nonprofits Really Need Directors and Officers Insurance? With Cody Wiswasser
- 166: This Could Have Been An Email | What Is Nonprofit Strategic Planning? with R. Perry Monastero
- 165: The Past Tense of Sync | How to Get a New IRS Determination Letter
- 164: Ermahgerd! | How to Evaluate Executive Director Performance with Debbie Rabishaw
- 163: A Runway of Snacks | Can a Religious Nonprofit Apply for Status with the IRS 1023-EZ Short Form?
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