- Legal vs tax
- You form a nonprofit at the state. Exemption (501(c)) is a separate IRS determination. Fiscal sponsorship is a third pattern.
- Liability
- Directors still have duties. The entity can shield members if used correctly.
- Default federal tax
- c corporation
- Other federal options
- tax exempt
- Formation / maintenance
- State nonprofit articles, bylaws, board, then Form 1023/1023-EZ or 1024 if seeking exemption.
- Public-record notes
- Charities are more public, not less — Form 990 and state charity registrations exist for a reason.
- Succession
- No private residual owners. Assets are locked to the exempt purpose.
- Investor fit
- No equity investors. Grants and donations, with restricted-fund rules.
Disqualifiers
- Want to take chips off the table as an owner
Professional review: attorney, cpa.
Related: tax-exempt-statusfiscal-sponsor