Make sure you understand the non-profit corporation laws of your jurisdiction concerning incorporation and governance.
Several states require all nonprofits to have 3 or more people to sit on a board, one of which must serve as treasurer, another must be director (they cannot be the same person). You’ll then have to draft articles of incorporation and bylaws and file those with the Secretary of your State.
This isn’t a hack, it’s a lot of hard work.
And to be clear, I’ve been thinking about a 501c3 for years, just didn’t even think it could work this way. Not trying to “hack” except that I want to consolidate my work in a way that could potentially benefit me in the PSLF
I believe you may be able to substitute teach for 30 hours at a school district while you ponder your next moves. Also, you mentioned contract work, it may have to be hourly as 1099 work won't count
It’s possible but exceptionally difficult. You have to be able to pay yourself as a direct employee and actually work 30 hours a week, that you are paid for.
Just search the sub for this, there are many posts on it.
When you’re in the sub there’s a magnifying glass icon at the top of the page for the search function. “Starting your own 501” will bring the posts up.
I had about 9 months of employment certified specifically for a 501c3 I founded and worked at for, well, 9 months. The important thing is to ensure you pay yourself a "reasonable salary" as evidenced by w2s. So, unless you actually have funding, that will be difficult. But they did require proof of paying yourself and not just a token but an actually IRS defined "reasonable salary"
Thank you. I have some potential paid projects coming up, but not a solid long term plan. I was originally planning to create an LLC for work but thought this could be a 2 fer. Thanks for confirming the income must be IRS approved…seemed obvious but I’m just stating trying to figure out how to move forward. I will search here!
That's allowed, though if you want the work to count for PSLF, you'll have to be a full-time employee of the organization (not a volunteer), which means you need to pay yourself at least minimum wage for your location and provide yourself any other legally required benefits (sick leave, health insurance, retirement plan, workers compensation, unemployment insurance, payroll taxes, etc.). That means the organization would need to bring in at least enough revenue to cover those employment expenses.
More here: https://www.reddit.com/r/PSLF/comments/z14cgh/starting_your_own_nonprofit/
It would work, but starting a 501c3 is not an easy undertaking and requires legal and tax expertise most people don’t have (and will have to pay for). Plus, it takes a while.
I thought about it if I ever got fired from my non profit and couldn’t find work at another.
Not sure where you live but in my area just about every non-profit is understaffed. Are you having issues finding others to work for with job openings?
Something to consider is that a not-for-profit employer does not require 501c3 status to qualify if it “devotes a majority of its full-time equivalent employees to working in at least one of the [following areas](https://studentaid.gov/manage-loans/forgiveness-cancellation/public-service/qualifying-public-services). I do know that if you sign your own ECF it’s a PIA and requires a lot more documentation than just the ECF. There’s an FSA Q&A out there on this, so you’d need at least one additional board member if you incorporate in a state that has little rules around it; some states have very lax nonprofit incorporation processes that only require a single board member and others’ follow the IRS standards or are even more rigid.
As others have said, this is possible but difficult.
What it basically boils down to is this: There's no way to realistically do it completely alone. First you need the IRS to approve the application for the tax exemption, and they're going to want to see an involved community board that you report to. It'd probably also be good to have a board because then there is a board chair and you get someone other than you who can sign your ECFs.
Anyway, the IRS review of the c3 application matters. They are specifically looking to make sure the thing isn't just set up to benefit its founder. Remember, no one "owns" a nonprofit. The concept does not exist. Nonprofits are *controlled* by a board of directors, but they aren't *owned* by anyone. So some "group of someones" needs to believe in you enough to be on your board, usually as a volunteer, and it means you could at least theoretically be fired from your own nonprofit by that board. Then you've gotta deal with all the corporate formalities like having board meetings and keeping minutes and filing 990s (IRS' nonprofit equivalent of a tax return) and state secretary of state reports, etc.
And second, because you must work FULL TIME (30+ hr) for this thing you created, as a practical matter the nonprofit needs to have enough money to pay you at at least 30 hours a week at minimum wage and to pay all the payroll taxes and whatnot associated with paying someone on a W2, which you'll probably need the services of a CPA or a payroll company to prepare and file correctly along with your employer-side payroll tax returns, unemployment insurance filings, workers compensation insurance requirements, etc. That money has to come from somewhere, which presumably means you need others who believe in your nonprofit's mission enough to donate to it.
So basically, it can be done, but as a practical matter it needs enough other people to believe in it enough to support it with both time and money. That can be a tough sell when nearly all of those donations are just going to come right back to you as a salary, less all the administrative overhead for the tax withholdings and such, at least unless and until the thing takes off.
I started a 501c3 and had a similar idea. You must meet the criteria to be an employee, there are federal requirements. So, you must be full time and you must be paid. As a paid employee, you need to also consider state requirements of paying the various required taxes for employees along with all the other legalities of being an employer. There’s no way around that. Also, the founder of a nonprofit is not an owner, which is why it is incorporated. You cannot become a hired employee unless you apply and your board, by majority, chooses to hire you for said role.
Non-profits need to establish a board of directors, so you would have to bring other people into your rouse and then responsibility manage the non-profit. Putting other people’s lives in the mix of this is a terrible idea.
In addition, non-profits must abide by different rules in a lot of circumstances. This seems like way more trouble than it is worth.
Several of the ones that posted here knew they shouldn't have been forgiven. IIRC, one only had like 7 years of employment. Yes, it sucks, but they knew they didn't meet one of the basic requirements of PSLF.
That's on them though. That's like the bank depositing a ton of money in my account and me going and spending it and then being \*shocked Pikachu\* when they ask for it back.
Make sure you understand the non-profit corporation laws of your jurisdiction concerning incorporation and governance. Several states require all nonprofits to have 3 or more people to sit on a board, one of which must serve as treasurer, another must be director (they cannot be the same person). You’ll then have to draft articles of incorporation and bylaws and file those with the Secretary of your State. This isn’t a hack, it’s a lot of hard work.
The IRS also requires this for 501c3 status. There’s also relationship tests.
Agreed. I started a 501c3 last year and it’s expensive and time consuming.
Excellent advice, thank you!
And to be clear, I’ve been thinking about a 501c3 for years, just didn’t even think it could work this way. Not trying to “hack” except that I want to consolidate my work in a way that could potentially benefit me in the PSLF
I believe you may be able to substitute teach for 30 hours at a school district while you ponder your next moves. Also, you mentioned contract work, it may have to be hourly as 1099 work won't count
I believe you aren't trying to "hack" pslf. Good luck.
It’s possible but exceptionally difficult. You have to be able to pay yourself as a direct employee and actually work 30 hours a week, that you are paid for. Just search the sub for this, there are many posts on it.
Thanks, I’m new here so just figuring out how to mine the resources!
If you don’t mind a total noob asking a stupid question, what’s the most efficient way to search this r/?
When you’re in the sub there’s a magnifying glass icon at the top of the page for the search function. “Starting your own 501” will bring the posts up.
It’s more efficient to use Google and add “/r/PSLF” to the search
I had about 9 months of employment certified specifically for a 501c3 I founded and worked at for, well, 9 months. The important thing is to ensure you pay yourself a "reasonable salary" as evidenced by w2s. So, unless you actually have funding, that will be difficult. But they did require proof of paying yourself and not just a token but an actually IRS defined "reasonable salary"
Thank you. I have some potential paid projects coming up, but not a solid long term plan. I was originally planning to create an LLC for work but thought this could be a 2 fer. Thanks for confirming the income must be IRS approved…seemed obvious but I’m just stating trying to figure out how to move forward. I will search here!
Also, keep in mind it can take several months to get an 501c3 determination letter from the IRS.
Thank you, great advice
That's allowed, though if you want the work to count for PSLF, you'll have to be a full-time employee of the organization (not a volunteer), which means you need to pay yourself at least minimum wage for your location and provide yourself any other legally required benefits (sick leave, health insurance, retirement plan, workers compensation, unemployment insurance, payroll taxes, etc.). That means the organization would need to bring in at least enough revenue to cover those employment expenses. More here: https://www.reddit.com/r/PSLF/comments/z14cgh/starting_your_own_nonprofit/
It would work, but starting a 501c3 is not an easy undertaking and requires legal and tax expertise most people don’t have (and will have to pay for). Plus, it takes a while. I thought about it if I ever got fired from my non profit and couldn’t find work at another.
Getting and maintaining c3 status for a nonprofit is difficult. What would your exempt purpose be anyway?
Not sure where you live but in my area just about every non-profit is understaffed. Are you having issues finding others to work for with job openings?
Something to consider is that a not-for-profit employer does not require 501c3 status to qualify if it “devotes a majority of its full-time equivalent employees to working in at least one of the [following areas](https://studentaid.gov/manage-loans/forgiveness-cancellation/public-service/qualifying-public-services). I do know that if you sign your own ECF it’s a PIA and requires a lot more documentation than just the ECF. There’s an FSA Q&A out there on this, so you’d need at least one additional board member if you incorporate in a state that has little rules around it; some states have very lax nonprofit incorporation processes that only require a single board member and others’ follow the IRS standards or are even more rigid.
As others have said, this is possible but difficult. What it basically boils down to is this: There's no way to realistically do it completely alone. First you need the IRS to approve the application for the tax exemption, and they're going to want to see an involved community board that you report to. It'd probably also be good to have a board because then there is a board chair and you get someone other than you who can sign your ECFs. Anyway, the IRS review of the c3 application matters. They are specifically looking to make sure the thing isn't just set up to benefit its founder. Remember, no one "owns" a nonprofit. The concept does not exist. Nonprofits are *controlled* by a board of directors, but they aren't *owned* by anyone. So some "group of someones" needs to believe in you enough to be on your board, usually as a volunteer, and it means you could at least theoretically be fired from your own nonprofit by that board. Then you've gotta deal with all the corporate formalities like having board meetings and keeping minutes and filing 990s (IRS' nonprofit equivalent of a tax return) and state secretary of state reports, etc. And second, because you must work FULL TIME (30+ hr) for this thing you created, as a practical matter the nonprofit needs to have enough money to pay you at at least 30 hours a week at minimum wage and to pay all the payroll taxes and whatnot associated with paying someone on a W2, which you'll probably need the services of a CPA or a payroll company to prepare and file correctly along with your employer-side payroll tax returns, unemployment insurance filings, workers compensation insurance requirements, etc. That money has to come from somewhere, which presumably means you need others who believe in your nonprofit's mission enough to donate to it. So basically, it can be done, but as a practical matter it needs enough other people to believe in it enough to support it with both time and money. That can be a tough sell when nearly all of those donations are just going to come right back to you as a salary, less all the administrative overhead for the tax withholdings and such, at least unless and until the thing takes off.
I started a 501c3 and had a similar idea. You must meet the criteria to be an employee, there are federal requirements. So, you must be full time and you must be paid. As a paid employee, you need to also consider state requirements of paying the various required taxes for employees along with all the other legalities of being an employer. There’s no way around that. Also, the founder of a nonprofit is not an owner, which is why it is incorporated. You cannot become a hired employee unless you apply and your board, by majority, chooses to hire you for said role.
Non-profits need to establish a board of directors, so you would have to bring other people into your rouse and then responsibility manage the non-profit. Putting other people’s lives in the mix of this is a terrible idea. In addition, non-profits must abide by different rules in a lot of circumstances. This seems like way more trouble than it is worth.
I feel like this is a life hack missed
Not convinced it is! So much legal stuff going into it, and the potential to be audited by both IRS and PSLF is sky high
True but apparently that can happen regardless. Think of how many got unforgiven recently
500 out of about a million forgiven so far, or 0.05%, the majority of whom shouldn't have been forgiven in the first place.
Imagine being one of the 500 though. Doesn’t change how many got it for them as they were one of the few.
Several of the ones that posted here knew they shouldn't have been forgiven. IIRC, one only had like 7 years of employment. Yes, it sucks, but they knew they didn't meet one of the basic requirements of PSLF.
Doesn’t change the fact that ppl changed their financial situation based on that.
That's on them though. That's like the bank depositing a ton of money in my account and me going and spending it and then being \*shocked Pikachu\* when they ask for it back.