How You (or Your Kids) Can Create a Charity in 3 Easy Steps

[NOTE: If you scroll down, there are specific tips about the logistics, paperwork, what types of entities to form, how to create them, what fundraising websites to use, etc.]

When our two kids were only ages 6 and 8, they came up with an idea to hold a chess tournament to raise money for charity. It was going to be a one-time event. They hoped to have a few friends come and play, and if they were lucky, maybe raise a few hundred dollars. They told all their friends and family, hung up posters at school, and ended up getting over 100 people to come, and raising over $2,000! It was so successful that people asked them when they were going to do it again. So they did another one and it was even bigger and raised even more money. Now, just a few years later, it is an annual event, they have their own non-profit corporation, a cool logo, and have raised over $50,000 for charities!

It was all the kids’ idea, but it did take some work from us, the parents, to help them pull it off. 

Here’s how we did it. You can too.

Step 1: Chess may not be your kids’ thing. But something is. Take something your kids find fun to do, and create a charity event for it. It can be for anything – a sports tournament, video games, art, etc. For example, if your child loves art, you can get a bunch of kids together to create cool artwork to sell and have adults buy the art. If your kids love soccer, organize a mini one-day fun soccer tournament for charity. Do what your kids enjoy. Find a space at a local school, community room, park or field. You will charge admission and/or sell things at the event, and donate the proceeds to a charity. Don't worry about it having to be something big. Just get started. Our first couple of events were very modest, but it grew over time. Our kids’ best advice is to know that “even little kids can make a big difference.” And they advise other kids who want to try something to not worry about making it big. Gabby says “just start small, with something fun to you.” Garrett says, “don’t worry how big it will be, just try something.”

Step 2: Pick a charity & set up a fundraising page. (a) Pick a charity. One suggestion is to pick something local, so your kids can visit in person and see where the money is going. This will "make it real" for the kids. For our first event, we chose the Ronald McDonald House Charities of Greater DC, which houses families from out of town when their child is in a nearby hospital for long-term treatment. We called the charity and told them what we wanted to do and they gave us a tour before our event and met our kids. After the event, we personally delivered the money we collected, and donated all our leftover unopened packaged foods. This “made it real” for the kids instead of merely mailing a check to a faceless beneficiary. (b) Set up a fundraising page. Many charities will already have a donation website where you can send donors directly. Or you can use a fundraising site, like CrowdRise.com, FirstGiving.com, GoFundMe.com, etc., to set up a donations page for a charity of your choosing. On many of these sites, the funds go directly to the charity, so donors get a tax receipt, but you can still keep track of how much you raised. It only takes 5 minutes and they do all the work.

Step 3: Publicize. A lot. Have the kids promote it by talking about it in school, and in all their activities. Tell their sports teams. Tell your friends. Post it on your social media pages. Post it in the local online news – most local websites have a community calendar where you can post events for free. Create flyers and post them and hand them out. Handing out flyers at a similar event is a great way to get the right target audience (e.g., for a charity sports tournament, hand out flyers at other tournaments or games). Create your own website if you want, or just use the fundraising page from the fundraising site. Call the local community newspaper and see if they will write a story about your event. Make sure you collect email addresses from everyone who shows up, so if you decide to do it again, you have a head start – you can send an e-mail to everyone asking them to come back next time.

Step 4 (optional bonus step): Try to get corporate sponsors. Many local businesses will donate $25-100 dollars for good causes in the community if you just ask. Try local grocery stores and restaurants, or try businesses with the same theme as the event (e.g., a local art studio for an art event, or the local sporting goods store for a soccer tournament). They may give cash or gift cards. You can use gift cards from supermarkets or Costco to buy sodas and snacks to sell at the event. You can give away gift cards or store merchandise as prizes for the “winners” of your event. Ask a local pizza place to donate pizzas you can sell by the slice. Ask a local t-shirt shop if they can make some t-shirts for you to sell at the event (or use an online t-shirt site like customink.com or booster.com). Tell all these donors you will publicly mention them and thank them at your event, and hand out their flyers, menus or coupons. Bring the kids with you to make the pitch.

Step 5 (optional bonus step): You can get a professional looking logo for just $5 using a website like fiverr.com! (It might cost $10-15 because you might need to try a couple of different vendors before you get one you like.) 

Again, don’t be intimidated. Start small, but start. And have fun. The goal is for your children to learn that charity can be fun, and even little kids can have a big impact. Get started and good luck!!

UPDATE (7/28/15): Many people have asked me more specifics on the "logistics" and "paperwork" involved (e.g., "how do you form a non-profit entity?"). My answer to that is that you can do it the easy way, the hard way, or in between:

The Easiest Way: You don’t necessarily need any “paperwork” and don't need to create any special new "entity" at all. You can always fundraise on behalf of other non-profits without ever creating a new entity. If you use one of the fundraising websites I mention in the article above (e.g., www.CrowdRise.com, www.FirstGiving.com, www.GoFundMe.com, etc.), you can track the extent of your donations (so you know how much you personally raised), but the money still goes directly to the chosen charity. Since the donation goes directly to the chosen charity, the donor can get a tax receipt directly from them. That’s the way we operated the first year or two.

In Between: You can form a non-profit corporate entity, but not file with the IRS for tax exempt status. There are services that will form a non-profit company for you. I recommend www.mycorporation.com. This will cost anywhere from about $100-300. Make sure you form a non-profit corporation, not an LLC. This way, you will have a "real company", and you or your kids can have a "real title" like CEO, President, etc. But your profits will not be tax exempt. That sounds like a problem, but it's really not. If you plan to donate virtually all the money you raise, then you will have zero profit. You will have a lot of "revenue" but then all the money/revenue that comes in will go right back out (expense), leaving zero "profit". So from a tax perspective, the tax status is not important. You will have to file tax returns, but unless you bring in a huge amount of revenue (unlikely at first) you can file a form 990N e-postcard online - this is an easy 5 minute online filing where you simply certify that you did not raise over a certain amount. Pros: Pretty easy, get to have a "title" like "CEO" or "President" of a real company. Cons: Has some cost involved, may have to file tax returns (postcard at first, real tax returns later eventually if your revenues/collections are high), not a full 501c(3), which may be required by some corporate donors (see below).

The Hard Way: If you wish to get 501(c)(3) tax status from the IRS, you have to file IRS form 1023. This may be important once you start to seek larger corporate donors because some potential corporate donors will only donate if you have 501(c)(3) status and they have seen your certificate to prove it. Again, there are services that will do the IRS filings for you for a fee, but this gets even more expensive - it may cost several hundred dollars. You can do it yourself, but it takes a bit of work, and there's still a filing fee directly with the IRS. There's a long lag time after you apply before you hear back from the IRS with a decision - may take a few months. For very small non-profits, it should be pretty easy to get approved but you still have to wait. Assuming you plan to raise only small amounts (currently less than $50,000), and meet the other qualifications, you can file a streamlined IRS form 1023EZ. You can find the relevant IRS forms and instructions here: https://www.irs.gov/uac/Form-1023,-Application-for-Recognition-of-Exemption-Under-Section-501(c)(3)-of-the-Internal-Revenue-Code  To see if you qualify for the EZ version, look at this checklist/worksheet posted by the IRS here: https://www.irs.gov/pub/irs-pdf/i1023ez.pdf  Pros: Allows you to get donations from corporate donors, gives non-profit status to your income. Cons: High cost, labor intensive to set up, long lag time / wait during application process.

Hope this helps! Best of luck and have fun with it!

About the Author:

Brian Heller is on the Board of Advisors to Chess 4 Charity Inc., a 501(c)(3), created and run by his kids. Please check out the website (and make a tax deductible donation now!) at www.Chess4Charity.org.

He is also a lawyer for a new and different kind of law firm, a 'virtual' law firm with no overhead that can pass on the savings to its clients. https://www.outsidegc.com/brian-heller/ Outside GC is reinventing the business model for lawyers. Outside GC is 100% virtual, so they charge 1/3 what a larger more traditional firm might charge. All their lawyers have business experience or in-house legal experience (no career-law-firm-lawyers allowed), so they understand the business realities and can work efficiently. If you need a transactional deal lawyer with great real world experience, at a fair and reasonable price, check out Brian's bio at https://www.outsidegc.com/brian-heller/