Non-Profit Organisation Loophole for Massive Profits...

[rekid]

I came across a strategy that non-profit organizations use through their non-tax status. Companies and individuals can donate items from clothing, cars, computers, real estate and receive a certificate that makes them elegible to a tax refund.

The loop hole is that the tax refunds can be worth more in value than the object eg car, being donated.

What the NP then does is sell the car way below market value to attract buyers and still make a huge profit by selling it because the cost was maybe a newspaper ad!

I've heard of lots of stories like this where some people became millionaires in a few years using this strategy.

So there you have it. I don't know if this loophole has been lifted or not...

[PsiPro]

Last I heard they were getting more strict on this issue and requiring more accountability. The problem is you need to have a reason to be tax-exempt.

If you are planning on just taking donations and reselling the items, you won't be able to become tax exempt unless you are doing something like GoodWill, you will(or should) be accountable for the money, its not supposed to go to your pocket

[The Stealthy One]

That's not really a loophole, at least not from the non-profit's standpoint. The NPO still makes its money, which is the whole point. NPO's were never meant to not throw off a lot of cash - the whole point is that all of the cash must be disbursed by the NPO.

Regardless, why stoop to what is, at the least, an unethical practice just to make a little bit more money?

Whatever happened to hard work, and waiting a few years for the reward?

[rekid]

so apart from the work that a non-profit may perform and earn money from it, how else do they make money?

By the way, what are the loopholes for non-profits..

[PsiPro]

so apart from the work that a non-profit may perform and earn money from it, how else do they make money?

By the way, what are the loopholes for non-profits..

You seem to have this impression that non-profit organizations make a profit. They don't, if your organization is out to make money you wont get classifications as a NPO (or shouldn't). As Stealthy said, the point of an NPO is to take the money they get and disperse it. Your money, would go to a few things.
1) Primarily your target / reason for existing (the poor, a poor country, pregnant women, etc.)
2) Upkeep costs. (Rent, paying salaries, etc.)

As was said in another thread, all NPOs say how much of your donation goes to the charity and how much goes to administrative fees. If you start an NPO and advertise that $0.20 of every $1 goes to the needy people, I doubt you will be getting much donation.

I would guess their main source of income would be donations, any fees associated with membership, or fund raisers.

[The Stealthy One]

so apart from the work that a non-profit may perform and earn money from it, how else do they make money?

By the way, what are the loopholes for non-profits..

There are no loopholes. Why are you looking to rip people off under the disguise of a NPO?

[rekid]

Pardon me,

I was in the shopping center and overheard two guys talking about loopholes, NPO's and I got curious.... i'm young, i don't know these things, just trying to learn : )