this post was submitted on 26 Feb 2024
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Register your project as a non profit and provide a receipt upon donation and you'll get more funding.
Can you register a project or do you need to make an organization?
IANAL and I have zero experience doing anything remotely like this.
But from my cursory reading of the IRS instructions on their website, doing this in the US specifically is more or less a two step process:
Form an organization by filing with your local state. Every state handles this process differently; in some (most?) this can be as straightforward as filling out a form, paying a processing fee on the order of $100 or so, and waiting for approval. Just don't form an LLC in particular, as that complicates the next step.
Fill out Form 1023-EZ with the IRS. This requires proving your organization qualifies for tax exemption (it is not clear to me whether this would) and a filing fee of $275. Your org also cannot possess more than $250,000 of assets, cannot receive more than $50,000 of revenue from donations within the span of a year, and cannot be registered as an LLC. If you fail to meet these, you need to fill out the regular Form 1023, which I believe is more involved and has a more expensive filing fee.
If both of these forms are accepted, kapow! You are now a tax-exempt organization, and other corporations can charitably donate to your project for tax breaks. Just remember to do your station-keeping tasks like filing your annual company and tax exemption status renewals, reporting your earnings to the IRS, and sending receipts to donors.
Most open source developers don't want to be messing about with non-profit admin tasks. This is why umbrella organisations like the Software Freedom Conservancy exist.