Evening Ladies and Gents. I have an inquiry directed to anyone with knowledge of government-issued Charity Licenses (which enable an organization to issue tax receipts) in North America, though of greatest interest is Canadian law, I am still interested in the American perspective too. So without further ado, my question:
If an unregistered fledgling charitable organization (e.g. waiting for paperwork to be approved) makes an arrangement with an established/licensed charity for initial seed funding (a few large donations to get the new organization up and running) to relay through the license of the established group, is this kosher? Lets say that the fledgling charity’s work falls within the stated mandate of the licensed charity,** is the licensed charity doing anything wrong or risking their license by issuing receipts to a few donors that are trying to setup the new organization? **
The catch-22 of the situation is that registering a national corporation and getting a charitable license approved can potentially be a slow, complicated and expensive process that is often best handled by expensive attorneys…but how can the upstart group get money for the legal work (required for their charity license) if they can’t issue tax receipts to the initial donors?