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I'm putting together a charitable giving framework which means that I will have to receive donated money, somehow extract my (small and reasonable) fee, and turn over the remaining money to the donee. Two questions:

  1. What are the legal implications of all of this? What do I not know that I should know?
  2. What are the technological avenues for this? Should I hold a Paypal account that everyone pays into? Should my donor hold the Paypal account and pay me back? None of the above? Something else?
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You should know that you might be invalidating the deductibility of charitable contributions of your clients. As such, I cannot understand why would anyone (in their right mind, of course) use your service, unless you misinform them (aka lie to them) or withhold information from them (aka lie to them). – littleadv Nov 3 '12 at 0:41
Ok... well presuming that I do have the interests of the donors in mind and that I am not trying to defraud anybody, (and this is the case), then can anyone help point me in the right direction? @littleadv Can you tell me why I'm invalidating the deductibility of charitable contributions and how to fix this? People donate money every day and somehow the people receiving the money do get paid. – John Berryman Nov 3 '12 at 21:10
If people give money to a charitable organization, as they usually do, then its deductible. If they give money to you, and you give to a charitable organization - then its not, unless you're a payment gateway (e.g.: credit card processor). In which case, there's a whole bunch of regulations relevant, depending on your jurisdiction. Since you're obviously not going to be a payment gateway (you're talking about working through paypal), then you're invalidating peoples donations, whether you wanted to do that or not. – littleadv Nov 3 '12 at 22:11
And by invalidating, I don't mean that donees don't receive the money, I mean that donors do not receive the tax deduction they would otherwise be entitled to receive. – littleadv Nov 3 '12 at 22:13
@littleadv Understood. But then how do fund raisers collect money at all? Do they drive donations to the charity and then have the charity pay them back? I had heard that this was also bad for some reason. – John Berryman Nov 3 '12 at 23:43
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closed as not constructive by Zuly Gonzalez♦ Nov 5 '12 at 17:09

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