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From reading the blog post and the IRS letter of rejection, I didn’t really find a strong case for why Yorba requires being a separate entity. Have you considered becoming fiscal sponsorship project? There are multiple 501(c)(3) organization that might consider serving as a fiscal sponsor for the project like the Software Freedom Conservancy. Another perk to this relationship is that the fiscal sponsor will handle the taxes and compliance.

To give some more background, my nonprofit went through a similar 4 yearlong back and forth process, but in the end, we did successful receive status last year. Prior to approval, I set up our organization as a fiscally sponsored organization by established another 501(c)(3). The status that we achieved is probably one of the highest on the IRS watchlist (donor advised fund) so I’ve had to fortune of getting to know the IRS and the tax code for tax-exempt entities very well :-)

For Yorba situation, the language used by Yorba in response to the IRS may be fine when talking to developers, but when talking to the IRS, using IRS’ language helps tremendously along with reinforcing a specific charitable purpose and avoiding any red flags (which Yorba’s response triggered in multiple regards); this is where a lawyer specializing in nonprofit law can really help as @philipn suggested. If you can’t afford a lawyer, you may be able to obtain pro bono work, and even then, it’s still good to read the relevant legal treatise to ensure you are well informed.




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