Richmond, VA · Member since 2014 · 5 posts · 0 votes
I'm the treasurer of a small church. We are looking for ways to invest the savings account for a better return. We have the money currently invested in CDs. When i get the statements it's obvious that the bank is the only one benefitting from our investment. My thought is to purchase single family homes to flip. I'm not looking to provide low cost housing, my thought is to sell to the general public as any other investor would. 100% of the profit would go to the church to fund maintaining and expansion of our facilities as well as support for missionaries and local outreach. Does anyone know if we can flip properties without effecting our 501 c3 status.
Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
10y
Flipping houses is not an investment vehicle, it's a business activity.
Any business activity which is not directly related to carrying on the 501C3 mission is non-qualifying income, taxable. You don't lose your tax status unless the "other income" is greater than your qualified income and that may (probably) happen with flipping income. That income also needs to go to the mission or you can taint the funds held, I suggest you not do that.
Search BP for a forum thread "Profits in non-profits" I started it a few years ago and it still applies.
I suggest you form an affiliate non-profit, separate entity. That mission could be low-mod housing, you can sell to the public supporting that mission. As a non-profit you can also do seller financing and avoid the Dodd-Frank spiral of issues.
You need to see an attorney familiar with 501C3 organizations. Good luck :)
Lender/Investor · Glenwood Springs, CO · Member since 2013 · 218 posts · 103 votes
10y
Unless you are a professional flipper, stick to what you know @Walter Sauls. It is a very dangerous game to be playing with your member's tithes. Ask yourself if the guy in the front pew who tithes faithfully would want you to be using his money to speculate on real estate? Because make no mistake... this is exactly what you are doing. Ask yourself if you are a church and what you are in the "business" of doing. I am pretty sure your elders would NOT say the real estate business.
Richmond, VA · Member since 2014 · 5 posts · 0 votes
10y
Thanks for the input, and also for the professional sarcasm. I'm simply looking for a better way to invest the savings account that will offer a better return.
Matthew 25:18 Context
15And unto one he gave five talents, to another two, and to another one; to every man according to his several ability; and straightway took his journey. 16Then he that had received the five talents went and traded with the same, and made themother five talents. 17And likewise he that had received two, he also gained other two. 18But he that had received one went and digged in the earth, and hid his lord's money.19After a long time the lord of those servants cometh, and reckoneth with them.20And so he that had received five talents came and brought other five talents, saying, Lord, thou deliveredst unto me five talents: behold, I have gained beside them five talents more.21His lord said unto him, Well done, thou good and faithful servant: thou hast been faithful over a few things, I will make thee ruler over many things: enter thou into the joy of thy lord