Brittany Murphy Foundation donations held up because of pending 501(c)3 status

For many philanthropic-minded entrepreneurs considering business formation, forming a 501(c)3 service is seen as a good way to conduct charitable endeavors. But when the charitable nature of an organization is called into question, state filing departments could challenge 501(c)3 incorporation.This seems to be the problem with the Brittany Murphy Foundation. The donation-accepting foundation was recently set up by Murphy’s widower, Simon Monjack, and mother, Sharon Murphy, according to EntertainmentAndShowBiz.com.

The source says the foundation was established to assist children’s education programs as the recently deceased Brittany had a desire to help kids. Yet, the nonprofit status is still pending and, in fact, the foundation currently has the status of a private organization.

This calls into question how the already-donated funds have been allocated. Many of them have been returned to donors since Monjack admitted to WhyFame.com that the foundation is “not really a nonprofit.”

Entrepreneurs interested in truly charitable endeavors might be well-advised to incorporate their business as a 501(c)3 service before accepting donations and to make their organization’s nonprofit status easily apparent to potential donors.