Launching a Nonprofit - Part 2

By Holly Berline for The Nonprofit Institute

Checklist for Starting a Nonprofit

Purpose Board of Directors Articles of Incorporation Employer Identification Number (EIN) Tax Exempt Status State Requirement ByLaws Strategic Planning Budget and Funding Accounting and Record Keeping Systems Nonprofit Mailing Permit D & O Insurance

Part 1 Review

What’s in a name?Your Mission

What were you established to do? Who’s on your Board of Directors?Articles of IncorporationBy-Laws

Filing Articles of Incorporation

Apply for an Employer Identification Number (EIN) Onlinehttps://sa1.www4.irs.gov/modiein/individual/index.jsp

Form 1023 - Request for Tax Exempt Status

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501(c)(3) Eligibility

“Organizations organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary, or educational purposes or to foster national or international amateur sports competition, or for the prevention of cruelty to children or animals are eligible.”

Organized…

An organization must be organized as a corporation… and the organizing document (Articles of Incorporation) must limit the organization’s purpose(s) and permanently dedicate its assets to exempt purposes.

Operated…

An organization must be operated to further one or more of the exempt purposes stated in its organizing document (Articles of Incorporation). A 501(c )(3) organization must: Refrain from participating in political campaigns Absolutely ensure its assets and earnings do not unjustly enrich

board members, officers, key management employees or other insiders

Not further non-exempt purposes Not operate for the primary purpose of conducting a trade or

business Not engage in illegal activities Restrict legislative activities

Public Charity or Foundation?

“A public charity has a broad base of support, while a private foundation receives its support from a small number of donors. This classification is important because different tax rules apply to the operation of each entity.”

User FeeThe law requires payment of a user fee with each

application. The amount of the user fee depends on the applying organization's average annual gross receipts.  If the organization's average annual gross receipts have exceeded or will exceed $10,000 annually over a four-year period, the fee is $850.  If gross receipts have not exceed or will not exceed $10,000 annually over a four-year period, the user fee is $400.  An applicant must certify its gross receipts in Part XI*.

* Updated May 2010 - increased user fees for exemption applications

Stayexempt.org

June 16, 2010 | Download PresentationIf your organization is brand-new, and you’re thinking about

applying for tax-exempt status, take a look at this mini-course first. You’ll learn about IRS resources that will make the process easier and quicker. (approximately 19 minutes)

Applying for Tax-Exempt Status http://www.stayexempt.org/Mini-Courses/Applying_for_Tax_Exempt-An_Overview/applying-for-tax-exempt-organizations.aspx

Maintaining Tax-Exempt Status http://www.stayexempt.org/virtualworkshop/TaxExemptStatus.aspx

For more help with your application…

For help in completing Form 1023 or general questions related to an exempt organization, call the Exempt Organization Customer Account Services toll free at 1-877-829-5500. You may also access information on the IRS website at http://www.irs.gov/eo

http://www.irs.gov/instructions/i1023/index.html

Next Steps

Strategic Planning

Budget and Funding

IRS Filing / Reporting Requirements http://www.stayexempt.org/home_mini_courses.html Preparing to File the New Form 990October 17, 2008 | Download Presentation

Beginning in the 2008 filing year, exempt organizations began working with a redesigned Form 990 or Form 990EZ. This course provides an overview of the changes, while the following four courses provide a line-by-line walkthrough of different sections of the form. Note that while these courses refer to the 2008 Form 990, the current 2009 Form 990 is very similar.