Seeking 501(c)(3) Recognition

Seeking 501(c)(3) Recognition

Lessons LearnedAABE Seattle-Portland

ChapterJune 6, 2003

June 6, 2003 AABE Seattle-Portland

Chapter 2

Background Sought for fundraising and tax

purposes Submitted application in March

2001 Received 501(c)(3) recognition

from IRS in May 2003


Chapter 3

Background Expected a long process, but not

two full years. Completed application ourselves Spent most of our time responding

to IRS requests for information Benefits far outweigh the

headache of the process


Chapter 4

Background

The benefits of 501(c)(3) recognition: Tax deductible donations Tax exempt status Funding from corporations and

governmental entities who donate only to 501(c)(3) organizations.


Chapter 5

Background If you’re well established and have

money to hire someone to complete the application, DO IT!

If you’re like us, little money and/or new chapter, here’s what you need to do . . . .


Chapter 6

Application Prep-work Before you begin, have ready: Descriptions of your chapter

activities Budgets for the current tax year and

the three subsequent tax years Scholarship award guidelines List of all funding sources


Chapter 7

Application Prep-work The national organization’s 501(c)

(3) recognition letter Chapter bylaws signed by the

president and secretary Current state incorporation Tax or employer ID number


Chapter 8

Prep-work: Activities You will need descriptions of your non-

profit activities: type of activity purpose frequency how, when, where, and by whom participation fees/charges percentage of chapter time spent on that

activity


Chapter 9

Example Activity: AABE Seattle Fun Run/Walk Purpose: to raise funds for scholarships and activities, and to raise

awareness of the AABE. Frequency: annually How, When, Where, By Whom: the Scholarship Committee will

organize this annual event to alternate between Portland and Seattle. Necessary local permits for the route will be obtained. The event will be advertised through the membership, at their places of employment, community newspapers, and local sports related business, and other AABE events. Scholarship Committee will solicit the assistance of volunteers for the day of the event. Committee also will solicit sponsor to help defray the cost of the event so that a greater percentage of the money raised goes to fund scholarships and other activities.

Participation: open to the public; participants must register Fees/charges: a registration fee Time: 25%


Chapter 10

Prep-work: Scholarships You will have to submit scholarship

award guidelines if your chapter awards or intends to award scholarships.

We are willing to share our guidelines and application with you – just ask.


Chapter 11

Prep-work: Bylaws Your bylaws document (and state

incorporation document) needs to include language requested by the IRS (the IRS calls it “sample language,” but they really want that exact language).

We are willing to share that with you – just ask.


Chapter 12

Prep-work: Tax ID Obtaining the employer ID number

is the easiest part of the process. You can obtain a tax ID number by

mailing or faxing Form SS-4 or by calling 800-829-4933.


Chapter 13

Prep-work: Forms You’ll need the following IRS forms for a

complete application: Form 1023 – Application Form 872-C – Consent Fixing Period of

Limitation Form 8718 – User Fee You may download the forms at

www.irs.gov. There is no online application.


Chapter 14

The Application Form 1023 Part I – Applicant Part II – Activities and Operational

Information Part III – Technical Requirements Part IV – Financial Data Schedule H - Scholarships


Chapter 15

The Application The space on the page should not limit

your response. For example, you should attach additional pages to describe your activities.

Attach to your application all of the prep-work documents mentioned in the earlier slides.

Submit the completed application and other forms with the fee to the address shown on Form 8718.


Chapter 16

The Application About the fee: The fee will vary depending on the

size of your annual gross receipts. When we filed, the fee was $150

for under $10,000 and $500 for over $10,000.


Chapter 17

What Happens Next After submitting the application,

expect correspondence from the IRS.

Contact the IRS if you haven’t heard anything within 30 days.

Be patient! For a smooth process, keep in mind the following important considerations.


Chapter 18

Important Considerations Again, if you can pay someone, do

it! But, if you’re a new chapter, it may

not be cost effective to hire someone since you will need to spend a significant amount of your time with that person defining your activities and goals.


Chapter 19

Important Consideration Dedicate about two members to the process. Develop a good relationship with your IRS

reviewer. Check your mailbox regularly. Be mindful of slow mail from the IRS – your

response time may be cut in half. Stick to response deadlines and call the IRS

immediately if there will be a problem meeting a deadline.

Stay on top of the IRS’ review.


Chapter 20

Important Considerations Keep a log of any telephone

conversations with the IRS. Keep a complete file of all

correspondence to and from the IRS. Follow IRS directions exactly. All correspondence to the IRS has to

be in writing to be officially recognized.


Chapter 21

Important Considerations Do not expect the ability to e-mail or fax

responses to the IRS, but don’t hesitate to ask whether you can.

Remember any annual tax duties that my be necessary - Form 990 or an audit of your financial records.

If you are a large chapter, you may consider professional tax advice.

Ask for help! Call us and others for tips on how to get your 501(c)(3) recognition!


Chapter 22

Contact Information Sonya Baskerville [email protected] 503-230-5904 Kirsten Watts [email protected] 206-220-6762 An electronic version of this presentation is

available upon request and at www.aabe-sea-por.org

Seeking 501(c)(3) Recognition

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