“Everything you always
wanted to know about
starting a non-profit*
*But were afraid to ask”
Morey Mechlin
Stop! Check out your options.
Starting a nonprofit.
Gain support.
Define purpose.
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Develop concept
Define purpose and goals
Consider funding sources
Find leader
Form steering committee.
• Steering committee will focus on the key goal
of making nonprofit official – taking the legal
steps necessary to become a tax exempt entity
with the ability to raise funds.
• Steering committee is different than a board
of directors.
Becoming a nonprofit organization.
• This process includes:
– Filing an application for approval of Certificate of
Incorporation by State Supreme Court
– Obtaining a letter of tax exemption from State
Department of Revenue
– Filing articles of incorporation and fees with the
Secretary of State
– Registering as a nonprofit corporation with the
State Attorney General
501(c)3 status.
• A 501(c)3 organization is any organization
described in section 501(c)3 of the Internal
Revenue Code, organized exclusively for
charitable, educational, scientific or religious
purposes described in the code.
• To become a 501(c)3 organization, you must
have filed articles of incorporation with
Secretary of State.
Info available.
• Application for Recognition of Exemption
under Section 501(c)3 of the Internal Revenue
Code – Form 1023
• Publication 557 “Tax Exempt Status for Your
Organization”
• Publication 598 “Tax on Unrelated Business
Income of Exempt Organization”
Start-up costs.
• $5,000
Need a lawyer?
Celebrate . . . Then get to work.
How to structure your nonprofit.
• Bylaws
– Necessary legal action and will serve as an outline
for your nonprofit’s existence
• Board of directors
– Size
– Committees
• Budget
• Fundraising
Hiring a nonprofit director.
Hiring an executive director is one of the most important
actions that the governing board of a not-for-profit agency
takes.
Conducted by board or outside service?
Either way, create timeline and process.
Balance immediate and long-range needs.
Consider hiring an interim director.
Management checklist.
Checklist for an
Assessment of Legal Activities in
U.S. Nonprofit Organizations
Filings.
All relevant filings to the Secretary of State are
current. These filings include:
•Annual Registration
•Articles of Incorporation with all
amendments
•Change of Corporate Name
•Change of Corporate Address
501-c-3 status.
The organization has filed the IRS
form 1023 (application for 501 (c)
status) and has received a letter of
determination.
990.
IRS forms 990 and 990T
(unrelated business income) have
been filed and copies of the 990
are available to the public.
Organizations with employees.
Organizations with employees must
keep federal and state payroll tax
withholding payments current. They
must also keep quarterly and annual
payroll report filings current.
If the organization has qualified
employee health and welfare and
retirement benefit plans, they must
meet all federal laws including COBRA,
initial IRS registration, plan documents
and filings with copies to employees.
Disclosure.
Organization acknowledges and
discloses to their board and
auditor any lawsuits or pending
legislations which may have a
significant impact on the
organization’s finances and/or
operating effectiveness.
Board of directors.
When the Board of Directors
makes decisions, a quorum is
present and minutes are
maintained.
Taxes.
If the organization is subject
to sales tax, State and City
filings and payments are
current.
Lobbying.
Organizations that participate in
grassroots or direct lobbying have
complied with all filings and
government regulations.
Gambling.
Organizations that conduct
charitable gambling have complied
with government regulations.
Unions.
Organizations with employees
represented by a union must have
copies of the union contracts on file.
Relationships.
Organizations that operate in a
fiscal or host-organization
relationship with another
organization or social service
group have a written agreement
on file.
Morey Mechlin
[email protected]