Developing a Nonprofit
Organization for Tribal
Entities
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Course Description
Formation of an organization as a nonprofit should reflect its mission
and priorities, as well as its boundaries and limitations.
Part One provides an overview of how to develop the most effective
way to: create a meaningful Mission Statement and select a Name;
appoint a Board of Directors and hold an Organizational Meeting;
develop appropriate Articles of Incorporation and functional Bylaws;
and, apply for an Employer Identification Number.
Part Two provides an overview of: the pros and cons of IRS status as
a 7871 tribal organization vs. a 501 (c) (3) IRS organization; how to
apply for an exemption as a 501 (c) (3) charitable nonprofit; and, how
to apply for a Sales Tax Exemption.
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Part One Topics
Development of a Mission Statement.
Registration of a Fictitious Name.
Appointment of a Board of Directors
and hold an Organizational Meeting.
Creation of Articles of Incorporation.
Formation and Structure of Bylaws.
Applying for an Employer Identification Number (EIN).
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Part Two Topics
Fundraising Considerations: Grants, Donations, Charitable
Giving, and Other Revenue Streams.
Analyzing the Features, Advantages and Disadvantages of 501
(c) (3) vs. 7871 Status.
Applying to the IRS for Determination as a 501 (c) (3)
Charitable Nonprofit Organization.
Requirements of IRS Form 1023 vs. IRS Form 1023-EZ.
Applying for a Sales Tax Exemption.
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Mission Statement
Your mission statement should be clear, memorable, and
concise with an average length of 15 words.
Your mission statement should be designed to clearly
communicate what you do in such a way that people can
remember it and communicate it to others.
“To provide Native Americans with knowledge and skills that
improves quality of life through housing related training
programs.” Native Learning Center
“The increase and diffusion of knowledge.”
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Smithsonian Institute
Fictitious Name
The name of your organization, also known as a “Fictitious
Name” is a registered name under which a person transacts
business in a state, other than his/her legal name.
For organizations it means any enterprise or venture in which
that enterprise or venture sells, buys, exchanges, barters,
deals, or represents the dealings in anything of value for
compensation.
This is a required registration process for nonprofit
organizations, so let’s take a closer look.
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Fictitious Name
In most states, the nonprofit's name may not be the same-as or
similar-to other names on file. In addition, watch out for the
situation stated below.
The nonprofit’s name must
contain the term Corporation
or Incorporated or the
abbreviations Corp. or Inc.
Be aware that the term Company and the
abbreviations Co. or Comp are exclusively
reserved for profit firms.
Nothing is more important for an organization than having a
name that is logical and easy to remember. Some names look
great, however, the names may be memorable for the wrong
reasons. Many bad names come about because of poor
planning. However, some of the worst names are unintentional.
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Fictitious Name
Here are some naming situations to avoid:
Unusual Spelling >
Would-4-Sail
This company sells wood
Unusual Phrase >
Redundancies
>
Internet Gold-Golden Lines
Website Design
Complexity
>
Ziffren, Brittenham, Branca,
Fischer, Gilbert-Lurie, Stiffelman,
Cook, Johnson, Lande & Wolf
Professional Firm
And here are some examples of unusual names:
Boring Business Systems
Royal Mail (1635-2001) to Consignia
(2001-2002) to Royal Mail (2002 - )
Curl Up and Dye
Ruth’s Chris Steak House
Abbott Laboratories to AbbVie
Sleazer Clothing Emporium
Comp USA
Bookgoo
IP Anywhere
OK Service Station
Ontario Rabbit Education Organization
Fifth Third Bank
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Fictitious Name
To register for a Fictitious Name contact the Division of
Corporations at the Florida Department of State. Or go to:
https://efile.sunbiz.org/ficregintro.html.
Enter your name and mailing address in Section 1 as you
wish it to be registered. Complete Section 2 if the (A)
owner is an individual or (B) if the owner is other than an
individual, such as a corporation, or trust, etc.
Let’s look at a screen shot.
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Fictitious Name
Ø  Enter your name and email here.
Ø  Enter your physical mailing
address here.
Ø  Complete this shaded section if the
owner is an individual.
Ø  Complete this shaded section if the
owner is other than an individual,
such as a corporation, LLC, trust,
etc.
Ø  Signature of the owner is required.
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Board of Directors
In most states, you must have at least three directors, who are
age eighteen or older, for your nonprofit organization.
Normally, your directors do not have to reside within the
state, but check your state’s requirements.
Chairperson: attends and oversees the BOD
meetings, may act as a spokesperson for the
organization, and works in partnership with
chief executive of the organization.
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the
Board of Directors
Vice Chairperson: attends and oversees the BOD meetings in
the absence of the chairperson, may act as an alternative
spokesperson for the organization, works in partnership with the
chairperson, and performs other assigned duties.
Secretary: attends all BOD meetings and retains all BOD
records, maintaining their accuracy and safety.
Treasurer: attends all BOD meetings and serves as the financial
officer of the organization.
With a BOD in place, then next step is to hold a meeting.
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Organizational Meeting
Hold an Organizational Meeting for the BOD and create a
Corporate Records Book. You will need this book to store hard
copies of important documents concerning your organization.
CORPORATE RECORDS
ü  Articles of Incorporation
ü  Bylaws
ü  List of Board of Director
Members
ü  Official Minutes from
Meetings
ü  Other Documents
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Check your state’s nonprofit
recordkeeping requirements
for specific information about
what you need to record and
keep.
Bring the updated book to all BOD
BOD meetings.
Organizational Meeting
Consider implementing the following activities before and
during your first BOD Organizational Meeting.
Before the first meeting:
Select a date, time and location, and then announce the meeting.
If not already included in your Bylaws, select a date, time,
location and frequency that is conducive for all. Send a
notification to confirm.
Create an agenda that at a minimum includes the following
issues: (1) Approval of the BOD members and (2) Approval of
the Bylaws.
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Organizational Meeting
During the meeting:
Approve the BOD members.
Approve the Bylaws.
Approve an accounting system, bank, fiscal year.
Approve a budget, major goals and/or fundraising events, if
any.
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Questions/Comments
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Articles of Incorporation
Incorporation is a process that establishes an organization as a
legal entity. It also shifts liability of the organization from an
individual to the corporation.
It is usually registered and approved at a state level.
It usually requires the completion of an online form and a fee.
Articles of Incorporation require serious decision making
regarding the structure of the organization.
So let’s take a close look.
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Articles of Incorporation
Preamble
Article I
Name
Article II Location
Article III Organizational Structure
Article IV Name of Initial Directors
Article V Distribution of Earnings
Article VI Dissolution
Article VII Incorporator
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Articles of Incorporation
Preamble is a preliminary statement or introduction, such
as :
ABC Housing Authority, The Articles of Incorporation of _______________,
the
Inc. undersigned, a majority of whom are citizens of the United
States, desiring to form a nonprofit corporation under the
Florida Nonprofit Corporation Law of ________________,
do
herby certify the following.
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Articles of Incorporation
Article I
Name
ABC Housing Authority, The name of the corporation shall be _______________.
Inc. Article II Location
The place in this state where the principle office of the
123 XYZ Street, Sunnyville, Florida 33024 corporation is to be located is: ______________________.
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Articles of Incorporation
Article III Organizational Structure
This corporation is organized exclusively for charitable,
religious, educational, and scientific purposes, including,
for such purposes, the making of distributions to
organizations that qualify as exempt organizations under
section 501 (c)(3) of the Internal Revenue Code or the
corresponding section of any future federal tax code.
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Articles of Incorporation
Article IV Name of Initial Directors or Commissioners
or Trustees
Serena Williams Address: __________
654 Jupiter Island Shore Name: ___________
Steph Curry 123 Golden State Avenue Name: ___________
Address: __________
Breanna Stewart Address: __________
987 SeaNle Storm Way Name: ___________
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Articles of Incorporation
Article V Distribution of Earnings
No part of the net earnings of the corporation shall inure to
the benefit of, or be distributed to its members, trustees,
officers, or other private persons, except that the
corporation shall be authorized and empowered to pay
reasonable compensation for services rendered and to
make payments and distributions in furtherance of the
purposes set forth in Article III Organizational Structure.
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Articles of Incorporation
Article VI Dissolution
Upon the dissolution of the corporation, assets shall be
distributed for one or more exempt purposes within the
meaning of section 501 (c) (3) of the Internal Revenue
Code, or the corresponding section of any future federal
tax code, or shall be distributed to the Federal
Government, or to a State or Local Government, for a
public purpose.
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Articles of Incorporation
Article VII Incorporator
__________,
Phil Mickelson The name of the incorporator is:
and
2016 PGA Blvd. his/her address is __________.
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Questions/Comments
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Bylaws
Bylaws are an organization’s operations manual. They help to
define:
Size of the BOD and how it will function.
Roles and duties of directors and officers.
Rules and procedures for holding meetings, electing
directors, and appointing officers.
Conflict of interest policies and procedures.
How grant monies will be distributed and other essential
corporate governance matters.
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Bylaws
Article I
Purpose
A. Purpose
Article II
Name & Location
A. Name
B. Mission & Vision
C. Other
B. Location(s)
Article III Board of Directors
A. Power* B. Residency C. Number D. Election E. Term
F. Vacancies G. Removal H. Resignation I. Quorum J. Meetings
K. Waiver of Notice L. Informal Action M. Participation N. Voting
O. Absence P. Compensation
Article IV Officers
A. Officers B. Term C. Removal D. Resignation E. Powers &
Duties (Chairperson, Vice Chairperson, Secretary & Treasurer)
Article V
A. Executive B. Finance C. Audit D. Other
Committees
Article VI Employees
A. Chief Executive B. Employees C. Others D. Compensation
Article VII Miscellaneous
(Operational)
A. Fiscal Year B. Gifts C. Checks, Drafts, Loans D. Deposits
E. Accounts, Records F. Amendments G. Indemnification
H. Insurance I. Validity J. Other Issues
Power*: authority to “operate” or authority to “govern” the affairs of the
organization. New organizations may require directors who have the ability and
authority to operate the operations. More established organizations may
require directors who govern the process.
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Bylaws
Article I Purpose
The purpose of these Bylaws shall be to protect the
ABC Housing Authority, Inc. interests of the ______________,
to develop
cooperative relations with agencies of the Federal
Government and to cooperate with State and Local
Governments.
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Bylaws
Article II (A) Name
ABC Housing Authority, Inc. The name of this organization is _______________.
Article II (B) Location
The location of the principle office of this organization is:
123 XYZ Street, Sunnyville, Florida 33024 ________________________.
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Bylaws
Article III Board of Directors/Commissioners/Trustees
ABC Housing Authority, Inc. shall be
The governing body of the _____________
know as the Board of Directors (BOD) and shall
consist of a Chairperson and four (4) other members.
The Vice Chairperson shall be elected by the BOD.
Secretary, Treasurer and other positions as deemed
necessary shall be appointed or employed by the
ABC Housing Authority, Inc. BOD on behalf of the _____________.
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Bylaws
Article IV Officers
ABC Housing Authority, Inc. shall be the
The officers of the _____________
Chairperson, Vice Chairperson, and /or Secretary
and Treasurer.
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Employer Identification Number
An organization should request an Employer Identification
Number (EIN), even if it does not have any employees.
Use IRS Form SS-4 also known as the Application for
Employer Identification Number.
Go to: https://www.irs.gov/pub/irs-pdf/iss4.pdf
Call the IRS at 800-829-4933.
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Employer Identification Number
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Part One Review
Development of a Mission Statement
Registration of a Fictitious Name
Appointment of a Board of Directors
and hold an Organizational Meeting
Creation of Articles of Incorporation
Formation and Structure of Bylaws
Applying for an Employer Identification Number (EIN)
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Questions/Comments
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Part Two Topics
Fundraising Considerations: Grants, Donations,
Charitable Giving, and Other Revenue Streams.
Analyzing the Features , Advantages and
Disadvantages of 501 (c) (3) vs. 7871 Status.
Applying to the IRS for Determination as a
501 (c) (3) Charitable Nonprofit Organization.
Requirements of IRS Form 1023 vs. IRS Form 1023-EZ.
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Fundraising Considerations
Wait until incorporation is finalized in your state and you
have the letter of 501 (c)(3) status from the IRS before
trying to raise money through contributions.
Why?
ABC Housing Authority, Inc. 123 XYZ Street, Sunnyville, Florida Before incorporation, you are personally responsible for
how you handle money. Also, you cannot tell potential
donors that their contributions are tax deductible until you
are officially declared a tax exempt nonprofit by the IRS.
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Fundraising Considerations
However, if you need to start raising funds before state-approved
incorporation and IRS-approved 501 (c)(3) designation, you can
use a Fiscal Sponsor.
A Fiscal Sponsor is simply another nonprofit organization that is
willing to handle your donations for you. This situation is also
known as Nonprofit Management or Nonprofit Incubation.
For more information on Fiscal Sponsors, Nonprofit Management
and/or Nonprofit Incubation, go to the Society for Nonprofit
Organizations at www.snpo.org. In addition, go to the Foundation
Center www.foundationcenter.org and use the keyword of
Incubator.
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Fundraising Considerations
If your organization wishes to apply for grants, keep in mind
that funders, whether private foundations, corporations, or
government agencies, almost always require 501 (c)(3)
status. For more information on these granting organizations,
go to www.foundationcenter.org.
In addition to tax exemption, contributions and grants, there are
other benefits of 501 (c)(3) status, including special discounts
on postage and rent. Some programs, like local Rewards
Programs, require that an organization be a 501 (c)(3).
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Features of a 501 (c) (3) vs. 7871
501 (c) (3) Status 7871 Status A 501 (c) (3) organizaUon is a nonprofit that acts as a corporaUon that is federally tax exempt. All federally recognized tribal governments, and any tribally established fund, program, or subdivision that is an integral part of a tribal government and is designated to perform charitable acUviUes for public purposes is covered under 7871 of the IRS code and can be considered a 7871 organizaUon. There are no owners. The founders may serve on a BOD and act as officers. It may or may not have members. It exists to ensure that the organizaUon operaUng in a way that best meets the needs of its clients and customers that use its services. This means that tribal departments of educaUon, housing, or economic development could all technically be described as 7871 organizaUons. Insert your logo here
Advantages of a 501 (c) (3) vs. 7871
501 (c) (3) Status 7871 Status Some tribes incorporate a nonprofit corporaUon under state law and then apply for 501 (c) (3) status from the IRS. A second approach is to incorporate a nonprofit under tribal law. A third and increasingly more common route is for tribes to establish a fund, program, or subdivision that is designed to perform charitable acUviUes. This type of charitable organizaUon, which part of tribal government, is o_en termed a 7871 organizaUon. It provides an organizaUon with administraUve support and governance Close connecUon with Tribal communiUes and their needs. It can be tax exempt. It can be tax exempt. There are reduced costs of operaUon. There are reduced costs of operaUon. Insert your logo here
Disadvantages of a 501 (c) (3) vs. 7871
501 (c) (3) Status 7871 Status CreaUng a nonprofit organizaUon takes Ume, effort, and money. ContribuUons to a 7871 must be used for exclusively public purposes. Nonprofits must keep detailed records and All foundaUons that provide donaUons to a submit annual reports. 7871 will require reporUng and accountability for funding expenditures and many will require an audit. Nonprofits are required to have several There may be a lack of separaUon of the directors, who are the only people allowed tribal government, and the organizaUon to elect other directors. may be subject to tribal poliUcs as a result. Nonprofits are dedicated to the public interest. Therefore, its finances are subject to review by funders and other enUUes. Insert your logo here
Some private foundaUon are hesitant to make donaUons to government enUUes, including a 7871, because they have not been educated about the tax-­‐deducUble nature of their donaUons. Questions/Comments
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Applying to the IRS
After approval of incorporation and the return of your filed
Articles of Incorporation by the Division of Corporations in
your state, which usually takes about 30-60 days, you can
submit IRS Form 1023, also known as the “Application for
Recognition of Exemption”.
Keep in mind that you must file IRS Form 1023 within
27 months of the date of the establishment of the
organization or when your Articles of Incorporation
were approved and returned to you.
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IRS Form 1023 vs. IRS Form 1023-EZ
Become familiar with the Application
for Recognition of Exemption (IRS
Form 1023). Read the instructions
carefully. This is a comprehensive
23-page form and may require you to
seek accounting and/or legal
assistance to complete it.
IRS Form 1023 requires a lot of leg
work, but don’t worry, many other
people have completed this form
successfully.
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IRS Form 1023 vs. IRS Form 1023-EZ Listed below are standard questions and attachments for the
Application for Recognition of Exemption (IRS Form 1023).
Standard Questions
Standard Attachments, Narratives, Lists
What is your Employer Identification
Number?
State-approved Articles of Incorporation.
What is your date of Incorporation?
BOD-approved Bylaws.
Are Officers and Directors related to
Employees?
Narrative of your overall activities.
Are you affiliated with a government unit?
Compensation of Officers and Directors.
Will you operate a school?
Compensation of five highest paid employees.
What is your status of public charity?
List of duties, qualification, and hours of work.
Are you a successor to another organization?
Narrative of fundraising activities.
Have you adopted policies on compensation?
Financial statements, if more than one year old.
Are you requesting a Definitive Ruling?
List of grants received.
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IRS Form 1023 vs. IRS Form 1023-EZ Listed below are standard questions to qualify for Recognition
of Exemption using the IRS Form 1023-EZ.
Have or do you project annual gross receipts will
exceed $50,000 in the next three (3) years?
Are you a successor to a for-profit entity?
Do you have total assets in excess of $250,000?
Are you a church, school, college or university?
Were you formed under the laws of a foreign
country or is your mailing address in a foreign
country?
Are you a hospital, medical research organization,
Accountable Care Organization, or a Health
Maintenance Organization?
Are you organized as an entity other than a
corporation?
Is a substantial purpose of your organization to
provide assistance to individuals through credit
counseling activities?
Do you or will you invest five (5) % or more of
your total assets in securities that are not
publicly traded?
Do you maintain or intend to maintain one (1) or
more donor advised funds?
Do you test consumer products?
Are you a private operating foundation?
Do you sell or intend to sell carbon offset?
Are you applying as a Charitable Risk Pool?
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Sales Tax Exemption
Who Qualifies?
501 (c)(3) Organizations
determined by the IRS to be
exempt from federal income tax
What is Exempt?
Purchases and Leases
What must be
proven?
501 (c)(3) Status
What Documents are
Required?
ü  Copy of the Determination
Letter from the IRS
Exemption Category
ü  501 (c)(3) Organization
What Else is
Needed?
ü  Employer Identification
Number
ü  Incorporation Date
And…?
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ü  Does the organization receive
income from the sale or lease
of personal or real property
or the sale of taxable
services? If yes, provide a
copy of your Sales and Use
Registration Number.
Part Two Review
Fundraising Considerations: Grants, Donations, Charitable
Giving, and Other Revenue Streams
Analyzing the Features, Advantages and Disadvantages of
501 (c) (3) vs. 7871 Status
Applying to the IRS for Determination as a 501 (c) (3)
Charitable Nonprofit Organization
Requirements of IRS Form 1023 vs. IRS Form 1023-EZ
Applying for a Sales Tax Exemption
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