From an email:
"We just filed our 501(c)(3) paperwork and it was
rejected because we are not a corporation.
It costs at least $800.00 for us to register that way in our state. What
can we do?"
Short answer - form a nonprofit corporation in your state
and get it registered.
There are certain steps you HAVE to take to become a legal federally
recognized nonprofit. You need a board
of directors. You need a mission statement. You need bylaws that follow the laws of your state, and certain other
legal statements such as a nondiscrimination statement. You need a focus or
field that embraces the public good, not just a narrow personal or political focus
that does not serve a greater public good.
After you have put those essentials in place, then you have
to register and pay whatever fees your state requires to incorporate. If you
are not qualified to understand the legal aspects of both forming and running a
nonprofit, you need some sort of legal and financial guidance.
Once you have all of that in place, and you have received
your state notice of acceptance as a nonprofit corporation and filed for tax
exemption in the state THEN you can file the paperwork with the Internal
Revenue Service. That normally takes from 4 to 12 months to come through, and
you can NOT advertise any sort of tax deductibility for donations until you
receive it.
IMPORTANT: For the most part you will not considered for
grant funding for a minimum of one to three years so you
will need to put together a fundraising plan and a strategic plan or at least a
series of goals for fundraising. While
you are in that phase you need to have an accounting program and year-end financial
statements, because all grants require a financial history, budgets and audited
financial statements. It doesn't matter
if you have $1,000 in receipts or $100,000 - you have to be able to show your verified
revenues and expenditures to apply for grants. You must file a 990 (tax report) each year, even if it is the postcard format.
There are various types of corporate types that are accepted
by each state, and there is no universal rule that determines that, so check
with an attorney and/or accountant that specializes in nonprofits in your
state.
State law may determine how many members you must have at a
minimum. Some allow a single entity,
some require three or even more board members. Your bylaws will
need to include how often your board meets, as well as other common requirements. The board members are legally accountable
for any professional or financial malfeasance, so your nonprofit needs to have
errors and omissions insurance applicable to their roles. Your nonprofit board is also accountable for ensuring that the
officers and key employees do not commit illegal acts, and all of them need to
have a background check performed and kept on file.
There is a lot more to this nonprofit thing than many people
understand, and there are no shortcuts. If all of this sounds too expensive and
kind of scary, consider volunteering at other nonprofits until you can absorb
the knowledge and expertise needed to start and operate your own nonprofit. Failing
to understand and follow the process and account for all the costs is a waste
of your time and money.
No comments:
Post a Comment