How to Start a Non-Profit Organization with a 501 (c) (3) Status
Do you always dream of making the world a better place to live in? Perhaps you want to establish a non-profit organization and to do this successfully you need to be aware of some guidelines and tips.
What Are Non-Profits?
Basically, a non-profit is an organization meant for non-commercial purposes, which promotes and advances issues or matters of private or public interest. Those with 501(c) (3) status are exempt from income and sometimes property taxes, and capable of receiving tax-deductible charity contributions.
To avoid mistakes, it is best to read reliable books and surf the Internet for information on non-profits, or consult an attorney who is an expert in the field.
Mission Statement: Its Purpose and Importance
During the same period, you must formulate a compelling and distinct mission statement of your organization based on the values, purposes, and services that you intend to do. It must be as concise and short as one to two sentences.
Choosing the Management Team
- Take time in choosing carefully the people who will comprise your organization’s board of directors.
- Identify the persons who actually support your mission and those who will most likely impart their time and abilities. Decide on the selection process and set the qualifications required to be a board member.
Documenting Your Organization
- Prepare and file your Articles of Incorporation and by laws. These are official statements that must be filed with the appropriate state agency in relation to the establishment of your organization. Requirements governing how to incorporate may vary in each state.
- Filing these documents is particularly important because it protects both the board and staff from legal liabilities that may be incurred of faced by the organization. Again, it will be best to consult, or obtain the services of, an experienced attorney.
- Request help from experts to develop an effective budget plan, accounting system, and record-keeping system.
- To apply for a 501 (c) (3) status, you need to obtain from the local office of the Internal Revenue Service (IRS) Form 1023 for the application and Publication 557 for the detailed instructions.
- Since application papers are important legal documents, it will be wise to get the assistance of an experienced attorney in preparing your papers. Do not forget to pay for the filing fees.
Regardless of whether you will or will not hire employees, you need to obtain a federal employer identification number (EIN) or the federal ID number. This is for the proper identification of the organization when tax documents are filed. You may obtain this from the IRS; just ask for Form SS-4 when you are applying for EIN.
If your non-profit organization plans to conduct fundraising activities, then you must fulfill the requirements under charitable solicitation laws. This is done by obtaining a permit or license and subsequently preparing an annual report and financial statement.
