grants assistance hotline 1.866.973.2760 starting a nonprofit organization focus area: grants...
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Grants Assistance Hotline 1.866.973.2760 www.NativeLearningCenter.com
Starting a Nonprofit Organization
Focus Area: Grants Education
Instructor: Vince Franco
Grants Assistance Hotline 1.866.973.2760 www.NativeLearningCenter.com
For additional help
Technical Assistance Hotline
1-866-973-2760
Grants Assistance Hotline 1.866.973.2760 www.NativeLearningCenter.com
Course Description & Objectives
Course Descriptions:Once you have a focused organization and a plan in place, you may be ready to start a 501 (c)(3). This course will guide attendees through the process of establishing a Board of Directors, incorporating as a nonprofit organization, creating bylaws, holding organizational meetings, and much more.
Course Objectives:After this course, attendees will be able to:• Describe the process of incorporation;• Utilize best practices to form a Board of Directors;• Conduct a meeting to adopt bylaws and goals;• Create a records book; and,• Apply for 501 (c)(3) status using IRS Form 1023.
Starting a Nonprofit Organization
#1
Grants Assistance Hotline 1.866.973.2760 www.NativeLearningCenter.com
Your Presenter
Vince Franco Grants Compliance Manager
Native Learning Center (NLC)
6363 Taft StreetHollywood, Florida 33024
VincentFranco@semtribe.com
1-954-985-2300
Ext. 10651
Grants Assistance Hotline 1.866.973.2760 www.NativeLearningCenter.com
Any Questions?
• If you have a question please use the hand tool to raise your hand and type your question into the chat box (next slide).
• The presenter will work to answer your questions as quickly as possible. Questions will be answered in the order they were received.
• Please remember to complete the class survey at the end of this course.
Grants Assistance Hotline 1.866.973.2760 www.NativeLearningCenter.com
Technical Issues? Unable to hear us?
Grants Assistance Hotline 1.866.973.2760 www.NativeLearningCenter.com
Topics• Building an Organization and Defining Your Mission (Review)
• Choosing a Business Name• Incorporating your Organization• Articles of Incorporation• Putting Together a Board of Directors• Developing Bylaws• Holding an Organizational Meeting• Registering for an Employer Identification Number• Applying with the IRS for 501(c)(3) Nonprofit Status• Sales Tax Exemption• Contributions and Applying for Grants and Funding
Grants Assistance Hotline 1.866.973.2760 www.NativeLearningCenter.com
Building an Organization and Defining Your Mission (Review)
• Implementing a Needs Assessment It is a survey of potential customers Helps to identify other organizations doing what you do
• Conducting a SWOT Analysis Defines your Strengths and Weaknesses (Internal) Defines your Opportunities and Threats (External)
• Developing a Mission and Vision Statement A strong mission shows why an organization exists and its overall purpose A strong vision supports the mission by showing the future path of an organization
• Creating a Logic Model, Goals and Strategic Plan Helps to define the purpose of an organization Helps to determine the everyday direction as well as long-term objectives
• Developing Partnerships
Grants Assistance Hotline 1.866.973.2760 www.NativeLearningCenter.com
What do you think a successful nonprofit organization looks like?
Grants Assistance Hotline 1.866.973.2760 www.NativeLearningCenter.com
Choose a Business Name
First, you need to choose a business name and check for availability. Every state has a Division of Corporations that will allow you to search for available corporate names, as well as outlining any restrictions on naming. You should also familiarize yourself with the statutes in your state that deal with incorporation and nonprofit organizations.
In the State of Florida, go to: http://www.sunbiz.org.
Avoid numbers and colors Avoid fads and clunky names
Keep it short Make it memorable Sound like you belong
Check with the State Do your homework
Grants Assistance Hotline 1.866.973.2760 www.NativeLearningCenter.com
Choose a Business NameIn most states, the potential 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.
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.
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.
Grants Assistance Hotline 1.866.973.2760 www.NativeLearningCenter.com
Choose a Business NameHere are some naming situations to avoid.
And here are some examples of bad names and name changes.
Now that you have carefully considered a name, let’s move on.
Unusual Spelling Would-4-Sail This company sells wood
Unusual Phrase Killer for Hire This in an insect control company (I hope!)
Redundancies Internet Gold-Golden Lines Website Design
Complexity Ziffren, Brittenham, Branca, Fischer, Gilbert-Lurie, Stiffelman, Cook, Johnson, Lande & Wolf
Legal Firm
Boring Business Systems Royal Mail (1635) to Consignia (2001) 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
Grants Assistance Hotline 1.866.973.2760 www.NativeLearningCenter.com
Incorporate your OrganizationIf you are located outside of
Florida, thenyou will need to check with the National Association of Secretaries of State to determine the process and filing fees for incorporation. Go to: www.nass.org.The filing fee is usually between $50 to $200, but it varies by state.
For more information on incorporation
in the State of Florida, go to the Division of
Corporations at: http://www.sunbiz.org.
Next, let’s look at what you need.
Grants Assistance Hotline 1.866.973.2760 www.NativeLearningCenter.com
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.
• Usually conducted at a state level.
• Usually requires the completion of Articles of Incorporation and a fee.
• Articles of Incorporation require serious decision making regarding the structure of the organization.
Let’s look even closer.
•
Grants Assistance Hotline 1.866.973.2760 www.NativeLearningCenter.com
Articles of IncorporationArticle I Name Name of the Corporation shall be…
Article II Duration Duration of the Corporation shall be perpetual.
Article III Principal Office Principal street and mailing address of the Corporation is …
Article IV Purpose Corporation is organized exclusively for charitable, scientific and educational purposes within the meaning of 501 (c)(3) . The mission of the Corporation is to provide…
Article V Manner of Appointment & Election
Manner in which the Board of Directors of the Corporation are appointed and elected is provided in the Bylaws of the Corporation.
Article VI Initial Board of Directors & Officers
Title, name and address of each initial Board of Directors and Officers are …
Article VII Limitations & Powers Earnings of the Corporation shall not benefit the Directors of Directors, Officers, or other individuals. Salary to employees shall be…
Article VIII Dissolution of Assets Upon termination, assets of the Corporation will be distributed within the meaning of 501 (c)(3). The assets will be distributed to…
Article IX Initial Registered Agent Name and street address is…
Article X Incorporator Name and street address is…
Grants Assistance Hotline 1.866.973.2760 www.NativeLearningCenter.com
Board of DirectorsIn 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.
All of the Directors should be selected, in part, for their ability to raise money. This is very important because raising funds is an organizational effort and everyone should be involved in generating revenue to operate the organization. Look for people with work experience in sales or business.
Grants Assistance Hotline 1.866.973.2760 www.NativeLearningCenter.com
Board of DirectorsWhat are some common themes and recommended personal qualities of a strong Board of Directors member?
For more information on the qualities of Board members, go to:
http://www.governanceprofessionals.org/society/Governance_for_Nonprofits_-_Board_Members_Personal.asp
Common Themes… …Qualities… …More Qualities
Honesty and a strong sense of ethics Someone who wants to learn and seeks out information
Ability to refrain from performing staff functions
Ability to communicate and work with others
Someone who can pose the right questions
Ability to critically evaluate an issue
Energy and enthusiasm Someone who represents the community that you serve
Fortitude to hold people accountable
Good listening skills Someone willing to make sure the mission of the organization is
realized
Patience and resilience
Grants Assistance Hotline 1.866.973.2760 www.NativeLearningCenter.com
Bylaws There are usually no set criteria for the content of Bylaws, but they typically set forth internal rules and procedures. There are a number of web pages out there that have sample Bylaws, including http://www.ehow.com/how_7518601_develop-bylaws-nonprofit.html and www.grantspace.org.
You might or might not be required to file Bylaws with your state, but in most cases, you must keep a copy at your organization's principal place of business. Check with your state to make sure.
Let’s look closer at Bylaws.
BYLAWS
Article I Purpose
Article II Office
Article III Board of Directors
Article IV Officers
Article V Committees
Article VI Employees
Article VII Miscellaneou
BYLAWS
Article I Purpose
Article II Office
Article III Board of Directors
Article IV Officers
Article V Committees
Article VI Employees
Article VII Miscellaneou
Grants Assistance Hotline 1.866.973.2760 www.NativeLearningCenter.com
Bylaws
Power*: authority to “oversee” or authority to “manage” the affairs of the organization. New nonprofits may require Directors who have the ability and authority to oversee operations. More established nonprofits may require Directors who manage the process.
Article I Purpose A. Purpose B. Mission & Vision C. Other
Article II Office A. Location(s)
Article III Board of Directors A. Power* B. Residency C. Number D. Election E. Term F. VacanciesG. 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 Committees A. Executive Committee B. Finance/Audit Committee C. Other
Article VI Employees A. Executive Director B. Employees & Agents C. Compensation
Article VII Miscellaneous (Operational)
A. Fiscal Year B. Gifts C. Checks, Drafts, Loans, Etc. D. Deposits E. Books & Records F. Amendments G. Indemnification H. Insurance I. Validity J. Other Issues
Grants Assistance Hotline 1.866.973.2760 www.NativeLearningCenter.com
Organizational Meeting
Hold an Organizational Meeting and create a Records Book. You will need this book to store important documents concerning your organization.
Check your state’s nonprofit recordkeeping requirements
for specific information about what
you need to record in your
Record Book.
Bring this book to all meetings.
CORPORATE RECORDS
Articles of Incorporation
Bylaws
List of Board of Director Members
Official Minutes from Meetings
Other Documents
Grants Assistance Hotline 1.866.973.2760 www.NativeLearningCenter.com
Organizational MeetingConsider implementing the following activities before and during your first organizational meeting.
Before the 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 emails or postcards to confirm.
• Create a first agenda that includes the issues below.
During the meeting:• Name and approve the Board of Directors, Officers,
and the Executive Director;• Adopt the Bylaws and major goals or strategic plan;• Adopt a budget and major events, if any;• Approve an accounting system and fiscal year; and, • Select a bank. Look for a bank that has accounts
for nonprofits with low minimum deposit requirements.
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Grants Assistance Hotline 1.866.973.2760 www.NativeLearningCenter.com
Employer Identification NumberRequest an Employer Identification Number from the IRS, with or without employees of the organization. This can be done via an online application at www.irs.gov.
Use IRS Form SS-4, Application for Employer Identification Number.
The federal government and many state and local agencies use the EIN to identify your organization.
Let’s look closer.
Grants Assistance Hotline 1.866.973.2760 www.NativeLearningCenter.com
Employer Identification Number
Sample of questions on the Application for Employer Identification Number (IRS Form SS-4). Keep in mind that some items will and will not apply to your organization.
Now it’s time to formally apply for 501 (c)(3) status.
1. Legal Name of Entity 2. Trade Name (or D/B/A)
9. a. Type of Entity 9. b. Name State of Origin
10. a. Reason for Applying? 10. b. Specify Type of New Business
11. Date Business Started 12. Closing Month of Accounting Year
13. Number of Employees Next 12 Months 15. First Date Wages Paid
16. Principal Activity 17. Indicate Product or Services Provided
New Business
Corporation
Other (specify)
Grants Assistance Hotline 1.866.973.2760 www.NativeLearningCenter.com
Applying for 501(c)(3) Status with the IRS
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.
So let’s look closer.
Grants Assistance Hotline 1.866.973.2760 www.NativeLearningCenter.com
Applying for 501(c)(3) Status with the IRS
Listed below are standard questions and attachments for the Application for Recognition of Exemption (IRS Form 1023).
Standard Questions Standard Attachments, Narratives, ListsWhat is your Employer Identification Number? State-approved Articles of Incorporation
What is your date if Incorporation? Board-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
Grants Assistance Hotline 1.866.973.2760 www.NativeLearningCenter.com
Applying for 501(c)(3) Status with 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.
Once you get your IRS exemption, you can apply to your state for a Sales Tax Exemption.
So let’s look closer.
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.
Grants Assistance Hotline 1.866.973.2760 www.NativeLearningCenter.com
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?
Copy of the Determination Letter from the IRS
Exemption Category 501 (c)(3) Organization
What Else is Needed? Employer Identification Number Incorporation Date
And…?
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.
Grants Assistance Hotline 1.866.973.2760 www.NativeLearningCenter.com
Contributions
• 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?
• 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.
Your OrganizationYour Organization
Grants Assistance Hotline 1.866.973.2760 www.NativeLearningCenter.com
Contributions
• 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 key word of Incubator.
Grants Assistance Hotline 1.866.973.2760 www.NativeLearningCenter.com
Grants and Funding
• 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).
Grants Assistance Hotline 1.866.973.2760 www.NativeLearningCenter.com
Topics Covered• Building an Organization and Defining Your Mission (Review)• Choosing a Business Name• Incorporating your Organization• Articles of Incorporation• Putting Together a Board of Directors• Developing Bylaws• Holding an Organizational Meeting• Registering for an Employer Identification Number• Applying with the IRS for 501(c)(3) Nonprofit Status• Sales Tax Exemption• Contributions and Applying for Grants and Funding
Grants Assistance Hotline 1.866.973.2760 www.NativeLearningCenter.com
Closing Notes
If you have any questions or need help, call The NLC Grants Technical Assistance Hotline at 1-866-973-2760!
Catch all the latest stuff from the Native Learning Center on our webpage at www.nativelearningcenter.com or on
Facebook or Twitter.
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