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Starting a nonprofit organization

Starting a nonprofit organization. Primary objective is to support some issue or matter of private interest or public concern for noncommercial purposes Arts, charities, education, politics, religion, research Examples??. NPO. Exempt from paying taxes Apply for grants

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Starting a nonprofit organization

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  1. Starting a nonprofit organization

  2. Primary objective is to support some issue or matter of private interest or public concern for noncommercial purposes • Arts, charities, education, politics, religion, research • Examples?? NPO

  3. Exempt from paying taxes • Apply for grants • Tax deductible donations • Tighter control of money • Starved Rock Why start a nonprofit

  4. Step 1: Identify what a nonprofit organization is and what it does Step 2: Develop a mission statement Step 3: Form a board of directors Step 4: Develop and file articles of incorporation Step 5: Establish bylaws Step 6: File for nonprofit status with the IRS Step 7: Register with the Attorney General Step 8: Apply for nonprofit mailing permit Starting a nonprofit

  5. 20+ NPO’s – based on IRS tax code • 501(c)(3) • Religious, Educational, Charitable, to Foster National or International Amateur Sports Competition • No political activity • 501(c)(4) • Civic leagues, social welfare organizations & local associations of employees Types of nonprofits

  6. 501(c)(6) • Business leagues, chambers of commerce, real estate boards or boards of trade • 501(c)(7) • Social clubs organized for recreation and other purposes for the benefit of their members Types of nonprofits

  7. Do a name check (Sec of State Office) • Friends of the Colorado Springs Pioneers Museum • Friends of Cheyenne Cañon • Rock Ledge Ranch Living History Association Name

  8. Who are we & what do we do (purpose). The Friends of Reading Recreation (FORR) was established to seek private sector donations to enhance the recreational and leisure opportunities in the Town of Reading. To strive toward building partnerships within the Community in order to Support, Develop and Subsidize the Barrington Rec Department’s Facilities and Programs. Mission Statement

  9. Direct organization • Size • IL Law – at least 3 board members • Employees as board members?? • Bylaws • Structure, titles, job description, roles, responsibilities, election procedures Board of Directors

  10. Official statement of creation • File certificate of incorporation • own its own property and its own bank account • ensure that the nonprofit can continue on its own (even after you’re gone) • protect yourself personally for operations of the nonprofit…liability Articles of incorporation

  11. Articles of incorporation – Form 102.10 • Unique name ending in NFP • Board members involved • Purpose of the organization • Registered agent…CEO of org. to execute AOI • Other provisions • Membership of the board, liability, distribution of net earnings • Dissolution • IRS has a boilerplate… Starting a nonprofit org

  12. Upon dissolution of the chapter, its assets shall be disposed of exclusively for the purposes of the chapter or distributed to such organizations that shall, at the time, qualify as exempt organizations under Sections 501(c)(3), such as the national AAUP at 1012 14th Street, N.W., Suite 500, Washington, D.C. 20005. 

  13. Bylaws • Define how a nonprofit organization will be managed and how it will run. • What will we include? • Draft the bylaws & the a lawyer reviews • How do bylaws differ from AOI? Starting a nonprofit org

  14. Articles of incorporation Bylaws • Provide info such as: • the name of the person organizing the corporation; • names of the corporation's Board of Directors; • location of the corporation • Filed with the state • Costs to amend • Details corporation's operations or structure • Membership, annual meeting, more detailed board operation, committee structure, amending the bylaws • Not filed with the state • Can amend anytime

  15. Purpose statement • Similar to AOI, but more specific • State exactly what you will fund (ie. SRD programs) otherwise anyone can apply • Members • Can have a lot of power • Can elect directors • Can dissolve the corporation • Can be the entire community, can be paid members • Limit control Bylaws…a few pieces

  16. Directors • Oversee org. • Mix of community & agency • Include number of directors, term, qualifications, elections, meetings, notice, quorum, voting, vacancies, compensation • Officers • Oversee day to day activities • Include role, election, terms, vacancies & removal of each position Bylaws…a few pieces

  17. Financial issues • Execution of checks, how deposits are made, execution of contracts, receipt of gifts • Indemnification • Legal ease, orgs holds harmless officers, directors, etc • Dissolution • Correlate with AOI Bylaws…a few pieces

  18. Employer Identification Number (EIN) • http://www.irs.gov/pub/irs-pdf/fss4.pdf • Needed to open a bank account, do business • Tax exempt status with IRS (Form 1023 ) • http://www.irs.gov/pub/irs-pdf/f1023.pdf • 28 pages • Hire an attorney Starting a nonprofit org

  19. Charitable Organization - Registration Statement - Form CO-1 Charitable Organization - Financial Information Form - Form CO-2 forms

  20. http://pe.usps.gov/cpim/ftp/pubs/pub417/pub417.pdf Mailing

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