Obtaining not-for-profit status for your organization at the federal level requires that your or your trusted legal advisor complete the application for tax-exempt status via form 1023. You can explore the details of form 1023 at www.irs.gov. There are several steps before you get here but that is the basis.
First, we should explore what is a nonprofit organization. A nonprofit organization is a legal entity that operates for a purpose that does not generate profit. Not generating a profit means it does not distribute surplus to its members. A nonprofit can be created for several reasons. These can include being organized for the betterment of social welfare, education, charity, and or religious purposes to name a few. Nonprofits can also be categorized by their size, geographic scope, and mission. These types of organizations are required to be governed by a board of directors and must file annual reports with the federal government. Often when someone has decided to create a not-for-profit organization, they do so to support a cause they care about, to make a difference in the lives of others, to give back to their community, and receive a tax deduction while doing it.
Okay now that we have that established, you’ll need to develop a mission statement for your non-profit and determine your target population. Who are you trying to help? Or what problem are you trying to solve? Once you’ve created the mission statement and answered the above questions you should choose a legal structure for your organization. The best structure will depend on your specific needs and goals. Please feel free to book a consultation if you’d like Browne Law to advise you as you create your not-for-profit.
At this time, we suggest you build your board of directors. These are the folks who will be responsible for oversight and management of your organization. Ideally, these will be capable individuals who are passionate about the mission. Next, you’ll apply for and receive tax-exempt status using the form we discussed. You may also want to apply for exempt status in the state you’ve formed your entity.
Do your research. Resources for nonprofits are plentiful. Talk with other nonprofit leaders, hire a lawyer and an accountant. They all can provide you with valuable advice and support.
As always, I hope this information is both useful and helpful.