Flying Right in Setting Up and Operating Your Exempt Organization

Our focus today will be on 501(c)(3) organizations.

Q. Why are most nonprofit organizations formed?

A. Because someone identifies a need that is not being met, that would be very difficult (if not impossible) to meet by a for profit entity.

Establishing a Nonprofit Organization

Step ONE:Clearly define the mission and prepare a mission statement.

Establishing a Nonprofit Organization - Continued

Step TWO:Evaluation:

a. Is there another nonprofit already operating with a similar mission?

b. Is the cause one that will allow you to obtain sufficient funding?

c. Are you willing to live with a lot of rules?d. Who will benefit?

Establishing a Nonprofit Organization - Continued

Step THREE AND BEYOND: Choose a name Prepare and file articles of incorporation File Form 1023, Application for Recognition of

Exemption, with the IRS. How to qualify for 501(c)(3) status…

Establishing a Nonprofit Organization - Continued

Draft bylaws Recruit and appoint the board of directors Hold an initial meeting of the board of

directors Obtain licenses and permits Obtain insurance

Establishing a Nonprofit Organization - Continued

Develop a detailed business plan. Remember that you need to operate like a business!

Adopt a conflict of interest policy Prepare and adopt compensation policies Obtain an EIN

Establishing a Nonprofit Organization - Continued

Secure office space Set up accounting Develop a budget

Establishing a Nonprofit Organization - Continued

Establish professional service relationships:a. Attorneyb. CPAc. Payroll Service Providerd. Banker

Establishing a Nonprofit Organization - Continued

Establish Key Performance Indicators - practical steps1. Mission clearly defined2. Strategies defined3. Action steps defined4. KPIs to measure accomplishment of action steps

Flying Right

Transparency Don’t sit on bad news Communicating your financial message in the

best light:a. Form 990b. Budgetsc. Financial Statementsd. KPIs

Flying Right - Continued

“No one gives you a dime!” – Peter Brinckerhoff

Annual Filing – Form 990 Acknowledging donations Restricted donations - tracking and using

Flying Right - Continued

Unrelated Business Income Tax (UBIT) Excess Benefit Transactions and Intermediate

Sanctions Lobbying

Questions?