HBIF Meeting 12-09

The ABC’s of Starting a Nonprofit

A Webinar By:

Key Speaker

Melanie M. Swift, MNMDirector of Nonprofit Services

CharityNet USA

Administrator

Chris RomeroMarketing Coordinator

CharityNet USAinfo@CharityNetUSA.com

Welcome!

• CharityNet USA: A “One-stop” resource center for nonprofit organizations and foundations nationwide!

• Key Speaker: Melanie M. Swift, MNM

Most Commonly Asked ?s

• Will the webinar slides be available for download?

• Will the webinar be recorded and available on-demand?

– Recorded Webinar Available At:• http://www.charitynetusa.com/webinararchive/in

dex.php

Yes

Yes

Ask Questions – Give Feedback!

Agenda

I. Starting a Nonprofit Overview

II. Articles of Incorporation

III. Bylaws

IV. Board Development

V. Conflicts of Interest

VI.Tax Exemption

The Gift of Giving

• Treat it like a business

• Develop a Plan• What is my

advantage?• What makes my

organization unique?

• How will I Sustain?• Know the Facts!

Articles of Incorporation

• Governing Document, aka Charter• Legally forms the corporation with

the state• Identifies the organization’s purpose• Sets out the basic operating

framework for the organization• Provides limits to organizational

activities

Bylaws

• Operating constitution• Outlines more specific measures than

does AOI• Details board procedures• Defines elections, term limits,

quorums, etc. • Should be reviewed and revised

regularly

Why a Board of Directors?

• Guardians of the public trust

– Built in protection, ensuring public purposes are being carried out.

– An effective board makes it possible for the staff to focus upon day-to-day mission fulfillment.

Board Responsibilities

• Legally and financially ensuring the conduct of the nonprofit organization

• Defining the organization’s mission, goals, and objectives

• Public accountability and creation of public value

Board Activities

• The Activities of a Board Include:•Mission Statement Development

• Policymaking

• Executive Director supervision

• Committee appointment

• Reputation Enhancement

More Board Activities

• Additional Activities Include:

• Manages the organizations funds

• Assists in developing annual budget

• Makes personal financial contributions

• Assesses its own performance

• Engages in long term strategic planning

What Board Members Do NOT Do

• Board Members DO NOT:• Become involved in day to day

operations of the organization

• Hold owner’s equity in any

organization assets• Receive compensation or salary for

their Board duties

IRS Board Guidelines for 501(c)(3)

• Must have a minimum of 3 members on the Board of Directors

• Must have a minimum of 51% that are independent

• Should represent a cross-section of the community served.

Board Indemnification

In most cases board members cannot be held personally responsible for legal action against the organization.

Conflict of Interest Policy

• Policies developed to address situations in which an insider or a member of their family may benefit personally from a transaction with the organization.

• Decisions involving conflicts may still be in the organization’s best interest.

Conflict of Interest Policy

• Require full disclosure of potential conflicts.

• Requires arm’s-length negotiations.• Removes individual with conflict from

participation in the decision and/or vote.

What Comes Next

• Setup your 501c3

• Develop Fundraising Plans

• Start Building Awareness of your Organization

• Begin Fundraising

Charity Registration

501(c)(3) Organizations

• Do not pay federal corporate income tax.

• In most cases, do not pay state corporate, franchise, excise, sales, and use taxes.

• Can offer individual and corporate donors a tax deduction for their contribution.

Summary Slide

• There are critical steps that must be taken when starting a nonprofit organization!

• Identifying organizational needs, a strong board and avoiding conflicts of interest is key in starting a solid foundation!

Why 501(c)(3)?

Nonprofit Does Not Mean Tax Exempt!

What Organizations Qualify 501(c)(3)?

•A nonprofit must prove that they are both organized & operated exclusively for allowable purposes.

Organizational Test

Operational Test

• An organization must be operated exclusively for one or more of the following purposes: • Religious• Charitable• Scientific• Testing for public safety• Literary• Educational• Fostering amateur sports• Prevention of cruelty to children or animals

Examples of Qualifying Organizations

• Homeless Shelters• Soup Kitchens• Churches• Outreach Ministries• Private Schools• Daycares• Museums• Community

Development Organizations

• Clothing Ministries• Prison Ministries• Foreign Assistance• Art Schools/Centers• Youth Organizations• Little Leagues • Low Income Housing• Senior Housing• Orphanages

Limitations for 501(c)(3)

• 501(c)(3) organizations are subject to limitations on some specific activities, including:

• Private benefit/inurement

• Lobbying

• Political Campaign Activity

• Unrelated Business

Unrelated Business Income

• Selling goods or services to generate income

• Not directly related to exempt purpose

• Reported and taxed on 990-T

• Certain exceptions apply

• If UBIT becomes a substantial portion of revenue, your organization will no loner be considered exclusively charitable

Upcoming Webinars

• Steps to Grow Your Nonprofit: 1/25/2012 3pm EST

• Fundraising Success: 02/01/2012 3pm EST

• Nonprofit Marketing: 02/08/2012 3pm EST

Register for upcoming events at:

http://www.charitynetusa.com/webinar/index.php

Special Promotion

Free Flyer(with purchase of $499)

Q & A

•CharityNet Nonprofit Services

• 501c3 Prep• Grant Writing• Strategic Planning• Website Development• Graphic Design• Marketing (Online & Offline)• Bookkeeping & Accounting• Small Business Services

Q & A

Contact Us• Chris Romero: Chris@bizcentralusa.com

• Melanie Swift: Melanie@bizcentralusa.com

• Visit www.CharityNetUSA.com or Call 407-857-9002

www.twitter.com/charitynetusa

Facebook Fan Page:

CharityNet USA

Follow us and we’ll follow you back: