Starting a non-profit
Form 1023 instructions
Applying for Exemption - Where to Send
Where do I send my exemption application?
Send your completed exemption application to the
address stated in the instructions to the application form:
Internal Revenue Service
P.O. Box 12192
Covington, KY 41012-0192
To send your application using express mail or a
delivery service, use the following address:
Internal Revenue Service
201 West Rivercenter Blvd.
Attn: Extracting Stop 312
Covington, KY 41011
Reasons for Delay
What forms &
documents do we have to file?
1. Order incorporation materials from the Secretary of
State, or call (860) 509-6200. This office has a wealth of sample
documents that allow you to secure a registered agent, perform a name
search and reserve your corporate name.
2. Contact the Secretary of Stateís office and prepare
& file Articles of Information. Keep in mind you need to file the
Non-Stock Certificate of Incorporation. Be sure to ask for any other
materials that explain the rules, etc. governing charitable solicitations,
hiring employees, employer payroll and unemployment taxes, registering for
taxes and for sales and/or income taxes under state and local law (if
any), and matters of interest for setting up and managing a nonprofit in
your state. These may come from several different offices at both the
state and local levels.
3. Prepare and file your organization's bylaws. (There are
many, many good books in libraries and bookstores to help you). In
general, the IRS looks at the bylaws to determine whether a group is what
it claims to be. This is a critical document, and of at all possible,
should be reviewed by an attorney.
4. Order, prepare and file your Federal tax exemption
This includes Form 8718 (User fee for Exempt Organization
Determination Letter request),
Package 1023 Application for Recognition of Exemption with
Form SS-4 (Application for Employer Identification
Publication 557 (Tax-Exempt Status for Your Organization),
and if you are
filing as a foundation order Publication 578 (Tax Information for
Private Foundations and Foundation Manager).
It is assumed you will be applying for 501(c)(3) tax
exempt status, and therefore you must file Form 1023, if not, you need to
file Form 1024.
If your organization is a church, or church-affiliated
auxiliary or an association of churches, you are not required to file Form
You must file your Form 1023 within 15 months after the
end of the month in which you filed your Articles of Incorporation to
ensure that your organization is tax exempt from inception. If not, your
tax exemption does not become effective until the postmark date.
5. Apply for Federal Nonprofit Mailing Permit to qualify
for lower rates on bulk mailings.
Visit a big post office, or call the nearest Postal
Service administrative office, and request the information packets for
nonprofit mailers. The postal service will require a copy of each of the
items mentioned above, plus copies of your literature, newsletters, or
promotional materials before approving your request.
6. Set up corporate checking account with local bank. They
will require a copy of your organization's Employer Identification Number,
Articles of Incorporation, etc.
Reprinted with permission Delaware Association of
Who can I contact at the IRS that can help?
Help Line at the IRS for Nonprofit Organizations
In keeping with its goal of becoming more customer
friendly the IRS has established a toll-free help line for non-profit
organizations. If you have a question you can call: (877)
829-5500. You will be
connected with a customer service representative at the IRS Cincinnati
office (where applications for tax exempt status are processed). A second
line for non-profits is being planned. The IRS is advising callers that
the new toll free exchange (877) may not yet be recognized by some
systems, and callers should ask an operator to connect them if they have
Printed with permission of Delaware Association of
What Is a Faith-Based Nonprofit?
Fritz, About.com Guide
Photo Courtesy of Franciscan
Question: What Is a Faith-Based Nonprofit?
A reader asked: "I am helping a new non-profit organization get
started, and I'm dealing with their incorporation issues and web page
startup. In the course of our discussions, they said they are
contemplating becoming a "faith-based" nonprofit vs. a non-faith
based one. Is there any difference in these two designations? Is there any
benefit to being a faith-based organization, in terms of availability of grants
or anything else? Any insight would be appreciated."
I asked Emily
Chan, of the NEO
Law Group and the Nonprofit
Law Blog to explain the differences between faith-based nonprofits and
regular nonprofits. Chan provided the following:
A Faith-based organization (FBO) is not a legally defined term but it
is often used to refer to religious organizations and other charitable
organizations affiliated or identified with one or more religious
organizations. For example, the Corporation for National and Community
Service defines an FBO to include:
- A religious congregation (church, mosque, synagogue, or temple);
- An organization, program, or project sponsored/hosted by a religious
congregation (may be incorporated or not incorporated);
- A nonprofit organization founded by a religious congregation or
religiously-motivated incorporators and board
members that clearly states in its name, incorporation, or mission
statement that it is a religiously motivated institution; and
- A collaboration of organizations that clearly and explicitly
includes organizations from the previously described categories.
Accordingly, the decision of whether to be an FBO may depend more on
whether the primary purpose or activities of the organization are
religious or explicitly religiously motivated than on any advantages or
disadvantages associated with such label. If the primary purpose and
activities of the organization are not religious, but religiously
motivated, the organization may want to consider the pro and cons of
identifying itself as a FBO and/or a specific type of FBO (e.g., church,
religious corporation). Perhaps the main considerations are how its chosen
identity will affect its donors, funders, supporters, targeted
beneficiaries, and other stakeholders.
There are no direct legal benefits associated with being identified as
an FBO. However, there are benefits and drawbacks associated with being a
certain type of FBO. For example, churches
that meet the requirements of Section 501(c)(3) of the Internal Revenue
Code can claim tax-exemption without a determination from the Internal
Revenue Service (IRS) and have special protections that limit how and when
the IRS may audit them. Additionally, certain religious organizations,
including churches, are exempt from filing IRS
Form 990 and may be exempt from filing state information returns and
charitable solicitation registrations.
FBOs may not be eligible to receive grants from certain grantmaking
entities that do not want to advance or be associated with a, or any,
particular religion or religious purpose. However, FBOs that do not
propagate a belief in a specific faith may be eligible. FBOs without an
IRS determination of 501(c)(3)
status may also be ineligible to receive grants because of the possibility
that they do not actually qualify as a 501(c)(3) entity.
The Arizona Grantmakers Forum in 2005 noted that "information on
foundation and corporate funding of faith-based organizations is
limited." The best source is research conducted by The Roundtable
on Religion and Social Welfare Policy, which is a research project of The
Rockefeller Institute of Government.
One study of large private and community foundations (total annual
giving of $1 million or more) suggests that a substantial percentage (12%)
expressed interest in funding both social services and religiously
affiliated organizations. An examination of the grants issued by the 50
largest "faith friendly" foundations indicates they provided
$68.8 million to support faith-based social services in 1999 and 2000.
This represents around 3% of the total annual philanthropic giving for
these foundations. Little is known about the giving patterns of smaller
foundations, but it is likely that their grants to faith-based
organizations are significant.
FBOs are generally referenced in several laws that recognize their
eligibility to receive grants under certain specified conditions and their
continued right to consider religion when hiring staff. "Charitable
Choice" laws, signed into law by former President Clinton during
the period of 1996-2000, specify that FBOs cannot be excluded from the
competition for federal funds simply because they are religious. But they
do not set aside funds for FBOs. Generally, federal grant funds may not be
used for inherently religious activities such as worship, prayer,
proselytizing, or devotional Bible study. The funds are to be used to
further the objectives established by Congress such as creating the
conditions for economic growth and prosperity.
Note: This communication was not written or intended to be used, and
may not be used, by any taxpayer for the purpose of (i) avoiding any
tax-related penalty under the Internal Revenue Code, or (ii) promoting,
marketing or recommending a tax-related transaction described herein.
557 (10/2011), Tax-Exempt Status for Your Organization
|Mission Statements http://nonprofit.about.com/od/nonprofitbasics/a/mission.htm
How to Write a Nonprofit Mission
From Mundane to Memorable
Fritz, About.com Guide
Mission statements have often been ponderous
things, suitable mainly for an internal audience and to impress
Today, mission statements are often shortened to a
few, pithy words that can easily be used across communication channels.
The best ones both express the authentic purpose of the charity and serve
as a building block of its branding and marketing.
An effective mission statement is more important
than ever. Donors, supporters, volunteers look for them. Indeed, they
should be right up front on your website,
in your annual report, and in your fundraising materials.
There is no one way to write a mission statement.
Studying many examples
will broaden your thinking about what is possible and what makes a good
one. The best are highly readable and inspirational, but still answer the
why, how, and for whom your charity exists.
The Benefits of a Compelling Mission Statement
- Focuses your energy and clarifies your
purpose. When you try to write your mission statement, you will
find that you have to really define what you are going to do. Many
questions will come up that must be resolved. For instance, whom will
you serve? Are you concerned about just your local area? Be careful to
keep your mission narrowly focused to ensure that you don't bite off
more than you can chew.
- Motivates board, staff, volunteers, and
donors. A mission statement is not just for internal use or to
submit to the IRS for tax-exempt status. It is a beacon that will
attract new people and more resources to your cause. Make your mission
statement compelling as well as clear. It will be your best public
- Helps to get IRS approval as a tax-exempt
organization. If you plan to apply for tax-exempt status--501(c)(3)
or some other IRS
classification--the IRS will be looking at your mission statement
to see if your organization matches its requirements for that type of
entity. Know what you are applying for and draft your mission to match
How to Write a Mission Statement That Is
Memorable, Not Mundane
- Bring in many perspectives. Get lots of
input from the community you plan to serve, as well as from your board,
staff, and volunteers. This will help you develop a broad base of
support. You can get this input through meetings, surveys, or phone
calls. Ask people what they think or need in regard to the area of
services you plan to offer.
- Allow enough time. Time spent now will
pay off later. So don't rush the process. Provide time to reflect on
the information you gather, to write an initial draft, to allow key
participants to read it, and to make changes.
- Be open to new ideas. This is especially
important for the founders of the organization. You may have had
tunnel vision while getting your organization set up, but now it is
time to get some fresh perspective. Be open to different
interpretations of what you should be doing and new ideas about how to
accomplish your goals. Use brainstorming techniques to ensure that all
ideas come forward freely. You can winnow them down later.
- Write short and only what you need. The
best mission statements are short and state the obvious. Your
statement's length and complexity depend on what your organization
wants to do, but keep it as brief as possible. As Tony
Ponderis says, the mission statement should be "...short
enough to remember and easily communicate. Strong enough to
Get help from a professional writer. A
well-written mission statement can be the foundation for your
and branding program. Consequently, it should not be written in a
way that only managers and insiders understand. A good writer can help
you avoid jargon
and language that is stilted. The goal should be a mission statement
that you are proud to display on your website and in your
publications, and that everyone can understand and remember.
- Review your mission statement frequently.
The American Heart Association, for instance, reviews its mission
statement every third year, but it is changed only every few decades.
Cass Wheeler, long-time CEO of the American Heart Association, says in
his book, You've Gotta Have Heart: Achieving Purpose Beyond Profit
in the Social Sector,"The environment changes and the
organization changes, so a periodic review is important to ensure that
there is alignment of purpose and reality."
5 Things to Avoid in a Mission Statement
- jargon that only professionals in your
particular field will understand.
- stilted, formal language.
- passive voice (passive: "xyz is an
organization that helps women achieve independence"; active:
"xyz helps women achieve independence.")
- a focus on the organization, rather than the
people it serves.
- generalities, such as "saving the
world" or "eradicating poverty."
Your mission statement is worth the time and
attention you'll lavish on it. It could be the toughest writing assignment
you ever take on, but the result will provide the bones for everything
else you communicate about your charity.
What are Articles of
Incorporation? Why Does My Nonprofit Need Them?
Fritz, About.com Guide
Question: What are Articles of
Incorporation? Why Does My Nonprofit Need Them?
When you incorporate
as a nonprofit,
the state in which you incorporate will require Articles of Incorporation.
What is required may differ from state to state. It is important to
contact the state office (usually the Secretary of State) responsible for
incorporations to find out what the requirements are. Many state offices
will provide a packet of information about how to incorporate as a
nonprofit and even samples of articles of incorporation or
fill-in-the-blank forms that you can use.
Articles of Incorporation provide information such
- The corporation's
- The name of the person(s) organizing the
- Purposes for which the corporation is formed
- Wording that states that no part of the assets
of the nonprofit corporation are to benefit the members.
- Number and names of the corporation's initial board
- The initial director(s) or registered agent.
- Location of the corporation's registered office
papers can be served to the corporation if necessary.
The Articles of Incorporation do not go into the
details of how the corporation will be run. That is spelled out in the
Are Bylaws? Why Does My Nonprofit Need Them?
Bylaws are developed during the incorporation
phase of a business or nonprofit.
Bylaws are the rules that govern the internal management
of an organization. They are written by the organization's founders or
directors and cover, at minimum, topics such as how directors are elected,
how meetings of directors are conducted, and what officers the
organization will have and their duties.
In the past, organizations often had constitutions
and bylaws but today bylaws are usually sufficient. The organization does
not formally exist until the bylaws have been approved by the board
Bylaws and the Articles
of Incorporation, are the primary official documents for a corporation,
whether a business or a nonprofit. The particular requirements for bylaws
are set by the state in which the organization incorporates.
In an article in Nonprofit World, Henry
Sollenberger recommends the following actions for a nonprofit
- Find an attorney who isnít a member of the
board to help draft the organizationís initial bylaws and to examine
any major subsequent changes.
- Tailor bylaws to meet the organizationís mission.
- Consider the organizationís potential
short-term growth, and build flexibility into the bylaws. Then, as
growth dictates, the board can propose changes.
As the organization grows and matures, board
- Review bylaws on an ongoing basis, and revise
- Contact an attorney to sign off on any
substantial revisions to your bylaws.
- If bylaws arenít upheld during a dispute,
board members could be held liable for breaching their duty to the
- Be sure to re-evaluate bylaws whenever the
organization creates a major subsidiary program.
Incorporation Begins at the State Level
Fritz, About.com Guide
Before applying to the IRS for tax-exempt status,
most organizations first become incorporated (an unincorporated
association is sometimes an exception). Incorporation will protect board
members and other individuals in your organization from being held
personally liable in case of a lawsuit.
Nonprofit incorporation is very similar to
creating a regular corporation except that a nonprofit must take the extra
steps of applying for tax-exempt status with the state in which it
incorporates and with the IRS.
Nonprofit incorporation usually involves these
- Choose a business
name that is legally available in your state.
- Prepare and file your "articles
of incorporation" with your state's corporate filing office,
and pay a filing fee.
- Apply for federal and state tax
- Create bylaws
that will dictate how the corporation is run.
- Appoint an initial board
- Hold the first meeting of the board of
- Apply for any licenses or permits that your
corporation will need to operate in your state and local municipality.
corporate filing division is usually part of the secretary of state's
office. You can request a packet of nonprofit materials from that office
which will include sample articles of incorporation, the state's laws on
and instructions on how to find an available business name.
After you have filed all the paper work for
nonprofit incorporation in your state, and received a copy of your
articles of incorporation, you can move on to submitting your application
to the IRS for your federal nonprofit status as a 501(c)(3)
organization. It is best to file within 27
months after the date of your incorporation.
The form you must complete for the IRS: IRS
Package 1023, Application for Recognition of Exemption.
publication 557, Tax-Exempt Status for Your Organization,
provides instructions on filling out the proper forms. You can get by
calling 800-TAX-Form, or they can be downloaded from the IRS website, www.irs.gov.
The IRS also provides a help line: 1-877-829-5500.
The IRS will review your application and send you
a "determination letter" indicating that it has approved your
nonprofit status. Or, the IRS might ask you for more information. It can
also deny your application. If that happens, don't give up; contact a
lawyer who specializes in nonprofits.
You may need to apply to your state for tax-exempt
status as well. Some states require a separate application to get a state
tax exemption; some states are satisfied with your federal tax-exempt
status; and in others, you will need to send a copy of your IRS
determination letter. To find out what your state requires, contact your
state tax agency.
Check to see if your city requires you to have a
solicitation license before you can fundraise.
Nonprofit Boards - Find Them,
Feed Them, Put Them to Work
Fritz, About.com Guide
Nothing will have such an impact on the success of
your nonprofit as your board
of directors. A great nonprofit board is essential to the legality
of your enterprise, how much money it raises, and the quality of the
leadership it hires. Finding directors that will exercise the best mix of
responsible oversight and appropriate level of control means locating and
recruiting people with the best skills, as well as the wisdom, honesty,
and spirit of public service to guide your organization through the good
times and the bad.
Responsibilities of a Nonprofit Board
How to Find Nonprofit Board Members
Characteristics of a Good Nonprofit Board