These are the basic requirements. Organizing a charitable organization should include a number of operational duties for the survival of the business. At a minimum, these items should include a strategic plan, case statement, articles of incorporation, budget, and set of bylaws.
- Determine whether you really need to start a charitable enterprise. Would you be better off to filing as a small business or for-profit corporation? Keep in mind that there are many rules and regulations that govern the operation of a nonprofit corporation, depending upon the state in which the business is located. This may include a yearly audit or tax forms to special reporting agencies.
- Another thing to consider is that there is usually more administrative paperwork necessary to operate a charitable organization than a for-profit business (sole proprietorship).
- You will be asked to define your charitable purpose and will have regulations that will govern the amount of compensation to your board of directors and/or officers.
- Check with your state business office to determine their requirements.
- Check with the IRS office to file the necessary forms. Determine what type of entity classification you will use. Not all will have tax-exempt status. The most common form is the 501(c)3, tax exempt organization, organized for charitable purposes.
Consult an attorney after reading the requirements of each option. IRS publication #557, Tax Exempt Status for Your Organization is very helpful. It explains the application procedures and forms required. To obtain IRS Forms and Publications at the IRS Web Site:
Depending on organizing requirements, you may need to develop a set of bylaws to guide the operations of your organization, and a set of articles of incorporation. The bylaws are extremely important. They should provide instructions as to the selection, responsibilities, and continuance of board members, membership requirements, officers, deposits, committee structures, notices, and other personal and insurance questions as they relate to the operations of the specific nonprofit business.
The Articles of Incorporation name the entity, its location, the organizing purposes, liability, and include the dissolution requirements of the corporation.
Government publications that are available:
To view Publication 557 – Tax Exempt Status of Your Organization Online and to download forms and get information:
To download Publication 557 – Tax Exempt Status of Your Organization: Use Adobe Acrobat to read this lengthy document. It describes the different types of entities and provides information about requirements.