Welcome Guest  (Sign-in | Register)  /  November 22, 2019  -  24 Cheshvan 5780  
   
home faqs about us contact us
Home // New Shluchim // Handbook For New Shluchim



Becoming a non-profit
In reality you do not need to become a non-profit, you are non-profit. Your moisad is not a company trying to make money; it is a corporation working to help people. Your incorporation papers should reflect that. However, you will run into problems when opening a bank account or applying for a loan. If somehow your income is greater than your expenses, you are not going to issue stock dividends etc. you are going to use it to grow your moisad in the future. What you need is for the IRS to agree that this is the case.

STEP 1. File for federal tax exemption
You will need to file with the Internal Revenue Service for tax-exempt status under Section 501(c)(3). Form 1023 is the multi-page form you will need to file. Within three to six months of submitting your paperwork, you ordinarily will receive a letter, granting tax-exempt status to your organization.
Organizations that achieve 501(c)(3) status are exempt from federal taxes, and contributions given to them are deductible by donors for income tax purposes. In addition, the overwhelming majority of private foundations in the U.S. award grants only to organizations that have this particular tax-exempt status. See:
• 
Package 1023, Application for Recognition for Exemption Under Section 501(c)(3) of the Internal Revenue Code
and Publication 557, Tax Exempt Status for Your Organization

The cost of filing this form is around $500. You can fill out this form by yourself or have a professional do it for you.
After sending it back, the IRS will either agree with you, ask you for more information or deny. It takes a couple of months for them to respond, but they will [shortly after filing] send you a letter of confirmation, a number, and who to contact about it.

Quick Tip.
If you fill out the 501 (C) 3 form as soon as you get started without procrastinating, you will avoid having to submit actual budgets. A simple projected budget will be sufficient. 
Although you can complete Form 1023 without outside assistance, it is not advisable to do so. Success in securing both state incorporation and federal tax-exempt status usually requires the assistance of an attorney, and competent legal counsel often helps the process move along smoothly. If you have limited financial resources, you might contact a public interest legal organization that connects nonprofit organizations with volunteer business lawyers. There is a growing network of those providers in cities all over the United States, coordinated by an organization in New York called Power of Attorney. You might also seek help from local technical assistance or management support organizations that specialize in providing guidance to nonprofit organizations.

Resources on the Web:
• 
http://www.form1023help.com/
• Power of Attorney
• CorporateProBono.Org

Useful Publications:
• 
Bookkeeping Basics: What Every Nonprofit Bookkeeper Needs to Know, includes step-by-step guidelines to set up your financial accounting system and to conduct effective and efficient bookkeeping.
• 
Field Guide to Nonprofit Program Design, Marketing and Evaluation will guide you through every step to carefully design a comprehensive program plan and associated program budget.
• 
Coping With Cutbacks: The Nonprofit Guide to Success When Times Are Tight will give you lots of ideas about what to do when your nonprofit doesn't have lots of money, has lost a major grant, etc.
• 
Venture Forth!: The Essential Guide to Starting a Moneymaking Business in Your Nonprofit Organization, includes step-by-step guidelines to plan an earned-income venture for nonprofits, including the necessary financial analyses and forms.
If your nonprofit has been struggling and needs to address a variety of complex issues, then see the
Field Guide to Consulting and Organizational Development With Nonprofits (for consultants and internal leaders in USA and Canada)

STEP 2. Follow state and local nonprofit regulations
Once you receive tax-exempt status from the federal government, it is likely that you will need to file separately for state and local tax exemptions. Most states and many localities require nonprofits to register with the Charities Registration Bureau of the state or locality where they'll be fundraising.
More info at
http://foundationcenter.org/getstarted/

→After receiving your 501 (c) 3, do not forget to file for State recognition as that will allow you to purchase items needed for the moisad tax free. It is not automatic; you must file for it. Click here for details.

Other Helpful links on non-profit corporations:
http://www.irs.gov/charities/charitable/index.html
http://www.investcomoxvalley.com/pdfs/Website_PDF/
Nonprofit/NON%20Profit%20Table%20of%20Fees.pdf

http://www.how-to.com/Operations/non-profit.htm

Not-for-profit mailings:

STEP 1.
To save on your mailings you must have your 501(c)3 approval letter from the IRS.
STEP 2.
Then, you can apply with your local BULK MAIL ENTRY UNIT facility (usually the biggest USPS processing center in the metro area). 
You will need to
• Fill out some forms from the BULK MAIL ENTRY UNIT
• Show some mailings you have already done to show that you indeed do non-profit mailings
• Provide some brochures/info about your organization and programs. 
It usually takes a few weeks to be approved by the USPS, which is separate from the IRS approval.  Until that time, you can use Bulk Rates (like all for-profit businesses) which are cheaper than regular first-class rates.  They will not allow you non-profit rates until you have the IRS letter.  They will reimburse your account for the mailings you’ve done from the time of submitting the USPS NON PROFIT application and its approval. 
There is an annual fee associated with such mailings (amount depends on the system you choose; it usually runs about $160 annually), but after a few mailings it pays for itself.

Click Here For Part 5

2019 The Shluchim Office