We all have an inclination for helping others--whether it is an animal rescue, abused women sanctuary, or a feed-the-children effort. The notion of starting a not-for-profit organization is commendable--but, how do you go about it?
Starting a not-for-profit organization is an inspiring way to give back to the community and help those in need. Before you embark of this journey, it is important to realize all the steps involved in this process before taking your first step.
The first step in creating a not-for-profit organization is obtaining your Charitable Registration [501(c)(3)] exempt status.
One of the first measures in this process is completing your Charitable Registration [501(c)] application. This document puts you in good standing with each state in which you solicit donations. If you only intend to ask for funds from individuals, corporations, foundations or entities in Texas, you only need to register in Texas. However, with today’s social media and such sites as Fund Me and other money-collecting sites throughout the country, you might wish to consider registering in more than one state.
Failure to file can lead to fines, civil suits, and revocation of future right to solicit funds. You need to prepare all forms necessary to register and renew your organization. You must consider registered agents, finalize documentation, and correspond with the state. Registering requires a bundle of preparation documents that must adhere to federal and state compliance laws, deadline dates, and procedures. All these filings must be accurate and timely. You don’t want the headaches of reinstatement fees for improperly-completed forms or failure to file.
Obtaining Your 501(c) Designation
If your charity solicits contributions, you need to register. You can solicit through email, direct mail, the Internet, funding applications, phone, grants, direct contact. Even if you do not collect donations, you must register.
You may ask, “Why is it necessary to register my not-for-profit”? The simple answer is “To protect the public.” Registration is a safeguard against fraudulent solicitations by individuals and it minimizes incidents where an organization misuses funds.
Once you are registered, your organization receives a Determination Letter that verifies your exempt status and provides your charity classification. Now you can provide donors with your disclosure statement that confirms that your organization is properly registered with the state. This makes your organization a valid and legitimate not-for-profit. It sets your organization apart from the fly-by-night get-rich-quick pseudo not-for-profits. The disclosure statement sets you apart from bogus scroungers.
It is essential that you prepare all required forms to register and renew your organization. You need a designated registered agent, and you must finalize documentation, and correspond with the state. Several activities comprise the registration process. You should establish a timeline for completing and filing your paperwork, follow the application through the approval process, and follow up to make sure you are compliant with the law and can solicit funds.
After you complete your initial application documents, review them for completeness and accuracy, submit the form with fees to the appropriate state department. When the application is in-the-works, you must obtain information, prepare, file, track, confirm and manage your Charitable Registration filings prior to their due dates. Keep an eye on the progress of the application’s acceptance. Conduct status checks on your registration and its journey toward approval.
While waiting for filing approval, your organization may operate as a tax-exempt organization. Meanwhile, file Form 990, 990-EZ, or 990-N. Donors get no assurance contributions are tax free until your registration is approved.
Your registration process includes the following steps:
Gather information to complete or renew your Charitable Registration Form thirty days before its due date.
Prepare and finalize renewals.
Evaluate your registration and its supporting documentation.
Send completed package to state agencies.
Follow the entire filing operation.
Receive notification when state agencies receive our filing or renewals.
Maintain a database of all your filings and renewals.
Completing your Charitable Registration tasks can be puzzling. Because TBFoster Accounting specializes in accounting for not-for-profit organizations, we comfortably navigate through regulations and compliance laws.
When your organization comes across perplexing information and you have questions--we are here with the answers. Don’t fret over completing and tracking your Charitable Registration. We have the solutions and know-how to get it done for you. If you have any questions about getting started as a not-for-profit organization or any other NFP industry topics, contact our not-for-profit team leader at trent@tbfosteraccounting.com
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