Charitable Non-Profits
The charitable nonprofit usually has the features of a nonprofit corporation (described above) and sometimes tax-exempt status in addition to the following features. Donors/funders can deduct the amount of their contributions (to the charitable nonprofit) from their tax liabilities. Charitable status is granted by the Internal Revenue Service in the USA and by Canada Revenue Agency in Canada. Usually the nonprofit must be a corporation to receive charitable status. People and funders often are much more willing to give money to a charitable nonprofit.
These nonprofits are constrained to providing services in accordance with their mission to meet the public need (otherwise they have to pay taxes on any revenue over a certain amount). This status requires ongoing submission of paperwork to the Internal Revenue Service or Canada Revenue Agency in order to retain charitable status.
Charitable nonprofits must limit the amount of lobbying that they can do (organizations that engage primarily in lobbying are usually tax-exempt, but not charitable). There often is strong, ongoing public interest in the operations of organizations, which can result in a lot of effort in the charitable nonprofit to be transparent and accountable for its operations. Often, a major challenge in these nonprofits is to generate revenue from fees because clients often have very limited funding.
If you want to form a nonprofit in order to get lots of donations/funds, then you’ll probably need to be a charitable nonprofit, but you’ll also have to report to a Board of Directors – and you won’t own the nonprofit, the public will.
So--presumably we would be charitable, because we offer our services for free to participants??
Nonprofit Corporation (Chartered, Registered)
This status is granted by the state to a nonprofit organization (in Canada, status can be granted by a province or federally). People form a nonprofit corporation usually when they want to ensure that their organization is an ongoing entity apart from its members, e.g., the corporation can have its own bank account and enter into contracts. Also, members of the organization usually are not directly liable for the effects of corporation’s operations (the limited liability shield), unless members engage in deliberate illegal acts for which individuals can be prosecuted.
Corporations benefit from the oversight and guidance of a Board of Directors (a requirement of corporations) – to some, this lose of power could be a disadvantage. Control of the corporation is vested in the Board members as a body. The nonprofit corporation is owned by the community, not by the founder or Board members. Usually Board members are not paid, but they can be reimbursed for expenses.
Employees must keep the amount of their salaries and wages within reasonable limits. Often, a nonprofit must be a corporation in order to quality for tax-exempt and/or charitable status from the IRS or Canada Revenue (see below) in order to avoid paying certain taxes and/or getting donations/funds from donors/funders.
So if you want to form a nonprofit to get donations/funding, you probably should file with your state to be a corporation – but realize that you’ll be working for a Board of Directors and you won’t own the nonprofit yourself.
So then, my question is, who would the Board of Directors be? The collective??
Some great information from: http://www.councilofnonprofits.org/howtostartanonprofit
WHEN? When should you file paperwork?
Basically, the paperwork process involves five phases:
- Phase I: Incorporating at the state level
- Phase II: Securing your tax exempt status from the federal government
- Phase III: Filling out your operational paperwork at the state and local levels
- Phase IV: Completing your internal paperwork
- Phase V: Ongoing reporting - to state entities (in your state and in any other where you might solicit funding), annual federal reporting, regular reporting to funders (both large foundations and individual donors
Form a Board of Directors. Forming a board requires careful thought and extensiverecruitment efforts. Each state has regulations that determine the minimum size of the board, typically three, but the optimum number of people who sit on the board should be determined by the needs of the organization. Based on what your organization would like to accomplish, you should decide what special skills and qualities you will require of the individuals on your board. Identify qualified individuals who are supportive of your mission and are willing to give of their talents and time. (See Tips for more information.)
Hurrah, a succinct list!: http://www.wikihow.com/Start-a-501c3-Nonprofit-Organization
This is overwhelming to say the least. Help please.
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