Profit from 501(c)(3) Nonprofit Organization

Tips - Profit from 501c3 Nonprofit Organization

Sample mission statement: "The National Mental Health Association is dedicated to promoting mental health, preventing mental disorders and achieving victory over mental illnesses through advocacy, education, research and service; The National Consumer Supporter Technical Assistance Center’s purpose is to strengthen consumer organizations by providing technical assistance in the forms of research, informational materials, and financial aid. The mission of Texas Mental Health Consumers is to organize, encourage, and educate mental health consumers in Texas. TMHC supports and promotes the mental health recovery process through peer directed and operated services, advocacy, economic development, and participation in public mental health policy design."
What to look for in a board member: Look for individuals whose values reflect your statement of purpose. Although it is recommended that the majority of your board be consumers, include the community at large, not just your specific community of focus (e.g. the mental health community). Consider the religious community, local service clubs, legal professionals, and colleges and universities as sources for prospective a Board of Directors. Do not overload people who already serve on many committees – seek a balance between old and new leadership.
The organization needs to open a bank account and ascertain whether to use the accrual or cash method of accounting. The difference between the two types of accounting is when revenues and expenses are recorded. In cash basis accounting, revenues are recorded when cash is actually received and expenses are recorded when they are actually paid (no matter when they were actually invoiced). In accrual basis accounting, income is reported in the fiscal period it is earned, regardless of when it is received, and expenses are deducted in the fiscal period they are incurred, whether they are paid or not.
Hire an attorney to help you with your Certificate of Incorporation and the By-Laws. Hire an attorney or accountant, particularly one who has experience with 501c3 nonprofit corporations, to help you file the state and federal exemption forms. It will save you time and money in the long run.

How to Start a 501c3 Nonprofit Organization

Have you always wanted to leave the world a better place than you found it by starting a nonprofit corporation? Here's a simple, straightforward guide on how to successfully establish a 501(c)(3) nonprofit corporation.

Steps - Start a 501c3 Nonprofit Organization

Understand what a nonprofit is: an organization whose primary objective is to support some issue or matter of private interest or public concern (such as the arts, charities, education, politics, religion, research, or some other endeavor) for non-commercial purposes. There are different kinds of nonprofits, one of them being a 501(c)(3), which is exempt from income and (sometimes) property tax, and able to receive tax-deductible charitable contributions. Before you spend your money, at least consult with an attorney who is experienced in the area of nonprofit law so that you do not make one of the many major mistakes that people make when they try to incorporate by themselves.
Formulate a mission statement. As a non-profit organization, you exist to accomplish your mission, which should be crafted based upon your purpose, services and values. The mission statement is a concise expression that covers in one or two sentences who the organization is, what it does, for whom and where. It should also be compelling, as it will be used in all published materials, funding requests and public relations. It should also portray how your organization is distinct from others. (See Tips for a sample mission statement.)
Form a Board of Directors. Forming a board requires careful thought and extensive recruitment 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).
File Articles of Incorporation. Articles of Incorporation are official statements of creation of an organization filed with the appropriate state agency. They are important to protect both board and staff from legal liabilities incurred by the organization, making the corporation the holder of debts and liabilities, not the individuals and officers who work for the organization. The specific requirements governing how to incorporate are determined by each state. You can obtain the information you need to proceed with this step from your state Attorney General’s office or your state Secretary’s office. Before you spend your money, at least consult with an attorney who is experienced in the area of nonprofit law so that you do not make one of the many major mistakes that people make when they try to incorporate by themselves.
Draft bylaws. Bylaws are simply the "rules" of how the organization operates. Although Bylaws are not required to file for 501(c)(3) status, they will help you in governing your organization. Bylaws should be drafted with the help of an attorney and approved by the board early in the organization's development.
Develop a budget. Creating a budget is often one of the most challenging tasks when creating a nonprofit organization. A budget is the expression, in financial terms, of the plan of operation designed to achieve the objectives of an organization. New organizations may start the budgeting process by looking at potential income – figuring out how much money they have to spend.
Develop a record-keeping system. Legally, you must save all Board documents including minutes and financial statements. It is necessary to preserve your important corporate documents, including board meeting minutes, bylaws, Articles of Incorporation, financial reports, and other official records. You should contact your appropriate state agency for more information on what records you are required to keep in the official files.
Develop an accounting system. If your board does not include someone with a financial or accounting background, it is best to work with an accountant familiar with non-profit organizations. Nonprofits are accountable to the public, their funders, and, in some instances, government granting bodies, and it is vital to establish a system of controls (checks and balances) when establishing the organization’s accounting practices. Responsible financial management requires the establishment of an accounting system that meets both current and anticipated needs.
File for 501(c)(3) status. To apply for recognition of tax-exempt, public charity status, obtain Form 1023 (application) and Publication 557 (detailed instructions) from the local IRS office. The filing fee depends upon the size of the organization’s budget. The application is an important legal document, so it is advisable to seek the assistance of an experienced attorney when preparing it.
Apply for a federal employer identification number. Regardless of whether or not you have employees, nonprofits are required to obtain a federal Employer Identification Number (EIN) — also referred to as the federal ID number. Available from the IRS, this number is used to identify the organization when tax documents are filed and is used not unlike an individual’s Social Security number. If you received your number prior to incorporation, you will need to apply for a new number under the corporate name. Ask for Form SS-4 when applying for your EIN.
File for state and local tax exemption. In accordance with state, county, and municipal law, you may apply for exemption from income, sales, and property taxes. Contact your state Department of Revenue, your county or municipal Department of Revenue, local Departments of Revenue, and county or municipal clerk’s offices.
Fulfill charitable solicitation law requirements. If your organization’s plans include fundraising, be aware that many states and few local jurisdictions regulate organizations that solicit funds within that state, county, or city. Usually compliance involves obtaining a permit or license and then filing an annual report and financial statement. Contact the state Attorney General’s office, the state Department of Commerce, state and local Departments of Revenue and county or municipal clerk’s offices to get more information.
Apply for a nonprofit mailing permit. The federal government provides further subsidies for nonprofits with reduced postage rates on bulk mailings. While first-class postage rates for nonprofits remain the same as those for the for-profit sector, second- and third-class rates are substantially less when nonprofits mail to a large number of members or constituencies.

How to Fundraise - Profit from 501c3 Nonprofit Organization

Whether you're raising money for victims suffering in a humanitarian disaster, or fundraising for Little League or another kid's sports team, there are a million ways to earn money and reach your goal.

Steps

Set a goal (How much do you need to raise?)
Create a timeline (How much time do you have to raise it?)
Who will you ask for the money (What is your target audience?) Whether you are raising money for your school or a political candidate, this is critical. Look first for a list of previous donors to this or similar causes. Most political campaigns donors are now posted on the web and are searchable by zipcode. If this is unavailable create a list from Christmas-card lists; school,club or church directories; or lists of co-workers or neighbors.
How will you ask for the money?
The likeliest method is an event. This sets a date certain and helps keep the fundraising on-track.
Take advantage of any special talents you might have. Maybe you sew and crochet--make some items to sell. You can sell them online, at a craft show, or set up shop in your own front yard, and have a garage sale to go with it, to earn extra.
Log onto the internet, type in "fundraising items", or you can type in "wholesale candles", or "wholesale picture frames",depending on what it is that you want to sell. By going through wholesale, you can get a lot more products, than you would going to a retail store, and for more than half the price.
Make a sign or print up some fliers, letting your customers know what their money is going towards.
Have a change jar set up on your pay table, and people can drop their loose change into it, at the end of the day, go to your supermarket, or one that has a change-counting machine. Drop all the change into the machine, then it will print up a receipt for you, to take over to a cashier. Then the cashier will hand you the amount in bills, and you won't have to send change, or spend change, to fund your fund-raiser.
Contact a fundraising agency.
Create an online fundraising page. Create a webpage, send the link to your family, friends, co-workers, parishioners, teammates, etc. and collect donations via credit cards online. It's easy and simple, and eliminates spending a lot of time sending letters, calling people, and organizing big events.

Tips - How to Fundraise - Profit from 501c3 Nonprofit Organization

You can have friends, family, and people in your neighborhood donate items to you, so you can sell them in your yard sale.
If you're already on a tight budget, then a craft show probably isn't for you at this time. For many official craft shows, you have to be willing to spend $25.00 and higher for a booth.
Get a backpack or briefcase instead of handling your papers freely. It makes you look professional and it doesn't let your papers fly in the wind.
Many foundations will only give to charitable not-for-profits (i.e. 501(c)3 IRS tax status). Be sure to include a copy of this status with any letters you send to a foundation for support. Less work on their end to verify your status equals more time they can spend on learning about your cause and qualifying a contribution.

How to Write a Grant Proposal - Profit from 501c3 Nonprofit Organization

Contrary to what the emails that fill your inbox and the guy in the funny suit on late night TV may say, true grants are very difficult to find. But finding the right grant is only the first step in the process. The second part, properly completing the grant application, is where most grant seekers fail. Whether it's for a business or organization, writing a grant proposal is a skill that must be learned.

Steps

Read and re-read the directions if you want your proposal to be read and considered. Every grant has rules and directions that must be followed exactly. If it says that the grant must be submitted via the online form, don't even bother to ask if you can fax it in. Unlike employment applications where it sometimes pays to be "original", grant committees have rules in place for a specific reason, and they expect them to be followed to the letter. To do otherwise may mean that your application will be disqualified before it ever gets read.
Determine if your proposal is what the funder actually funds. Don't assume that just because there is a significant amount of money available, that they will fund just anything. The truth is that funders are often very specific in what they are looking for (and sometimes a bit odd, but that's their choice) and will rarely deviate from their "category". You may have the very best purple widget in the world, but if the grant is only for the producers of red widgets, you won't get the grant.
Start with an outline that clearly follows each step of your plan, then expand each point as needed to fully explain your plan.
Make sure that your goals and objectives are clearly laid out and specific. If you say "I want this grant so that I can help the community" you won't get nearly the credibility as you would by saying "This grant will allow us to buy 2 new computers, and create 2 part-time paid staff positions in an area where jobs for high school students are very difficult to find."
Take the time to research and evaluate the actual expenses. Don't estimate. In a grant proposal, guesses just won’t make it. If a grant reviewer suspects that your financial sheet is not accurate, you just lost the grant. Find out exactly what kind of equipment, labor, and anything else you are going to need and exactly what the cost will be, then spell it out in the proposal.
Have at least two other people outside of your organization read the proposal and then ask them questions about your concept. If they cannot explain what you are trying to do, chances are the grants committee won't either. And they won't fund what they can't comprehend.
Show the funding committee that you take the proposal seriously by carefully proofing it for spelling, typing and grammatical errors. Take time to have at least two people proofread your proposal before you submit it - and then read it again yourself to make sure.

Tips - Write a Grant Proposal - Profit from 501c3 Nonprofit Organization

Give yourself enough time. Don't throw the proposal together in order to meet the deadline because it shows. A good proposal package takes time to assemble and research properly. If you really want the money, then spend the time to put it together correctly, without shortcuts.