How To Form A Nonprofit Public Charity In About 1 Year

posted Aug 6, 2011 8:36 AM by Paul Valentino [ updated 8 hours ago ]
It all started with an idea in the year 2010 at VMworld in San Francisco as outlined on the page:
Even though we knew very little about nonprofit organizations we were confident that we would be able to figure things out with the help of the community. We were right; people like @clinek, @SirStan and others came forward to help review our 1023 Application as well as other business documentation. As a result of this assistance we were able to avoid many common pitfalls that companies face when starting a nonprofit organization. Also, keep in mind that the majority of our efforts were coordinated through social media such as twitter and facebook and continue to be to this very day. We have board meetings using Skype due to the distributed nature of our team; we use twitter, facebook, blogging and google apps extensively for providing updates, collaborating on documentation or disseminating information. We've even had the great pleasure of participating in a podcast with our good friend @Niketown588. We would not and could not exist in our current form without these social media resources.
The Office of the Secretary of State and MN Council of Nonprofits websites proved to be key resources for helping to determine requirements for establishing a nonprofit corporation in Minnesota. A wealth of information for establishing a 501(c)(3) nonprofit organization was also found at the IRS web site. Furthermore, one of the greatest forms of assistance came from reviewing examples of other nonprofit 1023 applications, Articles of Organization and Bylaws. Many were found on the web, by request (public charities must provide copies of certain documents for a small fee upon request if they don't already publish them online) and by friends who are members of private foundations and public charities. Of course, we needed to apply our own business plan and mission when drafting our business documents but the examples provided a wealth of direction for satisfying all of the required elements, especially in the case of the attachments to the 1023 Application.
After choosing our name we needed to confirm that it was available. Although it was only required that the name be available in MN, we did a more extensive search to ensure that we wouldn't have any conflicts with naming for companies in other states or countries. We also made sure that we wouldn't have any issues with registering our domain name. To confirm availability in MN we used the Name Availability tool on the Secretary of State website. Once we felt comfortable that we wanted to move forward with the name we filed a name reservation form online with the required fee of $45.00 at the time of our filing September 20, 2010. We also filed for our EIN online with the IRS being careful to follow the instructions for a nonprofit.
We then spent the next three days researching the requirements for a nonprofit organizations Articles of Organization and Bylaws keeping in mind that we intended to apply for 501(c)(3) tax exempt status with the IRS. Amazingly, we had a fully drafted and reviewed set of documents which we submitted on September 23, 2010 with the $80.00 fee and obtained our Certificate of Incorporation as a Minnesota nonprofit formed under 317A on September 24th. The key thing to remember with your business filing is that it must be renewed every year to maintain a nonprofit status; in our case we must go to the Minnesota Office of the Secretary of State siteOnline Annual Renewal Filing page to stay current with our filing (No fee required unless a name change, address change, or registered agent change dictates an Amendment to Articles and associated $45 fee is required for online filing). Similarly, we must file form 990 annually with the IRS and may be eligible to file e-postcard990-N if donations remain below $25,000 per year.
At this point the fun began. We spent the next three months completing the 1023 Application for 501(c)(3) and the associated attachments. When you view the document links below it will be fairly obvious why three months were required, especially considering that we are full-time employees and were doing as much as we possibly could in the off hours (wee hours of the night). With business plan in hand and all the examples we could muster out of the interwebs as well as friends, we plugged away and were able to file on January 11, 2011 with the required $400 fee (fee could be larger for company expecting greater income). Then the waiting game began; the IRS processes 1023 Applications on a first come first serve basis so the time to wait will vary based upon volume of applications.
Now it is worth noting that even if you file the appropriate change of address forms with the IRS, the department processing your 1023 application wont get that update and inevitably continue sending notifications to your old address, so be sure to send a copy of any change of address forms to the address you sent the 1023 Application to, or if you've already been assigned an agent you may send them a fax with the information (Can you tell that we don't know this from our personal experience :-). Once our agent was assigned, the process was rather painless as she proved to be very helpful. We simply needed to file one Amendment for Article IV (If you copy the verbiage from this Amendment rather than using what we submitted in original Articles above you can save this step and the $45 fee that goes with it) and answer a few simple questions. Once we faxed all the information back it was only a matter of a couple of weeks before we received our letter of determination. Once we did receive the letter it was only a matter of a couple days after providing the required documents to the merchants before we got our Donation buttons up and running again for both Google Merchant and PayPal.
Yay! On August 4th, 2011 the LOD arrived stating we are officially a tax exempt nonprofit public charity.
Some other considerations were the creation of a website and establishing nonprofit merchant accounts for accepting donations. We chose Google Sites and Google Apps in an effort to ensure no monthly administration fees and for its ease of use. So far we've been perfectly willing to accept the limitations for customization of our site because we'd much rather not have to rely on public donations to cover any expenses other than certification and training costs. In hindsight, it would have been better to wait for our letter of determination before establishing merchant accounts because they ended up disabling our ability to accept donations shortly after we were setup because we did not have a letter of determination yet. It did not help matters that we sent all of our filings and a copy of our submitted 1023 Application to the merchants either.
We wanted to ensure that public donations would primarily service the needs of the candidates and we're proud to say that less than $30 of our donations to date have been used for administrative expenses. The board of directors contributed all of the fees for the 1023 Application and all of the business filings; we only needed to utilize a small amount of the donations to obtain certified copies of our business documents for banking purposes. This is also a factor for choosing not seek paid professional services but rather volunteer professional services. Our primary purpose is to further the cause of education and get people certified in a way that ensures real world success; therefore, we gratefully accept volunteer assistance from qualified professionals to meet our goals.
We hope you find this information useful and of value. If so, please consider making a financial, software, and/or hardware donation. Every contribution helps tremendously.
Paul Valentino - Chairman
vCommunity Trust Inc.