The document outlines the steps for establishing a nonprofit organization, with a focus on 501(c)(3) organizations. It discusses defining the mission, evaluating if the cause is suitable for nonprofit status, and the legal requirements like incorporating, applying for tax exempt status, drafting bylaws, and establishing governance practices. It also covers financial transparency requirements like Form 990 filing, communicating budgets and finances, tracking restricted donations, unrelated business income tax rules, and limitations on lobbying. The overall document provides guidance on properly setting up and operating an exempt nonprofit organization in accordance with IRS regulations.

1. Flying Right in Setting Up and
Operating Your Exempt Organization

2. Our focus today will be on
501(c)(3) organizations.

3.  Q. Why are most nonprofit organizations
formed?
A. Because someone identifies a need that is not being
met, that would be very difficult (if not impossible) to meet
by a for profit entity.

4. Establishing a Nonprofit Organization
 Step ONE:
Clearly define the mission and prepare a mission
statement.

5. Establishing a Nonprofit Organization - Continued
 Step TWO:
Evaluation:
a. Is there another nonprofit already operating with a
similar mission?
b. Is the cause one that will allow you to obtain
sufficient funding?
c. Are you willing to live with a lot of rules?
d. Who will benefit?

6. Establishing a Nonprofit Organization - Continued
 Step THREE AND BEYOND:
 Choose a name
 Prepare and file articles of incorporation
 File Form 1023, Application for Recognition of
Exemption, with the IRS. How to qualify for 501(c)(3)
status…

7. Establishing a Nonprofit Organization - Continued
 Draft bylaws
 Recruit and appoint the board of directors
 Hold an initial meeting of the board of directors
 Obtain licenses and permits
 Obtain insurance

8. Establishing a Nonprofit Organization - Continued
 Develop a detailed business plan. Remember that
you need to operate like a business!
 Adopt a conflict of interest policy
 Prepare and adopt compensation policies
 Obtain an EIN

9. Establishing a Nonprofit Organization - Continued
 Secure office space
 Set up accounting
 Develop a budget

10. Establishing a Nonprofit Organization - Continued
 Establish professional service relationships:
a. Attorney
b. CPA
c. Payroll Service Provider
d. Banker

11. Establishing a Nonprofit Organization - Continued
 Establish Key Performance Indicators - practical
steps
1. Mission clearly defined
2. Strategies defined
3. Action steps defined
4. KPIs to measure accomplishment of action steps

12. Flying Right
 Transparency
 Don’t sit on bad news
 Communicating your financial message in the best
light:
a. Form 990
b. Budgets
c. Financial Statements
d. KPIs

13. Flying Right - Continued
 “No one gives you a dime!” – Peter Brinckerhoff
 Annual Filing – Form 990
 Acknowledging donations
 Restricted donations - tracking and using

14. Flying Right - Continued
 Unrelated Business Income Tax (UBIT)
 Excess Benefit Transactions and Intermediate
Sanctions
 Lobbying

15. Questions?