In 1831, Alexis de Tocqueville wrote Democracy in America after a nine-month visit to a fledgling nation, the United States. He wrote about the uniquely American phenomenon of forming “associations” of all types, including professional, social, civil, and political groups.
Today, people continue to organize groups around common interests or professions. The exact makeup of these groups will be as different as their members, but they all share a common characteristic: that is, people coming together to collaborate. The purpose of this book is to provide a solid foundation for community organizers who work with groups that may be considering formal incorporation in their state or possibly becoming a federally recognized nonprofit.
Nonprofits often take on responsibilities that were once the domain of government agencies. As a result, nonprofits are assuming an exciting and dynamic role throughout the country. It has become even more important that people understand the basic requirements of organizing within their communities so that their group can remain viable and sustainable long after the original founders have moved on.
This book begins with the assumption that the reader is in some way connected to a small organization in its early formative stage. You may have heard the term nonprofit organization, but you probably have never had to apply for federal nonprofit status.
The enclosed CD contains printable PDF files of the basic forms necessary to incorporate in most states. Because every state has developed its own system and process for incorporation, each state has different forms — and a couple of states don't have standard forms at all. If you live in a state that requires you to create forms, there is a sample Articles of Incorporation on the CD (and explained in Chapter 5) that you are welcome to modify and use.
This book will guide you through the process of organizing, starting with those early meetings, working through the maze of local and state forms, and finally building the application for federal tax exemption. Becoming a nonprofit is not a magical path to financial wealth. It is, however, a way for an organization to remain true to its principles of community service while conducting basic business functions, such as having a bank account, signing contracts, hiring staff, and owning property.
Becoming a nonprofit organization is one of the best ways to guarantee that your club or organization will be able to continue its business well into the future. Organizing a group to prepare for incorporating and eventually applying for nonprofit status is a lot of work. It will require a clear understanding of what a nonprofit organization can and cannot do, based on the simple, yet precise requirements of the Internal Revenue Service.
This guide will help you understand the core requirements for every nonprofit. It involves a lot of common sense, and as you will see, it is not that difficult. However, it is impossible to cover every possible detail related to forming and operating a nonprofit organization in one book, so there will be occasions when we recommend that you seek advice from either a legal or nonprofit tax professional. Nonprofit regulations can and do change with amazing frequency.
Forming a nonprofit is an exciting process from beginning to end. You will work closely with many of the people in your community you might never have met as you take your ideals and your hard work and pour them into an entity that will guarantee that work can continue forever. The aim of this guide is to help you do your good work.