While this question may seem out of place in a book about forming a nonprofit organization, it is a very important question and one that is entirely appropriate to bring up at your first meeting. There are numerous misconceptions about what a nonprofit organization is, and this is the time to clear them up. Too many groups jump right into the application process without understanding the full scope.

You Can Leave at Any Time

Depending upon what your organization wants to do, the 501(c)(3) might not be the ideal option, especially if you are intending to be involved politically. If the 501(c)(4) classification is more appropriate or if it makes sense for your group not to apply for federal tax exemption for the time being, honestly discuss this option. The different nonprofit classifications are discussed earlier, and you may need to reread. You have 27 months from the time you incorporate to apply for your tax exemption. That clock begins ticking when you are formally incorporated with your state.

Forget Any Personal Gain

Everyone in the room must understand that if you decide to apply to become a federally recognized nonprofit corporation, you will become a public organization. No one can ever take a financial gain from the work of the organization because there will be no shares or dividends. Furthermore, anyone who agrees to serve on the board will most likely do so as a volunteer and only their actual expenses will be reimbursed. The organization's annual financial report will be open to public inspection.

Needless to say, the work involved and the restrictions and duties of maintaining a federal tax-exempt status is a unique responsibility. Groups should seriously consider every option before determining their course of action.