How to Start a 501C3
Mother Teresa was one of her kind and there would hardly be anyone who would disagree with the fact that she was unconditional love and kindness personified. All of us, no, majority of us cannot do so much or even a minuscule of what she has done. To give unconditional compassion and love, you need to have a real big heart and a real determination to uplift the under privileged.
For some of us who want to do something for others, may be starting up a 501c3 charitable organization is a good idea. The best part about this kind of an organization for doing social work is that it is normally exempt from income tax and from property taxes. Moreover, it can receive tax-deductible donations from companies and individuals as well. Here is how to start a 501c3!
What is a 501 Non Profit Organization?
A 501(c) non profit organization refers to an American tax exempt, non profit association or corporation. According to the Section 501(c) of the United States Internal Revenue Code, (IRC), 26 types of non profit organizations are exempt from income taxes collected under the federal law. The 501c3 comes under this and it is one of the most common organizations amongst the organizations that are exempt from tax. An organization or association is a 501c3 if it falls under these categories - religious, charitable, scientific, public safety, literary, educational, national/international amateur sports and prevention of cruelty to children or animal. The structure could be anything from a corporation to a fund to foundation or even a community chest.
Starting a 501c3
To Do 1
If there is an issue which is very dear to your heart and you want to do something about it which concerns others, it would be great. The reason? Well, you would need to have a clear cut and well-defined mission statement. It should reflect the values and goals of your organization. Along with it the statement should also mention what will the organization do and for whom. This is important because if the statement is not clear and convincing, there are more chances that you can get good donations.
To Do 2
Getting some people to join you in your noble cause is the next step for establishing a 501c3 association. The condition is that minimum 3 people should be ready to support the mission of the organization. These will be the members of the board of directors of your charity or the likes you have in mind. However, these people should willingly give their time and efforts for the organization and its objectives. Once that is done, then you need to chalk out the rules and by-laws about the operation of your organization.
To Do 3
After the laws and by-laws have been drafted, the fiscal issues have to be taken care of. Here the issue of budget comes to the fore. The budget ideally should be as detailed and clear as it can be made. Start up costs, long term and monthly expenses are a must. Accounting system has to be set up with the help of a financial consultant. This is essential to keep your organization accountable to the government and public. Simultaneously, record keeping system has to be in place, more so in case of donations. The records should be up-to-date and it is imperative to be very careful and meticulous about your records.
To Do 4
This initial and primary set up, articles of incorporation with your state, that is telling your state that a non profit organization is being established by you has to be done. Your state's attorney general or secretary office will help you get the necessary paperwork done. A nominal fee might be required in some cases. The next step is to file for a 501C3 status with the Internal Revenue Service (IRS). A form is required to be filled up as specified by the IRS accompanied by a fee depending on your budget.
To Do 5
The last thing you need to do is to apply for and get a federal employer identification number (EIN). This is a must if you want to start up any type of non profit organization. The number is imperative because then it can be identify you as a tax exempt organization when you are filing tax documents.
This was just a general ideas as to what it is all about. There would be many more finer points which you may come to know when you actually take the plunge!
Starting a 501c3 might seem a bit tedious and complicated. But if you really want to do it, I am certain that it would not seem to be that difficult, even though it could actually be! Moreover, when you have made up your mind that this is for the good of others, well, there is no stopping, isn't it? All the best!
