Running a Nonprofit · Level 2 of 5 · Foundations

Starting the organization

Incorporation, bylaws, EIN, and applying for 501(c)(3) status.

Study notes

Typical steps: choose a name, file articles of incorporation with the state, adopt bylaws, elect a board, get an EIN, and apply to the IRS.
Articles for a 501(c)(3) should include a purpose clause and a dissolution clause that sends remaining assets to another exempt purpose.
An Employer Identification Number (EIN) comes free from the IRS and is needed for banking and filings.
Organizations apply for exemption with Form 1023, or the shorter Form 1023-EZ if they meet the IRS eligibility worksheet (for example, small projected gross receipts and assets).
Many states also require charitable solicitation registration before you ask the public for donations.

Quiz: 6 questions

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1. Which document is filed with the state to create a nonprofit corporation?

Articles of incorporation Form W-2 A lease A grant report

2. Bylaws are:

The internal rules for how the organization is governed A donor receipt A federal tax return A volunteer waiver

3. How much does the IRS charge for an EIN?

Nothing; it is free $500 $1,000 It depends on the state

4. Which form is the shorter exemption application for eligible small organizations?

Form 1023-EZ Form 990-PF Form 1040 Form SS-4

5. Why does a dissolution clause matter for 501(c)(3)s?

Assets must go to another exempt purpose if the group closes It sets the board's pay It names the bank It avoids audits forever

6. Before soliciting donations from the public, many states require:

Charitable solicitation registration A liquor license A trademark A home inspection

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