Starting a Nonprofit Corporation
“I want to start a nonprofit.”
Good for you. Fortunately there is a very clear path to becoming a nonprofit and getting awarded tax exempt status to your organization. Whether you are a community-inspired young person or a recent retiree looking to give back and keep busy, I can help you define the purpose of the nonprofit entity and to present the filings so that you can create and manage a successful nonprofit. You put a lot of time and personal goodwill into the concept of your nonprofit. How much time do you really want to spend reading state and federal requirements for achieving your nonprofit status? Talking to a lawyer will help you get down to the activity that is the purpose of your nonprofit and maximize your chances of success.
“We’re a nonprofit, not a corporation.”
“Nonprofit” is a poor descriptor of what the nonprofit entity actually is. “Nonprofit” means that no profit will inure to its directors, members, employees, family members, and the like. It does not mean that there are no profits. Indeed, if you don’t make any profit the business will fail. In Oregon, nonprofit entities are registered with state as a corporation. The concept of a nonprofit is that the corporation is performing some public good and that any money the nonprofit corporation has is held in trust for the benefit of the public. The nonprofit corporation has to observe corporate formalities (rules), create bylaws with specific language that directs the conduct of its directors and staff, and keep exacting bookkeeping and accounting records.
Nonprofit corporations have an additional reporting obligation to the Oregon Department of Justice, Charitable Activities Division.
“Tax filing? We’re tax exempt. Why do we have to do that?”
Because your nonprofit corporation is working on behalf of the public, and the corporation holds all money in trust on behalf of the public, the corporation must file each year one of the versions of IRS Form 990. I work with accountants who specialize in nonprofit accounting and tax filings, and I will advise you on best practices for record keeping and tax filing, as well as best practices for directors.