As a nonprofit organization, you’re invested in your community. You’re an advocate—for the arts, a social cause, an environmental issue. You’re dedicated, determined, and driven. But what do you do when you want to gain the benefits of becoming a 501(c)(3)? Here’s how to kick-start the process.
Not all nonprofits are created equal
In Indiana, a nonprofit organization does not automatically receive a 501(c)(3) status. One major difference between a nonprofit and a 501(c)(3)? A nonprofit is exempt from certain state and local taxes, but a 501(c)(3) can receive tax-deductible donations. In other words, your corporation first must be recognized as a nonprofit organization before it can receive 501(c)(3) status.
The articles of incorporation
If your organization hasn’t incorporated as a nonprofit, you can file paperwork with the secretary of state. You’ll need to include the name and purpose of your corporation, the names and addresses of your board of directors, and copies of your governing documents.
The articles of incorporation are also the first step to becoming a 501(c)(3). Just be sure to check the “this corporation is a public benefit corporation” box and include:
- a statement of purpose that qualifies for tax-exempt status,
- statements that your organization will not engage in prohibited political or legislative activity, and
- a dissolution of assets provision dedicating your assets to another 501(c)(3) organization upon dissolution. (A 501(c)(3) cannot distribute assets for any individual’s personal gain in the event the organization ceases to exist.)
There are two ways to become a 501(c)(3), depending on the size of your organization. If your organization’s annual budget does not exceed $50,000, you can complete Form 1023-EZ. While this form is relatively new, it makes it easier for smaller organizations to obtain the 501(c)(3) status. If your organization is larger, however, or anticipates future growth, you will need to work with a professional to submit Form 1023. The form is complex and time-consuming. It often involves negotiations with the IRS and helping the agents understand how your organization serves the greater good.
While the paperwork and documentation required for the 501(c)(3) process may seem daunting, remember the goal: growing your organization, and continuing to make a difference in your community.
To learn more about the 501(c)(3) process, contact Cara Putman at 765-742-9066.
The content of this blog is intended to be general and informative in nature. It is advertising material and is not intended to be, nor is it, legal advice to or for any particular person, case, or circumstance. Each situation is different, and you should consult an attorney if you have any questions about your situation.