#332: How To Launch A Nonprofit Quickly and Easily

Read the full Your Mark on the World article and watch the interview here: http://bit.ly/1kQq8N0. Subscribe to this podcast on iTunes by clicking here: http://bit.ly/ymotwitunes or on Stitcher by clicking here: http://bit.ly/ymotwstitcher. Brent Andrewsen, an attorney with Your Mark on the World-sponsor Kirton McConkie, explains the simple steps required to form a nonprofit charity. There are two basic steps required. First, you need to create a legal entity and second, you must obtain tax exempt status from the Internal Revenue Service (IRS) for the entity. Most “nonprofits” are either a charitable trust or a nonprofit corporation. Brent recommends a nonprofit corporation for organizations looking to operate a traditional nonprofit. The formation requires articles of incorporation, bylaws, a board of directors (at least 3 in number), naming of officers, etc. The articles must be registered with the state, and the state also requires the names and addresses of board members and officers. These steps are almost completely within your control and while they sometimes take months, they can be done as quickly as you are willing to do them. Once the entity exists, you are in a position to prepare and submit an application to the IRS on Form 1023. The IRS estimates that you can learn what you need to learn to complete the form yourself and complete the form in approximately 20 hours. Most applicants get at least some help from attorneys like Brent who have submitted hundreds of applications. Brent says he’s never had an application rejected. Once you submit the application, the IRS will take three to four months to review it. Sometimes, the IRS will respond with additional questions. Sometimes they will respond with an immediate approval. Brent notes that the application is important. “Get help from an expert.” If the IRS ever has a question about whether your organization should be subject to tax, the IRS will conduct an audit. If the auditors find that you are doing what was approved in your application, the audit usually will be quick and painless. This also provides protection should the IRS change its opinion about the nonprofit’s activities. The IRS cannot penalize your organization for conducting activities disclosed in the application. In order to ensure efficient audits and protection from penalties, Brent encourages applicants to be “specifically broad” in their applications so that the auditors will quickly recognize that your activities align with your approved application. One secret that Brent suggests for those who are financially constrained with respect to the legal costs of setting up a nonprofit, is to ask your nonprofit lawyer for templates and some coaching up front and then to prepare the documents yourself. As a final step, ask your attorney to review your work. In this way, your attorney can help you create a successful application at reduced cost. Read the full Your Mark on the World article and watch the interview here: http://bit.ly/1kQq8N0. Please consider whether a friend or colleague might benefit from this piece and, if so, share it.