Section 501(c) (3) of the Internal Revenue Code (IRC) exempts nonprofit charitable groups from taxation, allowing financiers to deduct their donations to the groups while filing tax returns. Here are important steps to follow when starting a certified charity.
1. Know the different types of charity organizations you can start
There are different organizations based on missions. For instance, animal charities are concerned with the welfare of animals. Public charities receive most of the funds from the government while private foundations receive funds from small groups.
2. Confirm if your organization qualifies to be an IRC §501(c)(3) compliant
Your charity must be organized and managed just for “exempt purposes.” The exempt purposes include that the organization should run for public interest only.
3. Name your charity
The name to be used must adhere to rules set and be accepted by the Office of the Secretary of State among other conditions.
4. Set up a mission statement
A mission statement summarizes the importance and purpose of your organization. It is used in the filing of IRS and state files for the entity.
5. Incorporate the organization
This stage involves steps such as naming the corporation, the state of incorporation, and Articles of Incorporation among others.
6. Request a Federal Employer Identification Number (EIN)
In all your communications with the IRS, EIN must be used. An EIN is applied by filling the IRS Form SS-4. You should only apply for an EIN after your company is legally incorporated.
7. File to get tax exempt status
Send the correct IRS files to be considered for tax-exempt status by the federal and state government. You can use IRS FORM 1023-EZ or IRS FORM 1023.
8. Comply with charity regulations in your area
Different states, counties, and cities have different rules for charity organizations. You need to license and file the necessary annual reports.
9. Create a website
A great website enhances the credibility of your charity and ability to raise more funds. Your website should have your mission, testimonials, and charity activities you have undertaken.
10. Insure the charity
Choose the best insurance for your charity. You may need property and general liability coverage.
11. Plan how to raise money
The most difficult thing for many charities is to raise funds. Plan how to use various avenues such as social media and marketing to raise funds.
12. Minimize your costs
Many donors are concerned about how their contributions are used. Keep the administrative costs low to attract more donors.
13. Look for volunteers
Volunteers are crucial as they expand your mission and help in raising funds. The main advantage of volunteers is that they are not paid.
14. Deal with your employees appropriately
This involves offering your employees a fair salary. Look for employees who believe in your mission.
15. Other things
This involves activities like opening a bank account among others.