IRS Frequently Asked Questions (FAQ)

IRS Frequently Asked Questions (FAQ) -

http://www.irs.gov/charities/content/0,,id=96986,00.html

IRS Filing Requirements - http://www.irs.gov/charities/article/0,,id=96103,00.html

IRS and Unrelated Business Income Tax -
http://www.irs.gov/charities/article/0,,id=96104,00.html and Special Rules
http://www.irs.gov/charities/article/0,,id=96106,00.html

IRS Tax Kit listing the forms and pamphlets that are needed-
http://www.irs.gov/charities/article/0,,id=96774,00.html

There is web site assistance by Sandy Deja available in preparing the Federal Form 1023
at http://www.form1023help.com. Form 1023 Help has a page by page review of 1023
and important information to maintain the exempt status.

You can look at, read and print your State statute or code at Free Advice. Here you will
find a map of the United States, http://law.freeadvice.com/resources/statecodes.htm.
Click on your State. The web site for your State statutes will appear. Scroll through and
find the law on business or corporations. Some States have specific sections or articles
listed as "Nonprofit" or "Tax Exempt". In other State statutes, nonprofit organizations
are part of the corporation law and you have to read all of it to find the appropriate
sections. Some sections are specifically aimed at tax-exempt organizations but the entire
corporation law may apply. The use of this site and your State law is not a substitute for
talking with an attorney.
There are links to all states’ incorporating law,
http://firstgov.gov/Business/Nonprofit_State.shtml

The Foundation Center has an incorporating outline at its Learning Lab,
http://fdncenter.org/learn/ufg/ufg_tab1.html and
http://fdncenter.org/learn/classroom/establish/index.html.

Business Filings features brief statements about incorporating a tax exempt organization -
http://www.bizfilings.com/learning/nonprofitfaq.htm

Under the topic, Starting a Nonprofit Organization (for-profit or nonprofit), in the Free
Management Library assembled by Carter McNamara, MBA, PhD you will find valuable
links to information - http://www.managementhelp.org/strt_org/strt_org.htm and
http://www.managementhelp.org/strt_org/strt_np/strt_np.htm

Putnam Barber has excellent material at the FAQs of the Internet Nonprofit Center,
http://www.nonprofits.org/. In particular see the article Where to start when creating a
nonprofit at http://www.nonprofits.org/npofaq/02/01.html. The topics include
organization, management, regulations, resources, development, mission statement,
employment opportunities, accounting and much more.

Nolo Press has an excellent handbook on nonprofit organizations, How to Form a
Nonprofit Corporation, which is for sale at the site. Nolo Press also maintains a useful
web site. The basics for incorporating are discussed at
http://www.nolo.com/encyclopedia/articles/sb/np_basics.html covering liability issues
and reasons for incorporating. As with many web sites dealing with nonprofits there is a
link at the bottom to a section about Frequently Asked Questions (FAQ) that in each
instance I highly recommend reviewing. At
http://www.nolo.com/article.cfm/ObjectID/F63DD4C1-456C-418F-
A1066A3F3FBE05A5/catID/CE94A6B3-EFB6-4036-
8498D5414328FD73/111/262/ART/ there is a list of five reasons to incorporate a
nonprofit organization.

The material about a business plan discussed above features the words "mission" and
"mission statement". There are many excellent sites to assist you in these concepts - too
many to list here. But one that I will list is from Tony Poderis, http://www.raise-
funds.com/1101forum.html. Read it carefully. The statement about your organization's
mission is vital and should be the focus of much work and discussion. See also The
Mission Statement Checklist, http://www.raise-funds.com/exhibits/exhibit46.html

The web site for the Small Business Administration is http://www.sbaonline.sba.gov/
where you will find a significant amount of information about the beginning of a
business. Basically, however, nonprofit organizations are not eligible for loans from the
SBA. Although this site addresses issues for for-profit ventures, there is useful
information for not-for-profit organizations as well.
Material about marketing and publicity can be found at Independent Sector -
http://www.independentsector.org/mission_market/index.html and Nonprofit FAQ -
http://www.nonprofits.org/npofaq/keywords/2n.html. For assistance in preparing a press
release, visit http://www.press-release-writing.com/ for helpful hints, templates and other
assistance. This is a business site but they offer a significant amount of material without
cost.

• Basic elements of a press release – http://www.press-release-writing.com/content-
basics.htm
• How often should you have a press release – http://www.press-release-
writing.com/newsletters/t113-how-often-press.htm
• Ten essential tips to produce a press release – http://www.press-release-
writing.com/10_essential_tips.htm
• Suggestions for formatting a press release – http://www.press-release-
writing.com/formatting-suggestions.htm
• Sample press releases – http://www.press-release-writing.com/sample-press-
release.htm
• Press release template – http://www.press-release-writing.com/press-release-
template.htm
• Style Guide, International -
http://www.economist.com/research/StyleGuide/index.cfm
• Lists of radio, TV and newspapers nationally, media links -
http://www.gebbieinc.com/aio.htm and http://newslink.org/news.html
• A Managers Guide to Creating a Newsletter -
http://www.managersguide.com/indexa.html

The key to the success of a nonprofit, its mission and its accountability starts with the
board of directors. There is significant information about boards on the Internet. Some of
the most useful is –

• Carter McNamara and the Free Complete Toolkit -
http://www.managementhelp.org/boards/boards.htm
• Alliance for Nonprofit Management - http://www.allianceonline.org/FAQ
• Pennsylvania Attorney General Handbook for Charitable Nonprofit Organizations
- http://www.attorneygeneral.gov/pei/brochures/charities/html/handbook.cfm
• Nonprofit Good Practice Guide - http://www.nonprofitbasics.org/
http://www.npgoodpractice.org/
• The Council on Quality and Leadership resources -
http://www.thecouncil.org/resources/?c=free-resources

Your State law may cover the obligations and responsibilities of a board of trustees.
Under most if not all State laws a board of directors of a nonprofit corporation has a duty
of care, a duty of loyalty and a duty of obedience to the organization. Each state specifies
what it considers is an acceptable level of behavior in determining if board members are
acting in the best interest of the nonprofit organization. There are model and sample job descriptions for the president or chair of the board as well as for members and
discussions about the role of officers. See
• http://garberconsulting.com/job_description_president.htm
• http://garberconsulting.com/Job_Description_Secretary.htm
• http://www.managementhelp.org/boards/brdjobs.htm.

The issue of conflict of interest in nonprofits is a matter for concern. The conflict may
come about in the context of a contract between the organization and a board member or
with a family member of a staff or board member. The bylaws should have a distinct
section addressing conflict of interest and how it will be handled. In the beginning period
the question is often asked if the founder can be the salaried head of the organization and
on the board, or have the board filled with family members. The appearance of a conflict
can be as serious as an actual conflict. Loyalty to the organization is paramount in a
group's activities. One useful article on the Internet is found at
http://www.boardsource.org/FullAnswer.asp?ID=89. Each State nonprofit law has
provisions concerning conflict of interest. The concern around the involvement of the
founder is called "Founder Syndrome" where the founder has over-bearing influence
upon the organization. NPOs are a public trust, not a personal venture. This issue should
be addressed in the bylaws. http://www.managementhelp.org/misc/founders.htm

The IRS has interest in conflicts as well. There is such a thing as "Intermediate
Sanctions" that affect persons who are "in a position to exercise substantial influence over
the affairs of" a 501(c) (3) organization. The persons who can be in this group are the
founder (that Syndrome again), the president, the Executive Director, the Chief Executive
Officer (CEO) or the Chief Operating Officer (COO), substantial contributors, and
certain relatives. For more information on this subject review this memo -
http://www.runquist.com/article_intermedsancts.htm

Accountability and transparency are the new words for nonprofit organizations. It appears
to some that the whole field of tax exemption should be reviewed and made more
“transparent”. There is a lot of movement to tighten the material in the 1023 and 990s.
One law that was stimulated by Enron and other for-profit companies is the Sarbanes-
Oxley (SOX) that requires CEOs to sign financial papers filed with the Security and
Exchange Commission. There are other elements to the law. For a discussion on the
significance of SOX on nonprofit groups see
http://ncna.org/index.cfm?fuseaction=Page.viewPage&pageID=429.

Nonprofit organizations in Maryland developed a statement of ethics and accountability
covering mission and program, governing body, conflict of interest, human resources,
financial, legal, openness, fundraising, public affairs and public policy. The standards are
posted at http://www.mdnonprofit.org/ethics_initiative.htm. Other groups have
developed similar standards and useful rules for philanthropy by Internet,
http://www.nasconet.org/, http://www.ephilanthropyfoundation.org/ and as core values,
http://www.utahnonprofits.org/ethics.html. Many foundations are staring a search about
applicants through GuideStar; GuideStar offers basic, in-depth, and customized data
services on more than 1 million U.S. nonprofits. http://www.guidestar.org/index.jsp
The Organizational Assessment Tool (or OAT) is for organizations who are interested in
taking a look at their own capacity and effectiveness. (It makes sense to review your
organization’s own structure and readiness before you begin using their program
planning and evaluation tools.) The OAT leads you through an online survey, asking
questions about key areas of organizational development, and then produces an
immediate snapshot report of your organization's strengths and challenges. You can use
the report as a springboard for discussions of next steps, and to help you determine
whether there are areas of organizational capacity that you need to address before moving
on http://www.innonet.org/tools/oat .

Faith-based and community-based organizations can find assistance at the Pew Forum on
Religion and Public Life, http://pewforum.org/faith-based-initiatives/. The White House
web site features dates for conferences, grants and planning material,
http://www.whitehouse.gov/government/fbci/. For links to many organizations with
information for faith-based organizations, see my material at
http://charitychannel.com/publish/templates/?a=1581&z=0 .

The Utica NY Public Library maintains a virtual nonprofit library. There are links to
other web sites concerning Boards, Management, Planned Giving, Volunteering and
many other important topics. The library is found at
http://www.uticapubliclibrary.org/non-profit/directory.html.

If you are looking for help on technology as you plan out your organization. TechSoup
offers excellent articles, a newsletter and has a forum for questions and answers,
http://www.techsoup.org/. They list nonprofit discounts and sections on building the
technology plan and at the Tech Soup Stock web site
http://www.techsoup.org/stock/default.asp . See also a report on community-based
technology centers, Computers in Our Future, and the "Toolkit" to make them useful,
http://www.ciof.org/index.html. See Tech Foundation,
http://www.imakenews.com/techfoundation/, for technology grants and a free newsletter.

The Nonprofit Financial Center is a membership organization. Nevertheless they have
financial material, forms, policies and procedures at no cost.
http://www.nfconline.org/main/info/guides.htm

Jayne Cravens maintains an excellent site through her consulting firm, Coyote
Communications, at http://www.coyotecom.com/free.html. She has valuable links to
other organizations to assist in the development and growth of your organization. There
are also helpful tips about technology, especially used equipment.

Management Information Exchange (MiX) has a sample job description for board
members and additional information concerning the board of directors, worksheets and
toolkits, http://www.lcmmix.org/articles.cfm?cat=0&top=0
BoardSource is a valuable asset to the development and maintenance of an NPO. The
URL for BoardSource with information about nonprofits is http://www.boardsource.org.
You will find essential information about board governance and formation.

Board meetings can be exciting and focused. A lot depends on the leadership, knowledge
and experience of the chairperson. The setup of the room where meetings are conducted
can also affect the meeting. For ideas about room setup, see
http://www.llrx.com/columns/guide59.htm and
http://www.rwjf.org/grantee/howtoPlanMeeting_1.jhtml.

An issue confronting nonprofit groups is using Robert's Rules of Order. I have found
several web sites that I think are helpful to understanding Robert's Rules of Order.
Although there is a push to sell the book on each, there are useful "cheat sheets" and
discussions as well on the sites.

http://www.robertsrules.com/ - The Official Robert's Rules site

http://www.rulesonline.com/ - An adaptation and helpful outline to Robert's

http://www.jimslaughter.com/ - An excellent site with an available "cheat sheet"

http://www.parliamentarians.org/parlipro.htm - The web site of the National
Parliamentarian Association with another useful "cheat sheet" and discussions about
meetings and an agenda.

http://www.everett.com/parli-pro/ - A web site from a consultant with free material on
presenting motions, writing minutes, counting a quorum and other matters

http://www.newkent.net/rules.html - Trout's Top Ten Rules of Order

http://www.carvergovernance.com/ - John Carver has been preaching an alternative board
governance process and policy and this is his web site.

Incorporating is not the end of the process of developing, maintaining and sustaining the
organization’s mission and vision. Nonprofit groups have to consider written policies,
procedures, forms and recordkeeping. Some web sites that can help you in this phase of
operation are listed here. This is not a complete list, but will give you a head start.
Greenlights has a number of downloadable forms and draft policies for nonprofits,
http://www.greenlights.org/site/pp.asp?c=iuIYLdP4G&b=14665&sid=7651530.
Findforms.Org has sample legal forms relative to leases, employment contracts and much
more, http://www.findforms.com/. They also sponsor the web site, Lawguru that features
a FAQ section about sexual harassment, employment law and so on,
http://www.lawguru.com/faq/11.html and http://www.lawguru.com/. Office Depot has a
number of free downloadable forms and a small business handbook near the bottom at
http://www.officedepot.com/. Microsoft has templates for accounting, stationary and much more, http://office.microsoft.com/templates/default.aspx. CCH features a business
toolkit and a human resources toolkit, http://www.toolkit.cch.com/