Table of Contents:
Steps to Setup a Non-profit
Federal 501(C)3 Non-profits
Why Apply for 501(C)3 Status?
Who is Eligible for 501(C)3 Status?
Forming a Non-profit Organization
Sample Articles of Incorporation
IRS for Non-profits
Application for Recognition of Exemption
Organizations for Non-profit Funding
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Steps to Setup a Non-Profit
1. Form a Non-Profit Corporation
a) Write Articles of Incorporation and submit them to the Secretary of State to receive a Certificate of Incorporation
b) The Articles of Incorporation must include the requirements of the IRS regarding benefits and dissolution of the corporation
2. File form SS-4 with the IRS to obtain a Federal Employer Identification Number (EIN).
3. Form a Board of Directors with a minimum of four elected officers: President, Vice President, Secretary, and Treasurer.
4. Establish by-laws for the corporation.
5. File the Application for Recognition of Exemption with the IRS – this process may take some time
6. When the corporation has been granted non-profit status, review the Colorado Department of Revenue and the Colorado Secretary of State websites for non-profit requirements.
7. All non-profits must file a Federal Income Tax Report EACH year. The non-profit may email the IRS each year with basic information on Form 990-N. First filings are due May 15 for calendar year organizations. Failure to file for 3 years in a row will cost groups their exemption and/or a penalty or interest.
Federal 501(c)3 Nonprofits
Organizations that meet the requirements of Internal Revenue Code section 501(c)(3) are exempt from federal income tax as charitable organizations. Every exempt charitable organization is classified as either a public charity or a private foundation. Eligibility: must be organized as a corporation, trust, or unincorporated association + substantial portion of the organization’s activities must further its exempt purpose + organization must have one or more exempt purposes stated in the organizing document. Exempt purposes: charitable, educational, religious, scientific, literary, fostering national or international sports competition, preventing cruelty to children or animals, and testing for public safety. File with the IRS to obtain tax-exempt status. Non-profit organizations must still file tax returns with the IRS and are, with a few exceptions, responsible for payroll taxes.
In Colorado, an organization may choose to be an Unincorporated Nonprofit Association or a Nonprofit Corporation. A Nonprofit Association is for less formal groups that do not intend to seek special tax-exempt status. A constitution and articles of association must be adopted and the name registered with the Secretary of State. A Nonprofit Corporation is for organizations that want to become tax-exempt. Articles of incorporation must be filed with the Secretary of State. After receiving federal tax-exempt status, apply for sales tax-exempt status in Colorado with the Department of Revenue. Businesses classified as 501(c)3 by the IRS are exempt from state-collected sales taxes. Exemption must be obtained in writing from the Department of Revenue. If product sales to the public exceed $25,000/year, a sales tax license must be obtained and sales taxes must be collected. This exemption may not have been adopted by the local city or county.
Why Apply For 501 (c) (3) Status?
The benefits of having 501 (c)(3) status include exemption from federal income tax and eligibility to receive tax-deductible charitable contributions. To qualify for these benefits, most organizations must apply with, and be recognized by, the IRS as described in this publication. Another benefit is that some organizations may be exempt from certain employment taxes.
Individual and corporate donors are more likely to support organizations with 501 (c)(3) status because their donations can be tax deductible. Recognition of exemption under section 501 (c)(3) of the IRC assures foundations and other grant-making institutions that they are issuing grants or sponsorships to permitted beneficiaries.
An IRS determination of 501 (c)(3) status is recognized and accepted for other purposes. For example, state officials may grant exemption from state income taxes, sales, and property taxes; and the U.S. Postal Service offers reduced postal rates to certain organizations.
Who Is Eligible For 501 (c)(3) Status?
There are three key components for an organization to be exempt from federal income tax under section 501 ( c)(3) of the IRC. A not-for-profit (i.e., nonprofit ) organization must be organized and operated exclusively for one or more exempt purposes.
Organized – a 501 ( c)(3) organization must be organized as a corporation, trust, or unincorporated association. An organization’s organizing documents (articles of incorporation, trust documents, articles of association) must: limit its purpose to those described in section 501 ( c)(3) of the IRC; not expressly permit activities that do not further its exempt purposes, I.e., unrelated activities; and permanently dedicate its assets to exempt purposes.
Operated – Because a substantial portion of an organization’s activities must further its exempt purpose(s), certain other activities are prohibited or restricted including, but not limited to, the following activities. A 501( c)(3) organization:
- Must refrain from participating in the political campaigns of candidates for local, state, or federal office.
- Must restrict its lobbying activities to an insubstantial part of its total activities.
- Must ensure that its earnings do not inure to the benefit of any private shareholder or individual.
- Must not operate for the benefit of private interests such as those of its founder, the founder’s family, its shareholders, or persons controlled by such interests.
- Must not operate for the primary purpose of conducting a trade or business that is not related to its exempt purpose, such as a school’s operation of a factory.
- May not have purposes or activities that are illegal or violate fundamental public policy.
Exempt Purpose – To be tax exempt, an organization must have one or more exempt purposes, as stated in its organizing document. Section 501( c)(3) of the IRC lists the following exempt purposes: charitable, educational, religious, scientific, literary, fostering national or international sports competition, preventing cruelty to children or animals, and testing for public safety.
Forming a Non-Profit Organization
A Non-Profit Organization has been organized primarily for an exempt purpose, not for profit gain, and will operate within prescribed guidelines.
A 501 c 3 Non-Profit Organization has been organized for an exempt purpose and will operate with the defined guidelines as permitted under Section 501 c 3 of the Internal Revenue Code. This type of Non-Profit Organization receives a Tax Exemption or 501 c 3 Status.
The procedure is to apply to the Colorado Secretary of State and receive Non-Profit Status; then apply to the IRS for the Tax Exemption and 501 c 3 Status.
These are the steps:1. Form a Non-Profit Corporation. Set up a name for your corporation. In the formal name, “A Non-Profit Corporation” should follow the name. 1) Check with the Registrations on the Colorado Secretary of State Web Site, or call their Office, to see if that name is already taken. The telephone number is 303-894-2200.2) If not already taken, register the name of your corporation. Apply to the Colorado Secretary of State for Certification as a Non-Profit Corporation.1) Registration of your name is not sufficient. Your organization must be certified by the State as a Non-Profit Corporation.2) A copy of the Application to the Colorado Secretary of State can be downloaded from their Web Site or by calling their Office.3) Establish Articles of Incorporation and send them in with the Application.4) A fee must be sent in with the Application. Contact the Secretary of State's Office for the amount. 2. Articles of Incorporation for your corporation. This document must contain a written description of the exempt purpose for which the organization was organized. It must contain a written statement that the operations not allowed in 501 c 3 will not be permitted in the operation of the organization. It must contain a written statement that upon dissolution of the corporation, assets remaining after payment of liabilities shall be transferred to one or more non-profit organizations. At this point, you would have a Colorado State-approved Non-Profit Organization. However, this type of organization does not have the tax exemption benefits provided in an IRS-approved 501 c 3 Non-Profit Organization. 3. Obtain an Employer Identification Number (EIN) from the IRS. The form for this can be downloaded and printed from the IRS Web Site. It is Form SS-4. A copy of the EIN received from the IRS must be attached to the Application to the IRS for Tax Exemption. This EIN must also be shown on each page of the Application to the IRS for Tax Exemption. Keep in mind, that the IRS will not even consider an Application unless there is an EIN. 4. As a Corporation, you have to form a Board of Directors. There are 4 individual Officers in the corporation. These are the President, Vice President, Treasurer, and Secretary. These people can form your Board. 5. When you have formed your Board of Directors, the next step is to prepare a set of By-Laws for the Corporation. This document is established by the action of the Board at a Board Meeting. The By-Laws must contain the same written statements regarding exempt purposes and restrictions in operation by 501 c 3 as contained in the Articles of Incorporation. A copy of the By-Laws must be attached to the Application to the IRS for Tax Exemption. A Sample Bylaws is available and could be sent by E-mail. However, an Attorney should either review or prepare this document for your corporation. 6. With the above in place, it is time to go to the Internet and download and print the actual Application to the IRS for Tax Exemption. Its actual title is “Application for Recognition of Exemption, Package 1023”. Go to the Home Page of the IRS. As I mentioned before, to get the application blank for the EIN, click on Form SS-4. To get to the actual “Application for Recognition of Exemption, Package 1023” do the following: 1) Click on CHARITIES & NON PROFITS on the Tool Bar.2) Scroll down to “Revised Form 1023 – Application for Exemption. Click on this. The Application will come up and can be downloaded and printed. There are 28 pages in this document.3) The Application can also be found by typing in “PACKAGE 1023” in the SEARCH tab in the upper right-hand corner. Additionally, and very informative in filling out the Application, are the Instructions for Form 1023. These should be downloaded and printed. This Form can be accessed by typing “Instructions for 1023” in the SEARCH tab in the upper right corner. Click on the heading titled “Instructions 1023 (Rev 06-2006)” with the Adobe Reader Icon. There are 38 pages in this document. 7. Filling out the Application takes time and diligence. The basic purpose of filling out the Application is to convince the IRS that you are entitled to a Tax Exemption. You have to convince the IRS that you are organized for a definite exempt purpose and that you will operate by the rules and regulations of 501 c 3. There are many questions in the Application. This is where the Instructions to 1023 are extremely helpful. Some of the basic questions follow: 1). There is one question in which a written and detailed narrative is required to explain how you will operate for your exempt purpose and who will benefit. There are many additional questions regarding your operation.2). Names and addresses, and compensation if paid, of the Officers of the Corporation, are asked.3). For start-up organizations, a projected annual budget for the next 4 years is required. An Accountant or CPA knowledgeable in Non-Profit Organizations should be consulted for this.4). This projected budget varies somewhat for those organizations that have been in business and now want to go into nonprofit.5). There are several pages and questions about types of exemptions such as Churches, Schools, etc. Where these questions do not apply to the exempt purpose for which the organization was created, I suggest answering them with Not Applicable or N/A to show that these questions were not neglected. Then a non-refundable fee is required to be included with the Application. 1). For those organizations whose annual projected income for the next 4 years will be less than $10,000, the fee is $300.2). For those organizations whose annual projected income for the next 4 years will be $10,000, the fee is $750. The following attachments must be included in the Application.1). A copy of the completed Form SS-4, the Employer Identification Number.2). A copy of the Certification of Incorporation as a Non-Profit Corporation from the Colorado Secretary of State.3). Copies of the Articles of Incorporation and By-Laws A checklist is included at the end of the Application. This is excellent for review.
The next thing is to mail the completed Application to the IRS at the following address. It should be sent by Certified Mail with the Return Receipt Requested.
Internal Revenue Service
P.O. Box 192
Covington, KY 41012-0192
If the Application is sent by express mail or delivery service, the address is:
Internal Revenue Service
201 West Rivercenter Blvd.
Attn: Extracting Stop 312
Covington, KY 41011
A copy of the Application and all related documents should be made and stored where they can be found. Quite often the IRS will call, or send by letter, a request for additional information
Then comes waiting for a letter of Determination from the IRS. It takes many months before you hear from them. The Determination will come by letter to the President of the Organization.
Articles of Incorporation for a Non-Profit
The undersigned person, acting as an incorporator, hereby establishes a nonprofit corporation under the Colorado Nonprofit Corporation Act and adopts the following articles of incorporation:
ARTICLE I - NAME
The name of the corporation is The ABC COMMUNITY CENTER.
ARTICLE II - PERIOD OF DURATION
The period of duration of the corporation shall be perpetual.
ARTICLE III - A. PURPOSES
The corporation is organized and shall be operated exclusively for charitable and educational purposes within the meaning of section 501 (C) (3) of the Internal Revenue Code. The specific purposes and objectives of the corporation shall include but not be limited to the following:
(1) The primary purpose is to obtainable resources for a community through a network, which includes training and support services to help enhance the cohesiveness and well-being of the community.
In furtherance of the foregoing purposes and objectives (but not otherwise) and subject to the restrictions outlined in section C. of this article, the corporation shall have and may exercise all of the powers now or hereafter conferred upon nonprofit corporations organized under the laws of Colorado and may do everything necessary or convenient for the accomplishment of any of the corporate purposes, either alone or in connection with other organizations, entities or individuals, and either a principal or agent, subject to such limitations as are or may be prescribed by law.
C. RESTRICTIONS OF POWERS
(1) No part of the net earning of the corporation shall inure to the private or proprietary benefit of, or be distributed to, any member [which is not then an exempt organization described in section 501 (c) (3) of the Internal Revenue Code] any director or officer of the corporation, or any other individual (except that reasonable compensation may be paid for services rendered to or for the benefit of the corporation affecting one or more of its purposes), and no (member which is not then an exempt organization described in section 501 (c) (3) of the Internal Revenue Code, and no] director or officer of the corporation, or any other individual, shall be entitled to share in any distribution of any of the corporate assets on the dissolution of the corporation or otherwise.
(2) No substantial part of the activities of the corporation shall consist of carrying on propaganda or otherwise attempting to influence legislation, nor shall the corporation participate in, or intervene in (including the publishing or distribution of statements) any political campaign on behalf of any candidate for public office. Nothing contained in this Article shall be construed to empower the corporation to engage in any activities which are in furtherance of purposes other than those permitted to an organization described in Section 501 (c) (3) of the Internal Revenue Code.
(3) On dissolution of the corporation, all of the corporation’s assets remaining after payment of or provision for all of its liabilities shall be paid over or transferred to one or more exempt organizations described in section 501 (C) (3)of the Internal Revenue Code, contributions to which are deductible under section 170 c) (2) of the Internal Revenue Code. The organizations to receive such property shall be designated by the Board of Directors.
(4) Notwithstanding any other provision of these articles of incorporation, the corporation shall not carry on any activities not permitted to be carried on by a corporation exempt from federal income tax as an organization described in section 501 (c) 3) of the Internal Revenue Code or by a corporation, contributions to which are deductible under section 170 (c) (2) of the Internal revenue code, and, during any period in which the corporation is a “private foundation” as defined in section 509 (a) of the Internal Revenue Code:
(i) The corporation shall not engage in any act of “self—dealing”, as defined in section 4941(d) of the Internal Revenue Code, to give rise to any liability for the tax imposed by section 4941(a) of the Internal Revenue Code;
(ii) The corporation shall make distributions for each taxable year. at such time and in such manner so as not to become subject to the tax imposed by section 4942(a) of the Internal Revenue Code;
(iii) The corporation shall not retain any “excess business holdings”, as defined in section 4943(c) of the Internal Revenue Code, to give rise to any liability for the tax imposed by section 4943(a) of the Internal Revenue Code;
(iv) The corporation shall not make any investments that would jeopardize the carrying out of any of the exempt purposes of the corporation, within the meaning of section 4944 of the Internal Revenue Code, to give rise to any liability for the tax imposed by section 4944(a) of the Internal Revenue Code; and
(v) The corporation shall not make any “taxable expenditure”, as defined in section 4945(d) of the Internal Revenue Code, to give rise to any liability for the tax imposed by section 4945(a) of the Internal Revenue Code.
(5) All references in these articles of incorporation to provisions of the Internal Revenue Code of 1986, as amended, and shall include the corresponding provisions of any subsequent federal tax laws.
ARTICLE IV - REGISTERED OFFICE AND AGENT
The address of the initial registered office of the corporation is 1234 Main Street, Denver, CO 80202. The name of its initial registered agent at such address is Joe Smith.
ARTICLE V - MEMBERS
The Corporation may have one or more classes of members or may have no members. The designation of any such class or classes, the manner of their election or appointment, the 9 tenure, terms of membership, powers, privileges, immunities, and rights of the members of each class, including voting rights, if any, shall be set forth from time to time in the By-laws of the Corporation.
ARTICLE VI - BOARD OF DIRECTORS
The management of the affairs of the corporation shall be vested in a Board of Directors, except as otherwise provided in the Colorado Nonprofit Corporation Act, these articles of incorporation, or the bylaws of the corporation. The number of directors, their classifications, if any, their terms of office, and the manner of their election or appointment shall be determined according to the bylaws of the corporation from time to time in force.
The initial Board of Directors shall consist of Four (4) persons. Their names and addresses are as follows:
Name Address Phone
Joe Smith 1234 Main Street - Denver, CO 80202 303-234-9876
Jane Doe 1111 Elm Street - Denver, CO 80210 303-444-5566
Jack Sprat 1234 Club Street - Denver, CO 80203 303-565-7788
Mary Jones 533 Card Street - Denver, CO 80203 303-432-7891
No director shall be personally liable to the corporation or its members for monetary damages for any breach of fiduciary duty as a director, except that the foregoing shall not eliminate or limit such director’s liability to the corporation or its members for monetary damages for the following: (1 any breach of such director’s duty of loyalty to the corporation or its members, (2) any of such director’s acts or omissions not in good faith of which involve intentional misconduct or a knowing violation of law, (3) such director’s assent to or participation in the making of any loan by the corporation to any director or officer of the corporation, or (4) any transaction from which such director derived an improper personal benefit.
ARTICLE VII - BYLAWS
The initial bylaws of the corporation shall be adopted by the Board of Directors. Such board shall have the power to alter, amend or repeal the bylaws from time to time in force and adopt new bylaws. Such bylaws may contain any provisions for the regulation or management of the affairs of the corporation which are not inconsistent with law or these articles of incorporation, as the same may from time to time be amended. However, no bylaw at any time in effect, and no amendment to these articles, shall have the effect of giving any member which is not then an exempt organization described in section 501 (c) (3) of the Internal Revenue Code, or any director or officer of this corporation any proprietary interest in the corporation’s property or assets, whether during the term of the corporation’s existence or as an incident to its dissolution.
ARTICLE VIII - INCORPORATOR
The name and address of the incorporator are:
1234 Main Street
Denver, CO 80202
Date: ____________________ Incorporator: ______________________
STATE OF COLORADO
Acknowledged before me this _____ day of ______________, 2012 by ________________________ as incorporator.
(SEAL) Notary Public: __________________________
My commission expires: _________________
NOTE: This document is merely a SAMPLE of what the ARTICLES OF INCORPORATION could look like for a Non-Profit Corporation. No responsibility is assumed or taken for the accuracy, completeness, or inclusiveness of the material presented in this document. The actual document to be utilized for incorporation should be prepared by, or with the advice of, an Attorney at Law.
By-Laws For A Non-Profit Organization
ARTICLE I. NAME
1. The name of this Society shall be the ABC GENEALOGICAL SOCIETY OF COLORADO. It shall be a non-profit organization.
ARTICLE II. NON-PROFIT STATUS
1. This Society shall operate as a non-profit organization by requirements of 501( c)(s) of the Internal Revenue Code and the Non-Profits Section of the Colorado Corporations Act. No part of the net earnings shall accrue to the benefit of any individual.
2. This Society is a corporation, with the Board (consisting of President, Vice-President, Treasurer, and Secretary) as its governing members.
3. The corporation is organized exclusively for charitable, educational, scientific, and literary purposes, including such purposes, as the making of distributions to organizations that qualify as exempt under Section 501 (c) (3) of the Internal Revenue Code of 1986 or the corresponding section of any future United States Internal Revenue law.
4. a). No part of the income or assets of the corporation shall inure to the benefit of, or be distributed to any of its members, directors, or officers as such, or any other private persons during the life of the corporation or upon its dissolution or final liquidation. Nothing in this subsection, however, shall be construed to prevent the payment of reasonable compensation to officers of the corporation for services rendered and to make payments and distributions in furtherance of the purposes outlined in this document.
b). The corporation shall not make loans to its officers, directors, or employees. Any director who votes for, or assents to the making of, a loan or advance to an officer, director, or employee of the corporation, and any officer who participates in the making of such a loan, or advance, shall be jointly and severally liable to the corporation for the amount of such loan until the repayment thereof.
c). Notwithstanding any other provision of these articles, the corporation shall not carry on activities not permitted under:
1). A corporation is exempt from federal income taxation under Section 501 (c) (3) of the Internal Revenue Code or the corresponding section of any future United States Internal Revenue law.
2). A corporation, contributions to which are deductible under Section 170 (c) (2) of the Internal Revenue Code or the corresponding section of any future United States Internal Revenue law.
3). Laws of the State of Colorado governing the operation of a Non-Profit Corporation.
5. Activities of the corporation shall not include the issuance or carrying on of propaganda, or otherwise attempting to influence legislation. The corporation shall not, either directly or through the actions of any of its directors or officers, participate in, contribute to, or intervene in (including the publishing or distribution of statements and materials), or otherwise support or assist, any political party, or campaign on behalf or in opposition to any candidate for public office.
ARTICLE III. OBJECTIVE
1. To collect, preserve, and disseminate knowledge and information concerning genealogy.
2. To encourage interested persons to pursue and preserve genealogical data.
3. To provide opportunities for the sharing of genealogical information.
ARTICLE IV. MEMBERS
1. Any individual or institution willing to promote the objectives of the Society, upon written application and payment of prescribed dues, may be deemed eligible for membership in this Society. Should any member fail to pay dues for 3 months from the date of billing, that member shall be dropped from the membership roster. Yearly dues run from January 1st through December 31st.
ARTICLE V. OFFICERS AND EXECUTIVE BOARD OF DIRECTORS
1. The elected officers shall consist of the President, Vice-President, Secretary, and Treasurer.
2. The Executive Board of Directors shall consist of the Officers and the immediate Past-President of the Society.
3. The Executive Board of Directors shall control and manage the affairs, funds, property, and expenditures of the Society, shall carry out its purposes, and shall execute its by-laws.
4. The Board of Directors shall meet as frequently as needed to carry on the business of the Society. A meeting of the Board of Directors shall be held when requested by any two members of the Board of Directors. The Secretary shall notify all members, including ex-officio, of the time and place of each meeting at least one week in advance.
5. The unexpired term of any member of the Board of Directors who resigns or is dropped from the Board of Directors shall be filled by the selection of the Executive Board from among the roster of members.
6. The Board of Directors shall determine the dates and nature of all meetings and events of the Society with due consideration being given to any expressed wishes of the membership.
7. A quorum of the Board of Directors shall consist of three members. In the absence of a quorum, the Board members may propose suggestions for an ensuing meeting, but no actions may be taken until a quorum is present. Decisions shall be made without a vote of the President. In the event of a tie, the President shall cast the deciding vote. In the event of the need for urgent action, the Executive Board may mail or phone for a decision.
ARTICLE VI. ELECTIONS
1. No later than March, the Board of Directors shall appoint a Nominating Committee of three persons. The Chairman will be selected from the Society's membership.
2. The Nominating Committee shall propose a slate of officers and shall furnish their results to the Secretary no later than April.
3. The slate will be presented to the General Membership at its Annual Meeting in June. Any member shall have the right to propose alternative candidates for office.
ARTICLE VII. DUTIES OF OFFICERS
1. The President shall be the principal executive officer with the responsibility for general supervision of the affairs of the Society. The President shall preside at all meetings of the Society and of the Board of Directors but may designate the Vice-President to function when the President is unavailable. With the approval of the Board of Directors, the President shall appoint all committees and shall serve as an ex-officio member of all committees except the Nominating Committee.
2. The Vice-President shall substitute in the absence of the President and shall carry out whatever responsibilities may be assigned by the President or the Board of Directors.
3. The Secretary shall keep a record of the proceedings of the Society and the Board of Directors and carry out any necessary correspondence on behalf of the Society.
4. The Treasurer shall have custody of the funds of the Society and shall deposit them in insured financial institutions or invest them under a policy established by the Board of Directors. The Treasurer shall pay all bills, shall be responsible for the collection of dues or of any debts owed to the Society, and shall keep a roll of membership. At the first regular meeting after the end of the fiscal year, or at any earlier special meeting, the Treasurer shall submit to the Board of Directors the annual balance sheet and income and expense account. The accounts and reports shall be subject to such directions and such audits as the Board of Directors may prescribe.
5. A Budget Committee appointed by the President and including the Treasurer shall prepare a budget and present it for approval of the Board of Directors.
6. There shall be the following standing committees: Membership, Publications, Program, Publicity, and Resource.
Each of the foregoing shall consist of such numbers as the Board of Directors shall determine, and shall be appointed by the Board of Directors from its members and/or from the Society at large. The Board of Directors shall also appoint from the membership such other committees as it may deem to be appropriate. Each standing committee, and such other committees as may be appointed, subject to the discretion and control of the Board of Directors, may regulate the matters with which it is specially charged, and may prescribe and enforce penalties for their breach. Each of the standing committees and such other committees as may be appointed shall report periodically to the Board of Directors. Chairpersons shall function as the heads of the above committees.
ARTICLE VIII. REGULAR MEETINGS
1. Regular meetings will be held monthly, except for July, August, and December.
2. For the transaction of any business requiring the approval of the membership at large, a quorum shall consist of ten members present.
3. Decisions shall be by majority vote, including proxies. In the event of a tie, the President shall cast the deciding vote.
4. The latest available “Robert’s Rules of Order” shall govern all meetings of the Society.
ARTICLE IX. PROXY VOTES
1. Any member in good standing shall have the right to indicate in writing his or her decision on any matter announced in the agenda of any meeting of the Society. Their written vote must be in the hands of the Secretary in time for counting at the regular meeting.
ARTICLE X. FEES AND DUES
1. Charges, fees, and dues shall be established by the vote of the Board of Directors. They shall have the right to establish classes of membership.
2. Dues are payable in advance and become due on an annual basis. It shall be the responsibility of the Treasurer to bill the members at least three weeks before the date on which payment is due.
ARTICLE XI. FISCAL YEAR
1. The fiscal year of the Society shall be January 1st to December 31st.
ARTICLE XII. DISSOLUTION
1. Upon dissolution of the Society, and after payment of all liabilities, the Board of Directors shall dispose of all remaining assets of the corporation to an organization or organizations operated exclusively for charitable, educational, religious, or scientific purposes which shall at the time qualify for exemption under Section 501( c) (3) of the United States Internal Revenue Code of 1954.
ARTICLE XIII. AMENDMENTS TO BY-LAWS
1. Amendments to these by-laws must be proposed in writing. A proposal for an amendment may be offered by any member in good standing. Signatures of ten other members in good standing must accompany the proposal. The Secretary will circulate such proposals to the Board of Directors, which must approve the proposals by two-thirds of the Board Members. Upon approval by the Board of Directors, the amendment will be subject to ratification by a majority of the membership present at the next Annual Meeting or at any meeting of the Society provided the amendment shall have been circulated in advance of the meeting.
NOTE: This document is merely a SAMPLE of what the BY-LAWS could look like for a Non-Profit Corporation. No responsibility is assumed or taken for the accuracy, completeness, or inclusiveness of the material presented In this document. The actual document to be utilized for incorporation and operation should be prepared by the Board of Directors for the corporation.
Internal Revenue Service for Non-Profits
There are several Forms on the IRS website that pertain directly to the Application for Non-Profit Status.
1. A definitive requirement in the Application for Recognition of Exemption is an Employer Identification Number (EIN). If the organization does not have an EIN, an application must be made to the IRS for this number. The IRS will not even consider the Application for Recognition of Exemption without this number.
Click on Form SS-4 on the IRS Home Page; the application blank will come up and can be downloaded.
2. To get the actual “Application for Recognition of Exemption, Package 1023”, do the following:
a. Click on “CHARITIES & NON–PROFITS” on the Tool Bar.
b. Scroll down to “Revised Form 1023 – Application for Exemption”. Click on this and the Application comes up and can be downloaded. There are 28 pages to this Application.
c. This Application can also be found by typing in “PACKAGE 1023” in the SEARCH Tab in the upper right corner. An Index will come up with several Forms. Click on “Form 1023 (Rev 06-2006) with the Adobe Reader Icon. The Application will come up and can be downloaded.
3. Additionally, and very informative in filling out the Application, are the Instructions for Form 1023. These can be found on the same page that comes up in Paragraph 2c above. This Form is just above “Form 1023 (Rev 06-2006)”. Click on “Instruction 1023 (Rev 06-2006)” with the Adobe Reader Icon. The Form will come up and can be downloaded. There are 38 pages to this document.
a. The Form can also be accessed by typing in “Instructions for Form 1023” in the SEARCH Tab in the upper right-hand corner. Several headings will come up. Click on the one titled “Instruction 1023 (Rev 06-2006)” with the additional Adobe Reader Icon. The Instructions will come up and can be downloaded.
The Forms can also be ordered by calling 1-800-TAX-FORM (1-800-829-3676) or by contacting the local Denver Office of the Internal Revenue Service at 303-446-1675 or by writing to:
Internal Revenue Service - 600 17th Street - Denver, CO 80202
The Non-Profit Section of the Internal Revenue Service can be reached by telephone at 1-877-829-5500 or by writing to:
Internal Revenue Service - P.O. Box 192 - Covington, KY 41012-0192
STATE OF COLORADO NON-PROFIT STATUS
When you have received a Determination of Non-Profit status from the IRS, the Colorado Department of Revenue must be contacted for their requirements. Be aware, that the IRS Non-Profit Status is for Federal Tax Exemption. A non-profit corporation in Colorado is also governed under the Colorado Laws for CORPORATIONS AND ASSOCIATIONS.
Application For Recognition Of Exemption
The IRS Application for Recognition of Exemption, known as Package 1023, is lengthy and with many detailed questions. It will take some time to complete. It will also take quite some time for the IRS to review the application and make a decision. A brief outline of the types of questions asked follows.
It is recommended that the Revised (06-2006) Instructions to 1023 on the IRS Web Site be downloaded, printed, and utilized for detailed information about the questions.
Part I – Identification of Applicant.
1. These are general questions regarding the identification of the organization and people involved.
Part II – Organizational Structure.
1. These are questions regarding the organizational structure of your Corporation. The Articles of Incorporation and By-Laws show this and must be attached to the Application.
Part III – Required Provisions in Your Organizing Documents.
1. The documents must state your exempt purposes, how you will be funded, who will be benefited and how will they be benefited. The documents must also state that, upon dissolution of the Corporation or Organization, the remaining assets must go to charitable organizations.
2. The Application requires a description of where these requirements are stated.
Part IV – Narrative Description of Your Activities.
1. This is a description of what your activities have been, are at present, and will be.
Part V – Compensation and Other Financial Arrangements.
1. These are the present or projected salaries and financial arrangements with your Officers, Directors, Trustees, Employees, and Independent Contractors.
Part VI – Your Members and Other Individuals and Organizations That Receive Benefits From You.
1. These are general questions about who receives benefits from your Organization.
Part VII – Your History.
1. If you are a startup corporation, there is a very little history.
Part VIII – Your Specific Activities.
1. There are several detailed questions about your planned or projected activities in several different areas.
2. This Part should be answered in detail and to a great extent in how you plan to operate and how and to whom benefits will be derived. Your answers must convince the IRS that your Corporation or Organization is eligible for 501 (c) (3) status. I believe that Part VIII is a vital factor in the determination that the Corporation or Organization can be tax–exempt or that it is a “For Profit” entity.
Part IX – Financial Data.
1. These schedules are to show existing and/or projected revenues and expenses for several years and an existing or projected Balance Sheet.
Part X – Public Charity Status.
1. This Part does not usually apply to most 501 (c) (3) applications.
Part XI – User Fee Information.
1. A User Fee MUST BE INCLUDED with the Application.
2. If your average annual gross income will not exceed $10,000 over 4 years, the fee is $300.
3. If your average annual gross income will exceed $10,000 over 4 years, the fee is $750.
The balance of the Application is for Organizations such as Churches, Schools, etc.
Copies of the Application for Incorporation, Certificate of Incorporation, and By-Laws are required. A copy of the Employer Identification Number (EIN) is also required.
All questions should be reviewed to see which of them require an attachment. These attachments must be included.
It is recommended that an Index of Attachments be included. The Index would identify the attachment about the Part Number – Title, Item Number in the Part, and a brief description of the attachment.
It is recommended that, if available, copies of advertising brochures and similar items that show the activities and benefits derived be attached. Copies of planned fundraising events could also be included.
A copy of the Application for Recognition of Exemption should be made and saved. The IRS will often ask for additional information. With a copy, you will know what you have sent to them.
Part IV Narrative Description of Your Activities
The following is an excerpt from the Application For Non-Profit Status that was prepared for an organization. The written text and answers to the questions were submitted to fully show activities and operations as they befitted that particular organization. They are presented here only as samples and ideas. Your answers in your Application must apply to your planned non-profit organization.
1. Our organization is a genealogical society, open to all, and dedicated to educating and helping our members to learn to research their heritage, ancestors, relatives, and family. Our goal is to provide an educational forum where our members can learn the ways, methods, avenues of information, and manner of genealogical research. As an organization, we do not do the actual research for the individual members.
We have monthly meetings where prominent researchers and genealogists are invited to speak to the group. Their subjects have included naturalization documents, passenger arrival lists, census records, and various books and documents available at various libraries, including the Denver Public Library. Often we will have Information Exchange meetings where members bring their documents, ship’s manifests, citizenship papers, and other materials to share with other members. We also have a translator in our group to help in translating foreign language documents. In addition, we maintain our own ongoing and expanding library of books, magazines, and periodicals relating to genealogical research.
We are a member of the International Association of Genealogical Societies as well as a member of the Colorado Council of Genealogical Societies. We are members only for the genealogical information available; they have no voice in the operation of our group.
2. Our income is via contributions and membership dues. The only fundraising program is the collection of annual dues. Members may volunteer a contribution to the operation of our organization or for the purchase of books for our library. We do not have a fundraising program for contributions.
Organizations For Non-Profit Funding
Listed are just a few, there are much more available.
Rose Community Foundation
600 So. Cherry St.
Glendale, CO 80246
101 Monroe St.
Denver, CO 80206
Health One Alliance
600 So. Cherry St.
Denver, CO 80246
U.S. Government Link
Find information and services for nonprofits, including grants, loans, assistance, taxes, management, and more.
Private Non-Profit Funding Sources
St. John's University List of Funding Sources for Non-Profits
Fundsnet Services List of Foundations
Referenced Attorneys knowledgeable in non-profit organizations
Colorado Lawyers for the Arts (COLA)
Metropolitan Lawyers Referral Service
This is a referral service to an Attorney. A $75 referral fee may be charged.
8400 E Prentice Ave., #715
Greenwood Village, CO 80224
Isaacson Rosenbaum, PC
633 17th St., Suite 2200
Denver, CO 80202