Building a Non-profit
Building this organization involved much more than creating a website, gathering resources and executing trips. As it turns out, several steps are necessary for becoming recognized as a legitimate non-profit organization. With this post, I’d like to share what has been going on behind the scenes over the last month and provide helpful information to anyone else who might be looking to form their own non-profit.
Many folks have asked me why I chose to form a non-profit instead of a Limited Liability Company or other for-profit corporation. My most straightforward answer is what distinguishes a non-profit from a for-profit: I created this non-profit to serve the community, not for the benefit of myself, members, or shareholders. Some key benefits include income tax exemption and eligibility to receive tax-deductible donations. With that in mind, status as a non-profit aligns with Origin’s mission and allows the organization to allocate all of its resources towards that mission.
While each state has different organizational requirements to achieve non-profit status, most of them follow a similar structure.
Each organization will need Articles of Incorporation, a document that states the organization’s purpose. Filing the articles requires a mission statement and some specific language that adheres to state and IRS requirements. Thankfully, there are many resources online that outline these requirements.
Apply for state and federal tax exemption status. Once the state has officially endorsed the organization, it can apply for an Employer Identification Number (essentially a social security number for a business). The next step is to fill out and file IRS form 1023 to receive federal tax exemption, which automatically qualifies you for state tax exemption in the State of Michigan.
Non-profits are required to have a Board of Directors. The board's role includes oversight of the organization’s members and operations to hold it accountable to its mission. Board members cannot receive compensation for their role on the board. They must ensure that the organization and its members are not acting in personal or private interests that may compromise its status as a non-profit. Each state has specific requirements for an organization’s Board of Directors.
A non-profit must adopt bylaws, the governing documents of the organization. Bylaws outline how the organization conducts its business and protects its members from liability issues. While much of what is included is at the discretion of those who draft it, tactfully constructed bylaws are essential to cohesive operations and avoiding hiccups encountered by the organization.
Once all of these steps have been achieved, the Origin Expeditions will be officially recognized as an IRS 501(c)(3) organization - a tax-exempt non-profit. This process has demanded considerable research and days spent in front of the computer drafting documents and filling out forms. While it’s certainly a bit of a headache (and expensive), it has also been a valuable learning experience.
We formed a Board of directors throughout February, drafted bylaws, and The State of Michigan officially endorsed Origin’s articles of incorporation. On the first of March, form 1023 was submitted to the IRS for review, a process that should take roughly two to four weeks. In the meantime, we’re working hard to develop fundraising and marketing campaigns that we can implement once we achieve 501(c)(3) status.
With any luck, this will happen by the end of the month! Stay tuned!
- Joe
