If your passion is to inspire, make a difference and give back to the world,
then starting a non-profit corporation is an exciting entrepreneurial
proposition. Before you start, however, there are a few things to consider.
Starting a non-profit is similar to starting any other corporation, but
with some key difference and additional steps. To begin, it’s important
to determine what sort of non-profit your corporation is going to be.
The Internal Revenue Service recognizes a variety of non-profit organizations,
all of which are exempt from income tax. These organizations include,
but are not limited to, the following:
501(c)(3) – This is the most common type of nonprofit. It includes
organizations that are religious, educational, charitable, scientific,
and literary; groups that test for public safety, that foster national
or international amateur sports competition; or organizations engaged
in the prevention of cruelty to children or animals. Generally, almost
all donations made to 501(c)(3) organizations are tax-deductible.
501(c)(4) – These are civic leagues, social welfare organizations,
and local associations of employees. They promote community welfare, charitable,
educational or recreational goals. These nonprofits are often less restricted
in lobbying than 501(c)(3)’s.
501(c)(5) – Labor, agricultural, and horticultural organizations
fit under this classification. They are educational or instructive, with
the goal of improving conditions of work and to improve products and efficiency.
501(c)(6) – These organizations are business leagues, chambers of
commerce, real estate boards, etc. They seek to improve business conditions.
501(c)(7) – Social and recreational clubs fall into this category.
They promote pleasure, recreation, and social activities.
The purpose of your organization will determine what type of nonprofit
applies to you. Upon determining the appropriate category as provided
by the IRS, the next step is to draft and file your Articles of Incorporation
with the Louisiana Secretary of State. These Articles contain basic structural
information, such as the nonprofit’s name, its registered agent,
the initial board of directors and the office address. Once you have received
a copy of your Articles of Incorporation from the Secretary of State,
you are then ready to obtain an employer identification number and begin
completing the application to the IRS for your federal non-profit status
as a 501(c) organization. If forming a 501(c)(3) organization, the IRS
application is known as Form 1023. Form 1023 provides a thorough inquiry
relating to the officers, directors, and trustees of the organization;
any compensation arrangements; specific activities that may be engaged
by the organization; and the financial data of the organization. After
completing and submitting Form 1023 for IRS approval, the final step in
forming a non-profit organization is the creation of its bylaws.
Bylaws are the rules and methods that the organization follows to ensure
legality and productivity. This is the document that specifies the election
process and responsibilities of directors, your meeting manners, the requirements
for membership and/or committees, financial duties, and other legal provisions
that help define the organization’s structure and mission.
As you can see, the excitement of forming a non-profit is equally matched
by the necessity of proper planning and execution in order to achieve
the organization’s desired goals. If you would like more information
on this matter or would like to discuss any non-profit issues you may
have, please feel free to contact
Ryan P. Monsour at your convenience by calling (504) 833-5600 or emailing firstname.lastname@example.org.