Starting a nonprofit organization can be a confusing process. From selecting a Board of Directors, to drafting the Mission Statement and Bylaws, filing the Articles of Incorporation with the Secretary of State, and submitting all the required information to meet the IRS regulations for 501(c)3 status, many nonprofits can find the initial stages of their incorporation to be the most difficult challenge they will ever face.
To help with these difficulties, Nonprofit Resources has included a few guidelines for writing the requirements, as well as samples of our Mission Statement, Articles of Incorporation, and Bylaws. Due to space limitations, it is impossible to include all of the materials for forming a nonprofit on this website. These publications can be found in Nonprofit Resources' library. Call (501) 374-8515 to set up an appointment.
You may also wish to visit these sites which have excellent Frequently Asked Questions (FAQ) about nonprofit organizations: Nonprofit FAQ, which covers general questions about nonprofits, and the Nonprofit Management Center, which provides guidelines for groups in the process of Strategic Planning, Financial Management, Board Development, Fundraising and more.
You must establish a Board of Directors (or trustees) with at least three members. The Board is the governing body of the nonprofit and will make the decisions and planning that determine the nonprofits' success. When selecting Board Members, be sure to look for a diversity of skills and experience. Board members should be kept informed of the operations of the nonprofit and should be knowledgeable about the activities. Create a simple, clear decision making structure for the Board, so that all Board Members understand how they can contribute. For more information about Boards of Directors, check out the National Center for Nonprofit Boards website. There you can see Frequently Asked Questions about the duties and responsibilities of Board Members, and ask your own questions.
Every Nonprofit should clearly state its mission, its reason for being. Keep the Mission Statement as short and as understandable as possible. The mission should proclaim to all who read it exactly what it is that your organization does. It should be result-oriented, not activity oriented, and provide a focus for organizational planning. For example:
Nonprofit Resources, Inc.
Mission
Nonprofit Resources strengthens, supports, and enhances
the capacity
of Arkansas' nonprofit organizations to fulfill their missions.
The Articles of Incorporation establish the name and purpose of the nonprofit organization. Incorporating the organization serves three primary functions:
establish legitimacy for your organization.
Nonprofit incorporation says to the world that you mean business.prepare for anticipated future developments.
You will have "done your homework" and be ready to proceed with a major fundraising effort. Incorporation is a necessary condition for being granted tax-exempt status.help you meet the requirements of another organization with whom you wish to collaborate.
Funders or contractors may require that your program be incorporated.
Potential Advantages to Incorporation:
Potential Disadvantages to Incorporation:
The Articles must be filed with the Secretary of State's office, which will charge a $50 filing fee. The Arkansas regulations for Articles of Incorporation are very simple, and you can order a form directly from the Secretary of State's office by calling 682-1010. Some organizations may wish to have more detailed Articles, and Nonprofit Resources has provided a sample of such. To view this sample, click on Articles of Incorporation.
Bylaws are your organization's primary governing document. They establish the rules by which the nonprofit will conduct business. It is important to write them wisely, know them well, and faithfully abide by all their provisions.
What should be covered in the Bylaws:
The Name of the organization
The Mission of the organization
The geographic area served by the organization
Membership (Responsibilities, Dues, Quorum, Voting Procedure)
Board of Directors (Duties, Officers, Meetings)
Committees
Rules of Order
Fiscal Year of Operation
Procedures for amending the bylaws
The details of these operations can be complicated. To help you with drafting your Bylaws, Nonprofit Resources has provided you with a sample of Bylaws which you can print on your computer. To view this sample click on Bylaws.
Before you begin your 501(c)3 application, or even if you have questions regarding the implications of tax-exempt status, you may wish to see the Exempt Law website.
To obtain the necessary paperwork for obtaining 501(c)3 Tax Exempt status, you must get in touch with the IRS. The two forms you will need are Publication 557, Tax Exempt Status for Your Organization, and Package 1023, Application for Recognition of Exemption. Fortunately, the IRS offers a number of forms and publications on their website which you can download and print on your own computer. These documents come in a number of formats, and Nonprofit Resources recommends downloading the files in PDF (Portable Document Format) which can be read by the Adobe Acrobat program. You can follow the links to Adobe from the IRS website. To visit the IRS home page (which will give you an overview of all IRS forms and publications, click on IRS. Or, to go straight to the forms for nonprofit organizations and other businesses, click on forms.
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