Start a Nonprofit Foundation
A nonprofit foundation acts as a nonprofit corporation established to fulfill a charitable mission. A nonprofit foundation must have a mission statement that makes the company's purpose clear to donors, the state and federal government, as well as other interested parties. A nonprofit foundation is a distinct legal entity with a separate life from the company's staff and board members. Donations to a nonprofit foundation are tax deductible on a donor's income tax return.
Instructions
1. Select a business name that is not in use in the state where the nonprofit foundation will operate. The name of a nonprofit foundation may be rejected if it is too similar to another existing business in the same state. A nonprofit foundation must contain the words "corporation" or "incorporated," or an appropriate abbreviation. The name of a nonprofit foundation must not suggest an affiliation with a government entity, trust or bank. Conduct a business name search using the secretary or department of state website where the nonprofit foundation is organized.
2. File articles of incorporation for a nonstock corporation with the secretary or department of state where the nonprofit foundation operates. Most secretary or department of state websites provide nonprofit articles of incorporation that can be printed online. Include information such as the legal name and address of the company.
3. Select people to serve on the company's board of directors. The number of people required to sit on a nonprofit foundation's board of directors will vary from state to state. However, many states allow a single person to act as the company's sole board member.
4. Pay the filing fee charged in the state where the nonprofit foundation operates. The fee to file nonprofit articles of incorporation may range between $20 and $125, depending on the state, as explained by the Citizen Media Law Project website. Depending on the secretary or department of state where the nonprofit foundation is organized, articles of incorporation may be submitted electronically, by mail or in person.
5. Write bylaws for the nonprofit foundation. The bylaws are an internal document that provides rules and regulations for the board members and staff of the nonprofit foundation. There are no specific guidelines that must be followed when creating bylaws for a nonprofit foundation. Typical provisions that may be included in the bylaws include the time and place of director meetings and the qualifications for selecting board members. A nonprofit foundation must keep a copy of the company's bylaws at the primary business location.
6. Contact the IRS at 800-829-4933 or visit the IRS website to obtain an employer identification number. Provide information such as the number of employees that work in the nonprofit organization and the nature of the company's activities. A representative of the foundation must supply their name, address and social security number. A nonprofit foundation will obtain an EIN immediately after completing the online session, or after an IRS representative has collected all the necessary information over the phone.
7. File Form 1023, Application for Recognition of Exemption, with the Internal Revenue Service. Download and print Form 1023 from the IRS website, or call 800-TAX-FORM to have Form 1023 sent by mail. Provide information such as the purpose for organizing the nonprofit foundation, as well as the legal name and principal location of the company. Include the foundation's EIN number so that the IRS can easily identify the company. Submit Form 1023 to the IRS along with the foundation's articles of incorporation and bylaws.
8. Apply for state tax exemption. Some states will automatically grant tax exemption to a nonprofit foundation, if the IRS has determined the company is tax-exempt. Provide the IRS determination letter as proof of the nonprofit foundation's tax-exempt status. Include the company's bylaws, articles of incorporation and EIN number as proof of the foundation's legal existence.
9. Register the nonprofit foundation as a charitable organization with the attorney general's office in the state where the business is incorporated. Provide basic information such as the mission statement, number of employees, as well as the name and location of the business. Supply the attorney general with a copy of the IRS determination letter, articles of incorporation, bylaws and the company's EIN. The fee to register a nonprofit foundation with the attorney general may vary from state to state.
