501c3 Public Charity or Private Foundation

 

Every section 501c3 organization is classified as either a private foundation or a public charity. Private foundations and public charities are distinguished primarily by the level of public involvement in their activities. Though greatly outnumbered by public charities, private foundations bring a lot to the table. Many people have a layman’s understanding of the difference between public charities and private foundations, but there are some significant differences that can determine what type of nonprofit organization you want to setup.

Read more: 501c3 Public Charity or Private Foundation

Nonprofit Hunger Relief Organizations

As the holidays are approaching, remember that there are some individuals who are unable to have a nice hot meal or afford food. Thankfully, there are many charitable organizations set up exclusively to help these individuals. Usually there are two main types of 501c3 charitable hunger relief organizations: food pantries and meal centers.

Food pantries (or food banks) usually involve receiving donations of nonperishable canned food items and redistributing these items back out. These charitable organizations are focusing more on giving the grocery items to individuals who are unable to afford these items, but have a means of cooking them. Sometimes these nonprofit food pantries will also buy or take donations of groceries for specific families in need in the community.

Read more: Nonprofit Hunger Relief Organizations

Keeping Your 501c3 in Compliance

 

501c3

Once you've navigated the path to obtaining 501c3 status, there are important measures required to maintain your exemption with the Internal Revenue Service (IRS). This overview is a starting point in understanding how to remain in compliance.

 

 

 

Fundraising

Fundraising and applying for grants to support the functions of your organization are all within the rules of operation; however, all funding received must go toward the activities and programs of the organization or toward salaries for its employees.

Read more: Keeping Your 501c3 in Compliance

Recordkeeping Part I – Organizational Records

 

OrganizationalRecords

 When speaking about requirements for recordkeeping, nonprofits do differ from profit businesses. Each nonprofit organization should keep:

 

1. Organizational/Permanent Records

2. Financial Records.

In this article, we focus on the organizational/permanent records.

 

Organizational/Permanent Records: this includes all the paperwork that the organization should keep from the day of establishing the organization.

 

Read more: Recordkeeping Part I – Organizational Records

Recordkeeping Part II – Financial Records

 

FinancialRecordsNonprofits should always maintain good financial records. Nonprofit organizations need financial statements for the following reasons:

 -         To prepare their annual tax returns with the IRS (form 990s);

-         To report the financials to their members;

-         To apply for grants;

-         To write a Business/Strategic Plan;

-         To evaluate the organization’s accomplishments; etc.

 

Based on the financial statements, the organization’s Board of Directors make educated decision on which tax return their organization is eligible to file with the IRS – f990-N, f990-EZ or f990s. The main financial statements are Profit & Loss Statement and a Balance Sheet. Most accounting softwares generate the financial statements for the reported period.

 

Read more: Recordkeeping Part II – Financial Records

Recordkeeping Part III - Policies

 

OrganizationPolicies

 Once you’ve become a nonprofit organization it is highly recommended that your Board of Directors adopt policies, in order to successfully manage the nonprofit activities. The Board of Directors’ decision on which policies to adopt should be based on the organization’s structure, size and type. Furthermore, nonprofit organizations that fail on adopting such policies have a greater chance of being audited by the IRS. 

 

 

Some of the policies that your nonprofit organization may adopt include:

Read more: Recordkeeping Part III - Policies

Operating in Different States

 

 50statesNonprofit organizations can operate nationwide, even though they are legally registered in one specific state as a domestic entity. Generally, charities      incorporate in the state either where their headquarters are located in or where the majority of their activities take place. As your 501c3 organization grows  and evolves, a need to operate in more than one state might often arise.

Read more: Operating in Different States

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