So...you want to start a nonprofit. Fantastic! That puts you in pretty good company. In any given year, as many as 75,000 applications for 501(c)(3) tax exemption are filed with the IRS. Less than half survive the process, but there…
As long-time readers of our articles know, most of our posts focus on tips and best practices for effective nonprofit management. This post is going to be a little different. There is so much going on right now that affects nonprofits, we thought it would be a good idea to provide you with a brief run-down of some things you need to know. Some of it is related, some not. Here we go…
1. Many smaller nonprofits could lose their tax-exemption this year. How? Tax filing year 2009 is the third year that the IRS has required the filing of Form 990-N for organizations averaging under $25,000 in annual revenue. Prior to 2007, no filing was necessary. IRS regulations state emphatically that any 501(c)(3) public charity that fails to file a required Form 990 for three consecutive years will automatically lose their tax-exempt status. Unfortunately, many organizations are either still unaware or just whistling Dixie and not taking this seriously. I expect panic to set in when letters of revocation start hitting mailboxes later this year.
Founder’s syndrome. It affects nonprofits and for-profits alike. And it can be crippling to any organization. Understanding what it is and how to avoid it is crucial to the future of your 501(c)(3).
Taken from that most-reputable of sources, Wikipedia, founder’s syndrome is defined as, “a pattern of negative or undesirable behavior on the part of the founder(s) of an organization”. While that can be true, we find that most cases of founder’s syndrome within nonprofits simply involve a founder with too much influence. In plain English, it means that the universe revolves around the founder…and not in a good way. Here is an example of the way it usually works:
Charitable Solicitations Registration. “Never heard of it,” you say. Well, you are not alone. As astounding as it may seem, estimates of noncompliance range from 85-95% of charities and nonprofits nationwide. This level of noncompliance has persisted primarily because of 2 reasons: 1) lack of communication between state agencies and 2) grace. But, the times…they are a changin’. It is time to get compliant!
What is it? It is helpful to start by explaining what we’re talking about. 42 states and the District of Columbia require nonprofit organizations that raise or intend to raise financial support from the public to register with that state’s Charitable Solicitations Department. This department is typically run from within the state’s Attorney General’s office, though some originate within the office of the Secretary of State.
In this tough economy, nonprofit organizations are needed more now than ever. More and more people are finding themselves in difficult circumstances and, according to all available evidence, it's going to get worse before it gets better. Despite all the…
Sounds like scary stuff, doesn’t it? The decision to start a nonprofit organization is difficult in the best of circumstances. But in a downright frightening economic climate, does it make any sense at all? Some experts are predicting that this economy may doom up to 100,000 existing charities this year. Could you possibly pick a worse time?