Posts Tagged ‘leadership’

There’s a lot of discussion going on these days about taxes – whether to increase them or reduce them, what should taxes be spent on, and so forth.  However, there is one item in the tax laws that I hope NEVER goes away – Section 501 of the Internal Revenue Code.  What is this you might ask?  Well, I’m glad you asked!  Section 501 describes organizations that are exempt from taxation.  You may have heard of the term “501(c)(3) organizations”, which describes many of the nonprofit organizations we’re most familiar with.  This entry will briefly describe the process of becoming tax-exempt.

But before I go on, let’s make sure there’s an understanding that there is a difference between being a nonprofit organization and being tax-exempt.  According to the Internal Revenue Service (IRS), nonprofit status is a state law concept.  Nonprofit status may make an organization eligible for certain benefits, such as state sales, property and income tax exemptions.  Although most federal tax-exempt organizations are nonprofit organizations, organizing as a nonprofit organization at the state level does not automatically grant the organization exemption from federal income tax.  Therefore, you must not only become certified as a nonprofit organization in your state, but you must apply to the IRS to become federally tax-exempt.

What are the benefits of becoming tax-exempt?  The two primary benefits of becoming tax-exempt are as follows [1]:

  • Donations to the nonprofit are tax-deductible. With 501(c)(3) nonprofits, donations are tax-deductible to the donor.
  • Access to grants earmarked for 501(c)(3)s. Certain grants and other public allocations are only available to 501(c)(3) organizations.

Is there a fee associated with the application?  The application fee will depend on what your anticipated “annual gross receipts” (AGR) will be – either a fee of $400 for AGR of less than $10,000 during the preceding 4 years OR $850 for AGR of greater than or equal to $10,000 during the preceding 4 years (as of September 2011).

What is the application process?

  • Obtain nonprofit status from your state;
  • Obtain an Employee Identification Number; and
  • Complete and submit Form 1023 (for most organizations) along with supplemental documentation and appropriate fee to the IRS.  NOTE: This process can be a significant investment in time, depending on the amount of work that has already been done (e.g., budget, detailed description of organization and programming, etc.).

There are many organizations, including ours, that assist organizations with completing this application for free or for a nominal fee; however, it is not necessary.  If you have other questions, please visit the IRS’s website or contact me.

Be strong and be blessed!

[1] – Source: http://www.bizfilings.com/learn/tax-exempt-nonprofit.aspx


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“An idea that is developed and put into action is more important than an idea that exists only as an idea.” – Gautama Buddha

You’ve noticed a great need in your community (e.g., teen unemployment, crime, obesity, etc.) and have come up with a great idea to address that need or would like to implement an existing program in your neighborhood.  As you proceed, make sure that you begin with a firm foundation in creating the organization through which your idea will be implemented.  If you plan to, for example, raise funds from outside sources, the decisions made at this stage will determine where you can go to raise needed funds.

Organization Type – There are two primary choices for organization type: for-profit and non-profit.  As the names suggest, each type is driven by its primary objective.  For-profit organizations exist to maximize profits (revenues minus expenses) for its owners and/or shareholders.  In contrast, non-profits are not PRIMARILY motivated by profits, but rather by fulfilling its charitable mission.  However, there are incidences where you can find both types of organizations mutually benefitting each other (e.g., a for-profit organization creating a related non-profit organization to perform charitable work such as the Ford Foundation).  Keep in mind that foundations and some government programs can only award grants to tax-exempt non-profit organizations (we’ll talk about becoming tax-exempt soon).

Organization Name – It has been said that “words have meaning and names have power”[1].  Don’t underestimate the importance of choosing a name for your organization that communicates who you are, what you do, and/or who you serve (e.g., American Cancer Society).  In choosing a name, you will need to make sure that the proposed name is not being used by another organization.  Various sources you can use to check on the availability of a name include your secretary of state and/or your local registar.

In order to become an official organization, you would submit an application or articles of incorporation to your secretary of state or similar entity.  In addition, you may be required to apply for a business license from your local jurisdiction.  Check with your state and local governments for their specific requirements for creating your organization.

Be strong and be blessed!

[1] – Author unknown (Source: http://www.quotegarden.com/names.html)

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With all of the detailed steps that have been discussed regarding operating and financing your nonprofit organization, we don’t want to dismiss the importance of starting up properly.  Just as “blocking and tackling” is to football, building a firm foundation in starting your organization will allow you to proceed more confidently in meeting the needs of your community.

Over the next few weeks we’ll discuss various topics pertaining to your organization’s start-up activities, including:

  • Obtaining a tax-exempt status designation
  • Becoming an “official” organization
  • Resources that can assist you
  • What faith-based organizations should consider

If there are other topics you want us to cover or have other questions, feel free to send me your comments or contact me.

Be strong and be blessed!

Postscript: Join me in praying for those individuals and families who were and continue to be affected by the tragic events of September 11, 2001.

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According to the U.S. Department of Labor, Labor Day is a creation of the labor movement and is dedicated to the social and economic achievements of American workers.  It constitutes a yearly national tribute to the contributions workers have made to the strength, prosperity, and well-being of our country. [1]

As we approach the Labor Day holiday, I can’t help but to think about how blessed I am to be employed.  I would consider myself a “modern-day employee” in that for much of my career history, I sought out opportunities to expand my skill set either through a new position with my present employer, with a new employer or through entrepreneurship.  With this strategy, I have been blessed to have gained a wide variety of experiences, with a primary focus on community and economic development.  Nevertheless, there have been times when, unfortunately, I did not receive a steady paycheck or the entrepreneurial pursuit did not turn out as I expected.  Through it all, God provided for me and my family and I thank Him for that!

I, also, can’t help but to reflect on those who are unemployed or underemployed.  As of this writing, the unemployment rate in the U.S. stands at 9.1% (August 2011).  There are more than 13 million people who are seeking full-time employment, but have been unsuccessful for a number of reasons (e.g., jobs moving to lower cost locations, skills mismatch, etc.).  This has implications for all areas of the economy, including homeownership, meeting basic needs, obtaining the training needed for today’s jobs, and others.  With the current direction of federal and state governments to reduce spending at all costs, the work and mission of nonprofits become even more important.  Nonprofits have to become even more efficient in their operations and programming to address the ever-increasing needs of its target population, constituency and community.

Do not become discouraged in the present state of affairs, but rather use this time to be more creative in meeting the need and more emboldened in requesting and securing assistance for your efforts.

Please pray with me that the unemployed, employers, government leaders, nonprofits and other willing participants will work together to improve our economy and increase meaningful opportunities!

Be strong and be blessed!

[1] – U.S. Department of Labor (http://www.dol.gov/opa/aboutdol/laborday.htm)

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Let’s see…we’ve talked about assessing the needs of your community and matching these needs with your organization’s interests.  After assessing community needs, you would develop programming to address these needs.  We’ve talked about the importance of focusing your efforts to avoid trying to be all things to all people.  We’ve discussed the reasoning behind and necessity of knowing your target market (in other words, who you’re trying to reach to positively affect their lives in some way).  Now, let’s look at “needs assessment” from a different vantage point – what are the needs of YOUR ORGANIZATION to most effectively serve your target market with your programming.

When one begins to look at the needs of an organization, the focus usually sharpens very quickly on MONEY.  Now don’t get me wrong, having sufficient financial resources are vital for short- and long-term success, but it is not the first thing you need and it may not even be the most important!  As has been mentioned before, having the right PEOPLE on the team, I submit, is more important than money.  People help create the organization in its infancy…people can perform a preliminary community needs assessment…people develop the organization’s programming concepts…people help identify the MONEY! 

To expand this idea further, an organizational needs assessment should include answering the following questions:

  • Do we have the “right” board members?  Even though your board is enthusiastic and supportive, the experience and skill sets of the members may be very similar (e.g., members of the same church, neighbors, etc.) – on the surface, of course.  However, as you look at the make-up of your board, seek to identify members with experience in areas such as finance/accounting, management, legal, working with your target market(s), public relations, fundraising, city/county government, advocacy, and others.  Resources that can help include organizations such as Triangle BoardConnect (to identify potential board members) and BoardSource (building the board’s capacity).
  • How many volunteers do we need?  As you implement your programming, you cannot solely rely on board members to do the work.  You will need dedicated volunteers for program implementation and, ultimately, to become advocates and ambassadors on behalf of the organization.  (Possible resources:  United Way, Volunteer Match, and Senior Corps).
  • Are there other organizations in the community I can work with and how can I work with them?  You will learn about other organizations that do similar work and/or target similar markets as you perform your community needs assessment.  You will, also, get vital information from your board members because, in many cases, they are very familiar with these organizations and may even serve on their boards as well.  Feel free to reach out to these organizations to let them know what you plan to do, seek their advice and explore possible partnership opportunities.
  • How much money do I need and where can I find it?  You will need to determine your organizational and programming budget(s) as well as develop a strategy for securing these financial resources.  We’ll discuss this important topic in the near future.

You will find that by doing a thorough organizational needs assessment, you will identify YOUR needs to effective implement your programming that will address COMMUNITY needs.

Be strong and be blessed!

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What you offer for the betterment of the community, specifically your programming, is the “heart and soul” of any nonprofit organization. After you’ve assessed the needs of the community and matched them with your and/or your board’s “work passion”, you are in a position to develop your organization’s programming.

There a number of decisions that need to be made, including:

  • What specific services will be offered (e.g., tutoring, financial education, advocacy, technical assistance, etc.);
  • Who will offer these services (e.g., volunteers, staff, in partnership with other organizations, etc.);
  • How will the services be offered (e.g., web-based, one-on-one, in group settings, audio/video, etc.);
  • To whom will the services be offered (your target market(s) – this will be discussed in an upcoming blog);
  • Where will the services be offered (e.g., in the client’s home, in a church fellowship hall, at the library, in a public park, etc.);
  • How will you market your service offerings (e.g., public service announcements, paid advertising, posting flyers at the local community center, word-of-mouth, etc.);
  • How will success be measures (to be discussed later); and
  • Will there be a fee charged for these services.

As an example, to address the lack of exposure to the arts that has been determined to contribute to the achievement gap found in at-risk youth, you have decided to create an “arts academy”.  This academy will provide exposure to a variety of arts (e.g., music, visual, dance, etc.) for young people free of charge in partnership with the local parks and recreation department, students at the local college, and industry artists who have “made it big”.  Sessions will be held on Saturdays at local churches and community centers.  Advertising will be done through the local public access channel, flyers posted at barber shops/beauty salons/grocery stores, and announcements at churches in the area.

For those with a business background, these items sound eerily familiar to elements of a traditional business plan.  And you would be right!  In essence, most of our discussions have centered around the development of your nonprofit BUSINESS!  Even though you are, or will be, providing products and services that in many circles would be considered “charitable,” the foundation undergirding your efforts is a BUSINESS and should be viewed and managed like one, including asking questions like (1) How do I generate revenues to sustain my efforts? (2) How can I most efficiently offer my products/services? (3) Who will perform the accounting function of the organization’s finances? …and so on.

Back to program development…  The answers to the questions posed earlier will drive many other decisions, including the amount of money you will need at each stage of program execution, the human capacity you will need, what other partner organizations you will need to establish relationships with, and others.

Speaking of “partner organizations,” we plan to focus on this important element in the development of your programming next week.  Until next time…same blog time, same blog channel (Adam West aka Batman would be proud)!

Be strong and be blessed!

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Continuing the theme of answering the question “So, what do you do?”, after you’ve researched the needs in your community and narrowed the needs you plan to address based on the goals and objectives of the organization, the process of developing a strategy to address those needs can begin.  Note that before you begin addressing the needs, you must FOCUS your energies on the SPECIFIC needs you plan to address.  No organization can be ALL things to ALL people and address ALL the needs in a particular community.  For example, the causes and effects of homelessness are diverse and far-reaching.  Nevertheless, there are many organizations that have been created to address different “layers” of homelessness, including affected populations (e.g., veterans and children), addictions, and so on.

You might ask the question of how can one narrow the scope of one’s work to address community needs.  There are a number of ways this can be accomplished, including:

  • Your personal interests – Your passion to do the work will go a long way towards its success.  Let’s say you have a passion for music and want to help at-risk youth become better students, you could create an organization that exposes young people to classical music and, even, create a youth orchestra.  Your case would be strengthened if you found in your research that exposure to the arts leads to better grades and that educational funding for these activities is being reduced.
  • The skills/interest of your board – An extension of the previous point, narrowing your scope will be much easier if your board members are passionate about how to address a specific community need and have the skills, contacts, etc. to add value to the effort.
  • Unique opportunities – Even though I’ve mentioned previously that an organization should not create programming just to “chase the money”, there are times when the “stars are aligned” and that funding opportunities help to “open the mind to other possibilities”.  For example, the North Carolina Fund was created in the early 1960’s as a “laboratory” to address poverty and became as a precursor to the nation’s War on Poverty.  The Fund requested proposals from communities throughout North Carolina as to how they would address poverty in their locales.  For many, this was a once-in-a-lifetime opportunity that provided a catalyst for creating unique programming to address an issue that had plagued their communities for decades.  As a result, the evolution of many of these organizations and their efforts are still in effect today.

Narrowing your focus cannot be overstated.  There are many organizations that have found themselves unable to attract funding or other needed resources because they were (or at least perceived to be) too broad in scope.  Find your niche!

Be strong and be blessed!

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