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Posts Tagged ‘programs’

We’ve discussed a number of topics related to developing your idea to address a need in your community and ways to organize your efforts to achieve your goals.  It is my hope that these topics have been helpful to you as you begin and/or proceed on your journey.  I may not have been as exhaustive in my information as you may need; however, these entries can be used as a launching pad to help guide you in your search for more information.

I readily admit that there are many professionals in this field that are more experienced that I am, but I have a passion for this work and this blog was one way to share my thoughts and more than 15 years of experience.  If there are other related subjects you would like for me to cover, please let me know and I will do my best to create more “launching pads”.  If you want a particular subject to be covered more thoroughly, let me know.  Otherwise, I thank you for taking this journey with me and I pray that all of your efforts are successful.

And speaking of “your efforts”…are you ready to take the plunge?  What’s stopping you from moving forward?  Nothing stops an idea better than inaction.  Just go for it!!

Be strong and be blessed!

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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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We are all familiar with the famous quote from the movie “Jerry Maguire” – Show me the money!  It means “put up or shut up”…do what you say you’re going to do…walk the talk.  When it pertains to raising funds for your organization, it is rare that someone will walk into your office and say “I have a million dollars to give to your organization” (it would be nice, but highly unlikely – unless you’re close to Henry Ford or Bill Gates).  Therefore, you have to SEEK out the funds and then do what it takes to SECURE those funds.

Whether it’s a foundation or government grant, each has a process by which you communicate your funding needs as well as how your needs match the funder’s priorities.  There are a number of methods by which you can communicate your needs, including:

  • Face-to-face – As you network in your community, you will meet different people who may have an interest in working with you to address your funding needs.  Take the opportunity to tell them about your organization and, if appropriate, ask for a follow-up meeting to discuss your needs, including financial.  The saying is true that people tend to help those whom they know.  Also, you never know how a person may be able to help you – don’t just focus on the money!
  • Letter of introduction/interest – This is an effective way to introduce your organization to a potential funder without the pressure and time commitment associated with a formal application.  In fact, many funders require this as a “pre-application” step to screen out ineligible requests before time and effort are spent by the applicant to complete a more detailed application.
  • Formal application – Most funders use an application to obtain information about an applicant such as its organizational structure, its target audience, its programming, and its desired use of the funds being requested.  More and more applications for funding are being completed and submitted on-line.

To talk a bit more about formal applications, there are some key pieces of information that are requested (many we’ve talked about before).

  • Tax-exempt status – Many funders can only make contributions to organizations that have obtained tax-exempt status from the IRS.  This means that contributions made to this type of organization are tax-deductible to the contributor and that many purchases made by the organization can be purchased tax-free.  For more information on obtaining tax-exempt status for your organization, please contact me or visit the IRS website.
  • Evaluation – As mentioned in a previous blog entry, a funder wants to know that their contribution will have the desired impact that led them to make the contribution in the first place.  To better ensure this, the application will request details up front on how the program will be evaluated to determine success.  For example, if your goal is to reduce the number of students dropping out of school, how will you know you are successful (e.g., benchmarking, pre- and post-testing, etc.)?  You may consider securing outside assistance from, say, a university to provide expertise and objectivity.

There are many other items included in formal applications for funding.  However, if you are diligent in following the recommendations above as well as those giving in previous blogs, you will be better prepared to apply for and secure funding.  Our plan is to talk about the human capital needs associated with fundraising in our next entry.

Be strong and be blessed!

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When it comes to fundraising, knowing where to find the money is as important as how to get it.  We’ve talked some about the “how” in the past, so now we’ll provide a brief introduction to the “where”.

There are five primary sources of funding for nonprofits – individuals, foundations, federated funds, churches/organizations and government [1].

  • Individuals – Individual contributors make up the largest source of giving to nonprofits and once they are contributors, they can become your most fervent advocates.  However, one key disadvantage is the cost associated with developing and reaching these individuals, with a relatively small return per contributor.
  • Foundations – According to the Foundation Center, there are more than 76,000 grantmaking foundations in the United States that give more than $40 billion in gifts annually.  There are three types of foundations: community, corporate and independent.
  • Federated Funds – A federated fund is a cooperative enterprise, owned and controlled by the nonprofit members, whose purpose is raising program and operating capital for each member agency (e.g., United Way).
  • Churches/Organizations – Depending on your organization’s mission, churches and other organizations can become key partners in achieving your goals and objectives.  These organizations are more likely to be a source for volunteers and other in-kind assistance.
  • Government – While a great source for large sums of money, the application process and on-going compliance requirements can be time-consuming and arduous.  To find out about federal government grants, go to www.grants.gov.

We’ll go into more detail on the application process and other issues regarding fundraising in future entries.

Be strong and be blessed!

[1] – Source: managementhelp.org
[2] – Source: www.businessdictionary.com

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