Starting Your Non-profit
There are a few things you may want to consider when starting your non-profit in Missouri, particularly if you want to form a 501(c)(3) organization.
Creating a Mission Statement
How you prepare your mission statement, and the information you include in it, will help you answer questions from future lenders, board members and employees. Create your mission statement by outlining what you want your non-profit to do, and by explaining its purpose. Answer these six important questions: who, what, where, when, why and how? Lay out your company's objectives, activities, and resources, and explain how and where it will obtain funding.
501(c)(3) and Other Types of Non-profits
There are different types of nonprofits in Missouri. A 501(c)(3) nonprofit is exempt from federal taxation under the Internal Revenue Code. These are usually organizations operating for charitable, religious, scientific and other similar reasons. They may include both public charities and private foundations.
Social welfare organizations, business leagues, and social and recreational clubs may also qualify for nonprofit status in Missouri, but some Missouri nonprofits may not qualify for tax exemption.
Considerations for Starting a Non-profit
Advantages:
- Missouri not for profits are exempt from Missouri income tax.
- Non-profit corporations provide their shareholders, directors and officers with protection from liability.
- Some Missouri nonprofits have advantages in fund raising, especially 501(c)(3) non-profits.
- A non-profit corporation can outlive its original organizers, unlike partnerships and associations.
- Not for profit organizations may be exempt from property taxes on all or part of their real property.
Disadvantages:
- Although non-profits are good for managing large numbers of members, they're not a good choice if you want personal control over your organization.
- Non-profits require more time and money to create and maintain than sole proprietorships or partnerships.
- Grants from some federal and state government organizations may require non-profit status.
Requirements and Mandatory Forms for Creating a Nonprofit
- Articles of Incorporation, filed with the Corporation Division of the Missouri Secretary of State
- Form 1023, an Application for Recognition of Exemption, filed with the IRS for 501(c)(3) nonprofit status. Nonprofits that are exempt from federal tax are also exempt from Missouri corporation income tax and Missouri corporate franchise tax. 501(c)(3) nonprofits may also obtain an exemption from Missouri sales tax by filing a copy of the IRS determination letter, a three-year financial history, and Form 1746, the Missouri Sales/Use Tax Exemption, with the Missouri Department of Revenue.
- Registration with the Missouri Attorney General's Office for charities that solicit or receive charitable contributions. This involves filing an initial registration statement. The filing is not required of 501(c)(3) nonprofits. Only a copy of the IRS determination letter and a note indicating that the nonprofit wants to start soliciting in Missouri are required of 501(c)(3) organizations.
How to Retain Your Non-profit Status
After forming your not for profit organization, you must follow certain guidelines to retain your nonprofit status.
- File an annual report with the Attorney General's office within 75 days of the end of your fiscal year.
- Maintain complete books and records of accounts, as well as minutes of corporate meetings, at your non-profit's registered office.
What it Costs to Form a Missouri Non-profit
- Missouri charges a $25 filing fee for non-profit Articles of Incorporation.
- The fee for an initial registration statement is $15, but 501(c)(3) nonprofits are exempt from this requirement.
- Missouri's fee for filing an annual report is $15.
Accountability and Ethics
Board members should avoid conflicts of interest. They must disqualify themselves from decisions if a conflict is present.
Nonprofits should respect the intentions of their donors in areas such as anonymity and the use of gifts. Written agreements can help avoid disputes about how gifts will be used.
Nonprofits operate for public purposes with public support, so information regarding your organization's mission activities and finances should be made available to the public.
Applying for Grants & Loans
Grants and loans from federal, state and private sources are a major source of funding for Missouri non-profits. A not for profit corporation is responsible for complying with grant requirements and keeping appropriate records. It's important for non-profits to keep money received from grants separate and apart from the non-profit's general fund. A good reputation in administering grant monies helps non-profits obtain more funding from these sources.
Missouri Non-profit Resources
Nonprofit Missouri: Nonprofit Missouri provides training, networking, information, advocacy and discounts for Missouri nonprofits.
Missouri Community Services: This helpful website provides a checklist for starting and maintaining a Missouri nonprofit.
This article contains general legal information and does not contain legal advice. Rocket Lawyer is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.
