Starting Your Non-profit
There are a few things you may want to consider when starting your non-profit in Idaho, especially 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 explain 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
Idaho recognizes different types of nonprofits. A 501(c)(3) nonprofit is exempt from federal taxation under the Internal Revenue Code. These are usually organizations that operate for charitable, religious, scientific and other similar reasons. They can include both public charities and private foundations.
There are also other types of Idaho nonprofits that may not qualify for tax exemption. Social welfare organizations, business leagues, and social and recreational clubs may also qualify for nonprofit status in Idaho.
Considerations for Starting a Non-profit
When you're creating your Idaho nonprofit, here are a few potential advantages and disadvantages to keep in mind.
- Idaho nonprofits are exempt from Idaho income tax.
- Nonprofit corporations provide their shareholders, directors and officers with protection from liability.
- Some Idaho nonprofits have advantages in fund raising, especially 501(c)(3) nonprofits.
- A nonprofit corporation can outlive its original organizers, unlike partnerships and associations.
- Grants from some federal and state government organizations may require nonprofit status.
- Not for profit organizations may be exempt from property taxes on all or part of their real property.
- Although nonprofits are good for managing large numbers of members, they're not a good choice if you want to retain personal control of your organization.
- Nonprofits require more time and money to create and maintain than sole proprietorships or partnerships.
Requirements and Mandatory Forms for Creating a Non-profit
- You must submit Articles of Incorporation to the Idaho Office of the Secretary of State.
- If your corporation is a 501(c)(3) nonprofit, you must submit Form 1023, Application for Recognition of Exemption, to the Internal Revenue Service. Exemption from Idaho state income tax is automatic for nonprofits that have obtained 501(c)(3) exempt status from the IRS.
- Nonprofits are not generally exempt from sales tax in Idaho, but exceptions are sometimes granted. The Idaho Tax Commission makes the final decision regarding sales tax exemptions.
How to Retain Your Non-profit Status
After forming your not for profit organization, you must follow specific guidelines to retain your nonprofit status.
- Nonprofit corporations must file annual reports with the Idaho Office of the Secretary of State on or before the end of the month of the incorporation anniversary date.
- A nonprofit corporation should maintain complete books and records of accounts, as well as minutes of corporate meetings. Keep these records at your registered office.
What it Costs to Form an Idaho Non-profit
The current fee for incorporating a non-profit in Idaho is $30.
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 regarding anonymity and the use of gifts. Written agreements can help avoid disputes about how gifts are used.
Nonprofits operate for public purposes, and with public support. Information regarding your nonprofit's mission activities and finances should be available to the public.
Applying for Grants & Loans
Grants and loans from federal, state and private sources are a major source of funding for Idaho nonprofits. It's important for nonprofits to keep money received from grants separate and apart from their general funds. A good reputation in administering grant monies helps nonprofits obtain more funding from these sources.
Idaho Non-profit Resources
Idaho Nonprofit Center: The mission of the Idaho Nonprofit Center is to provide resources and advocacy to the Idaho nonprofit sector. Their website provides information on starting and operating a nonprofit, and help on obtaining grants.
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.