Starting Your Non-profit
When you start a non-profit in Kansas, there are a number of factors to consider, particularly if you elect to form a 501(c)(3) organization.
Creating a Mission Statement
You're creating a non-profit because you want to give back to your community, but you must still meet certain requirements to protect yourself and to ensure that you're meeting your organization's goals. When you create a mission statement, you can explain your organization's purpose. Consider what problem or issue your organization wants to address, then focus your statement on the efforts and values that will guide your non-profit to meeting its goals.
Considerations for Starting a Non-profit
Advantages:
- Incorporation protects your personal assets from your organization's lawsuits and creditor claims. It also protects your trustees, officers and volunteers.
- Kansas non-profits are usually exempt from federal tax on any income that's related to their exempt purposes.
- Your non-profit may qualify to receive public and private grant money.
Disadvantages:
- Because your non-profit is not owned by you or your shareholders, you won't have individual control and autonomy over your organization.
- More paperwork is involved, such as creating bylaws and recording and maintaining corporate minutes.
- You'll need time and money to apply for the federal tax exemption, and you'll need an accountant or legal professional to help you operate your non-profit.
- Your non-profit's finances are open to public inspection.
Requirements and Mandatory Forms for Creating a Non-profit
- Articles of Incorporation, filed with the Kansas Secretary of State, Business Division. Your Articles should include a required purposes clause and a dissolution of assets provision.
- Name reservation request form
- Incorporator's statement
- Registered agent
- Bylaws
- IRS Form 1023: Application for Recognition of Exemption
- Form SS-4: Application for employer identification number
- IRS determination letter
- Entity Exemption Certificate, filed with the Kansas Department of Revenue, along with a letter detailing the activities of the organization and why it should be exempt from sales taxes on purchases.
- Registration as a charitable organization with the Kansas Secretary of State
- IRS Form 990: Annual Information Return
How to Retain Your Non-profit Status
After you form your Kansas not for profit organization, you must meet specific guidelines to retain your non-profit status.
- Keep detailed records of all sources of income.
- File annual reports.
- Keep unrelated activities separate from your non-profit and pay separate taxes on them. Unrelated activities could jeopardize your nonprofit status if they make up a substantial portion of your business.
- Ensure that the time and resources spent on your non-profit are related to your organization's exempt status.
- Maintain detailed records of corporate meetings.
- Make sure that your non-profit's assets are distributed to another tax-exempt group, when and if it dissolves.
- Do not make loans to any of your directors or officers.
- Do not issue shares of stock or pay dividends or other shares of income to members, directors or officers.
- File a Return of Organization Exempt from Income Tax form with the IRS each year, if it's required based on your annual gross receipts,.
What it Costs to Form a Kansas Non-profit
- Kansas's Secretary of State, Business Division charges a $20 filing fee for nonprofit Articles of Incorporation.
- A name reservation fee is $35.
- The filing for for an annual report is $40
- File a registration statement for solicitations, along with Form 990 and a $35 fee, with the Kansas Department of State before beginning solicitations.
- The IRS charges a $400 application fee to organizations that expect to earn less than $10,000 in total income over a four-year period. The fee increases to $850 for organizations whose gross receipts exceed $10,000 annually over a four-year period.
Applying for Grants and Loans
Grants may be used for a general purpose, or to help meet the operating expenses of your organization. If a grant is awarded for a specific project, you should take steps to restrict the funds to that project.
Kansas & National Non-profit Resources
Fundsnet Services: This site offers a list of available Kansas community investment programs from banks and private funders.
The Greater Kansas City Community Foundation: This foundation offers competitive grant opportunities, scholarships, and links to web sites of funders in the Kansas City area.
Kansas Grants: Kansas Grants has online grant opportunities from federal and state sources and categorizes for grant opportunities by topic.
USA.gov: USA.gov offers information and services about grants, loans, management, tax information and funding directories for all states.
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.
