Starting Your Non-profit
One of your first considerations when forming a non-profit should be the best way to achieve your goals. Sometimes working with an existing nonprofit can be better. You'll also need to decide if you want to incorporate your nonprofit or form an unincorporated association. If you want to apply for 501(c)(3) tax-exempt status, you'll need a formal business structure.
Creating a Mission Statement
Your non-profit should have only one mission if it's going to be effective. Your mission statement should define that mission clearly. It's best to start with a general idea, then narrow it down. Ask yourself who you want to help, how you intend to help, and where and when you intend to operate.
501(c)(3) and Other Types of Non-profits
The Internal Revenue Code includes a section covering nonprofit organizations that qualify for federal tax exempt status. This section is 501(c)(3), and non-profits that qualify under this section are often called 501(c)(3) organizations. Only certain purposes meet the requirements of this section, including charitable, educational, scientific and social goals.
Minnesota may allow you to form a nonprofit for reasons not included in this section, but your organization will not be tax exempt.
Requirements and Mandatory Forms for Creating a Non-profit
Creating a not for profit corporation in Minnesota requires filing Articles of Incorporation. Articles are similar to those for any corporation, with a few additions specific to nonprofits. If you intend to apply for federal tax-exempt status, you must include a qualifying purpose. The IRS also requires specific language outlining the requirements you will follow for exemption.
How to Retain Your Non-profit Status
After you have your not for profit organization up and running, you must take steps to retain your nonprofit status. Both the state of Minnesota and the federal government have rules governing what non-profit corporations must do and what they cannot do. Here are some guidelines you must follow:
- File an annual report with the Attorney General's office each year by the fifteenth day of the seventh month after your fiscal year ends.
- File your annual renewal with the Secretary of State each year by Dec. 31.
- Maintain a board of directors consisting of at least three people.
- Keep accurate corporate records books. These should include your Articles of Incorporation, bylaws, tax-exempt filings, meeting minutes and financial transactions. All records should be easily available for inspection.
- Do not make loans, issue shares or distribute dividends to your directors, members or any other individuals.
- If you have income over $1,000 from unrelated commercial activities, pay taxes on that income.
- Make sure unrelated commercial activities do not make up too many of your organization's activities.
- File the appropriate Return of Organization Exempt From Income Tax with the IRS (Form 990, 990EZ or 990N), based on your annual gross receipts, or total assets as of the end of the year.
- Do not engage in political campaigning or try to influence legislation.
What it Costs to Form a Minnesota Non-profit
Minnesota charges a filing fee for your Articles of Incorporation. This fee is currently $70.
The IRS also charges a fee for your tax-exemption application. This fee is $400 if your annual revenues are $10,000 or less and $850 if they exceed this amount.
Minnesota & National Non-profit Resources
Minnesota Council of Nonprofits: Find information on planning and starting a nonprofit at this site. The Council also offers training sessions, networking lunches and more, all geared toward helping nonprofits reach their goals.
Minnesota Secretary of State: The Minnesota Secretary of State provides links to additional information about nonprofits. You can also file your nonprofit online.
Minnesota Council on Foundations: This association of grant makers offers resources for finding grants and writing a strong grant proposal.
USA.gov for Nonprofits: This page has links to a variety of services for nonprofits.
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.