Starting Your Nonprofit
There are a few things you may want to consider when you're starting a non-profit in Nebraska, especially if you're considering forming 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 Nebraska. 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 Nebraska. Some Nebraska nonprofits may not qualify for tax exemption.
Considerations for Starting a Nonprofit
- Nebraska not for profits are exempt from Nebraska income tax.
- Non-profit corporations may provide their shareholders, directors and officers with protection from liability.
- Some Nebraska 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.
- Grants from some federal and state government organizations may require non-profit status.
- Not for profit organizations may be exempt from property taxes on all or part of their real property.
- 501(c)(3) nonprofits that are exempt from federal tax are also automatically exempt from the Nebraska income tax.
- Although non-profits are good for managing large numbers of members, they're not a good choice if you want to retain personal control of your organization.
- Non-profits require more time and money to create and maintain than sole proprietorships or partnerships.
- Nonprofits are not generally exempt from sales tax in Nebraska.
Requirements and Mandatory Forms for Creating a Nonprofit
- Articles of Incorporation, submitted to the Nebraska Secretary of State
- Form 1023, Application for Recognition of Exemption, filed with the Internal Revenue Service if your corporation is a 501(c)(3) nonprofit
How to Retain Your Nonprofit Status
After forming your not for profit organization, you must meet specific guidelines to retain your nonprofit status.
- Nonprofit corporations must file biennial reports with the Nebraska Secretary of State by April 1 of every odd-numbered year.
- A nonprofit corporation should maintain complete books and records of accounts, as well as minutes of corporate meetings, at its registered office.
What it Costs to Form a Nebraska Nonprofit
- Nebraska charges a $10 filing fee for non-profit Articles of Incorporation, plus an additional fee of $5 per page.
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 the nonprofit'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 Nebraska 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.
Nebraska and National Non-profit Resources
Nonprofit Association of the Midlands: NAM provides training, networking, information, discounts and advocacy for Nebraska and Western Iowa nonprofits.
NebraskAccess: This helpful website offered by the State of Nebraska provides nonprofits with grant writing tools, tax information, and other nonprofit resources.
National Council of Nonprofits: This national organization has resources for starting and maintaining a nonprofit organization.
Nebraska Department of Economic Development: This site offers regulations, requirements, forms and additional information about beginning and maintaining nonprofit corporations in Nebraska.
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.