Starting Your Non-profit
When you're starting a non-profit in New York, there are a number of factors to consider, especially if you want 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 with certain requirements if you want to protect yourself and 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 methods and values that will guide your non-profit to its goals.
Considerations for Starting a Non-profit
- Incorporating protects your personal assets from your non-profit's lawsuits and creditor claims. It also protects your trustees, officers and volunteers.
- New York non-profits are usually exempt from federal tax on any income that's related to your organization's exempt purposes.
- You can obtain an exemption from collecting sales and use taxes if your organization is formed under IRS Section 501(c)(3).
- Your non-profit may qualify to receive public and private grant money.
- 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 subject to public inspection.
Requirements and Mandatory Forms for Creating a Non-profit
- A Certificate of Incorporation, filed with the New York State Department of State Commission, Division of Corporations
- Name reservation request form
- Certificate of type
- Certificate of assumed name
- IRS Form 1023: Application for Recognition of Exemption
- Form SS-4: Application for employer identification number
- IRS 501(c)(3) determination letter
- Form CT-247 to obtain New York income tax exemption
- Form ST-119.2 to obtain New York sales tax exemption
- EPTL Form Char 410 Charities Registration Statement, to be filed with the New York Attorney General's Office prior to solicitations of contributions or within 6 months after property is held or income is received
- IRS Form 990: Annual Information Return
How to Retain Your Non-profit Status
After forming your New York not for profit organization, be sure to follow 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. This income could jeopardize your nonprofit status if it makes 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 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.
What it Costs to Form a New York Non-profit
- New York's Department of State, Division of Corporations charges a $75 filing fee for nonprofit Articles of Incorporation.
- A name reservation fee is $10.
- A certificate of type fee is $30.
- The Certificate of Assumed Name fee is $25. An additional $25 is charged by the county where the assumed name will be used. This extra fee is $100 in New York, Queens, Bronx and Richmond counties.
- The IRS charges an application fee of $400 to organizations that expect to earn less than $10,000 in total income over a four-year period. This fee increases to $850 if you expect that your nonprofit will take in gross receipts exceeding $10,000 annually over a four-year period.
Applying for Grants and Loans
The grants you receive may be for a general purpose, or they might help meet the operating expenses of your organization. If a grant is awarded for a specific project, you should restrict the funds to that project.
New Jersey & National Non-profit Resources
City of New York, Office of the Mayor (PDF): This is an excellent resource for New York non-profits that are seeking loans or grants. The New York City Returnable Grant Fund provides interest-free loans on a short-term basis.
Nonprofit Finance Fund: This is a community development fund that provides loans and lines of credit to nonprofits, as well as financial training workshops, analysis of businesses, and advice regarding how to maximize use of grants.
Philanthropy Front and Center—New York: For information on how to receive funds from the New York City Council for nonprofit, community-based social service providers, visit this website. It also discusses discretionary funding for nonprofits.
USA.gov: This site 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.