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 Ohio. 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 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 Ohio. There are also other types of Ohio nonprofits that may not qualify for tax exemption.
Considerations for Starting a Nonprofit
- Ohio not for profits are exempt from Ohio income tax.
- Non-profit corporations may provide their shareholders, directors and officers with protection from liability.
- Some Ohio 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.
- Not for profit organizations may be exempt from property taxes on all or part of their real property.
- Although non-profits are good for managing large numbers of members, they're not a good choice if you want to maintain personal control of your organization.
- Non-profits require more time and money to create and maintain than a sole proprietorship or partnership.
- Grants from some federal and state government organizations may require non-profit status.
Requirements and Mandatory Forms for Creating a Nonprofit
- You must submit Articles of Incorporation to the Ohio Secretary of State.
- If your corporation is a 501(c)(3) nonprofit, submit Form 1023, Application for Recognition of Exemption, to the Internal Revenue Service.
- Nonprofits that are exempt from federal tax are also automatically exempt from the Ohio corporation franchise tax. This exemption does not apply to agricultural and consumer cooperatives.
- 501(c)(3) nonprofits are exempt from sales tax. Sales and use tax exemption certificates can be obtained from the Ohio Tax Commissioner's Office.
- All Ohio nonprofits that will solicit contributions must register with the Ohio Attorney General within 6 months of creation. Submit copies of your Articles of Incorporation, IRS exemption letter, bylaws, Form CFR-1, and a charitable organization registration to the Office of the Attorney General Charitable Law Section.
- Nonprofit organizations must also register with the Ohio Attorney General before they solicit contributions in Ohio.
How to Retain Your Nonprofit Status
After forming your not for profit organization, you must follow specific guidelines so you can retain your nonprofit status.
- Nonprofit corporations must file an annual financial report with the Office of the Attorney General Charitable Law Section. The annual filings are due on the fifteenth day of the fifth month following the close of their fiscal years.
- Nonprofits must file a Statement of Continued Existence with the Ohio Secretary of State every five years.
- 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 an Ohio Nonprofit
- The filing fee for Articles of Incorporation is $125.
- The filing fee for annual reports may be as much as $200, but some organizations can file the report free of charge.
- The fee for charitable organization registration statements depends on the amount of contributions an organization has solicited, but may be as much as $200.
- The fee for a statement of continued existence is $25.
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 your 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 Ohio 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.
Ohio and National Nonprofit Resources
Ohio Association of Nonprofit Organizations: OANO provides training, networking, information, discounts and advocacy for Ohio nonprofits.
Legal Information For Nonprofits - Ohio: Linc-Ohio is sponsored by the Ohio Bar Association and provides advice on managing Ohio nonprofits.
National Council of Nonprofits: This national organization offers resources for starting and maintaining a nonprofit organization.
Ohio Attorney General: This site has publications, webinars, and training regarding the responsibilities of nonprofit board members.
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.