Starting Your Nonprofit
When you're starting a non-profit in Oregon, there are a number of factors to consider, particularly 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 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 values and methods that will guide your non-profit to meeting its goals.
Considerations for Starting a Non-profit
- Incorporation protects your personal assets from your organization's lawsuits and creditor claims. It also protects your trustees, officers and volunteers.
- Oregon nonprofits are usually exempt from federal tax on any income that's related to their exempt purposes.
- Oregon does not collect sales taxes.
- Your nonprofit may qualify to receive public and private grant money.
- Because your nonprofit 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 Oregon Secretary of State, Corporation Division. Your Articles must include a required purposes clause and a dissolution of assets provision.
- Name reservation request form
- Incorporator's statement
- IRS Form 1023: Application for Recognition of Exemption
- Form SS-4: Application for employer identification number
- IRS determination letter
- Registration as a charitable organization with the Oregon Department of Justice Charitable Activities Section
- IRS Form 990: Annual Information Return
How to Retain Your Non-profit Status
After forming your Oregon not for profit organization, be sure to follow specific guidelines to retain your nonprofit 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. These 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 nonprofit are related to your organization's exempt status.
- Maintain detailed records of corporate meetings.
- Make sure that your nonprofit's assets are distributed to another tax-exempt group when and if it dissolves.
- Do not make loans to 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 an Oregon Non-profit
- Oregon's Secretary of State, Corporations Division charges a $50 filing fee for nonprofit Articles of Incorporation.
- A name reservation fee is $50.
- 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. This fee increases to $850 if your organization earns gross receipts exceeding $10,000 annually over a four-year period.
Applying for Grants and Loans
Grants may be for a general purpose, or they may help meet the operating expenses of an organization. If a grant is awarded for a specific project, you should take steps to restrict the funds to that project.
Oregon & National Non-profit Resources
Fundsnet Services: This site offers a list of available Oregon community investment programs from banks and private funders.
Oregon Foundation Databook: This website has a comprehensive list and profile of every Oregon foundation, as well as a listing of over 11,000 grants that are awarded and can be ordered online.
Oregon Humanities: Oregon Humanities provides public program grants and responsive program grants to nonprofits that are engaged in the humanities, such as social justice activities, the arts, discussion of public policy, promoting cultural diversity, and opportunities to discuss and learn about historical, political and cultural issues.
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.