Starting Your Nonprofit
There are several things to consider when you start a non-profit, especially if you plan to form a 501(c)(3) organization.
Creating a Mission Statement
When you create your mission statement, begin with a broad view of what you want your nonprofit to accomplish, then pare it down to specifics. The process may feel a bit repetitive at first, but this will help you make sure you don't leave out any important details.
501(c)(3) and Other Types of Nonprofits
Virginia recognizes several types of non-profits, including educational. charitable, scientific, religious, healthcare and veterans organizations. None are automatically tax-exempt. To achieve this status, non-profits must file Form 1023, an Application for Recognition of Exemption, with the IRS.
Considerations for Starting a Nonprofit
- Only your corporation's assets or property are vulnerable to your nonprofit's lawsuits or creditor claims. The personal property of trustees, officers and managers is not at risk.
- Non-profits may qualify for tax-exemption.
- Planning a nonprofit requires significant time and effort.
- If control, autonomy, and independence in running your organization are important to you, nonprofit status may not be right for you.
- Meeting Virginia's incorporation filing requirements takes time and money.
Requirements and Mandatory Forms for Creating a Nonprofits
- File Articles of Incorporation with the State Corporation Commission, using Form SCC 819.
- File an Application for Certificate of Authority to Transact Business in Virginia with the State Corporation Commission, using Form SCC 921. This is only necessary if yours is a foreign nonstock corporation intending to conduct business in Virginia.
- File an Application for Reservation of Corporate Name, Form SCC 631, with the State Corporation Commission.
- File annual reports with the State Corporation Commission. Nonprofits are required to file these reports with the Office of the Clerk on or before the last day of the twelfth month after incorporation, and by the same date in all future years.
How to Retain Your Nonprofit Status
After you achieve nonprofit status, you must turn your attention to keeping it. This involves filing your Articles of Incorporation and Certificate of Authority to Transact Business in Virginia, and keeping current with your annual reports and annual registration fees.
Tax-Exemption and Other Benefits
Federal Tax Exemption:
- To acquire status as a 501(c)(3) corporation with exemption from federal income taxes, file Form 1023, Application for Recognition of Exemption with the IRS.
- To retain your tax-exempt status, file Form 990-N, Form 990-EZ, or Form 990 with the IRS, depending on your non-profit's annual gross income.
State Tax Exemption:
- Virginia passed legislation in 2003 exempting nonstock corporations from sale and use taxes if they're exempt from federal income taxes with the IRS as 501(c)(3) or (4) corporations.
- Nonstock corporations seeking state tax exemption must meet all eligibility rules.
What it Costs to Form a Virginia Nonprofit
- Virginia charges a $100 filing fee for non-profit Articles of Incorporation as a domestic nonstock corporation.
- Virginia charges $75 to file an Application for Certificate of Authority to Transact Business in Virginia as a foreign nonstock corporation.
- There's an additional annual assessment fee of $25.
- A $25 annual registration fee is payable to the State Corporation Commission on the first day of the second month next preceding the month the corporation was incorporated, or when it was authorized to transact business in Virginia.
- The IRS charges an $850 application fee to nonprofits with annual revenues exceeding $10,000. If you expect that your nonprofit's revenues will be less than that, the fee is only $400.
Virginia & National Nonprofit Resources
Virginia Conservation Network: VCN's Nonprofit Management page is geared toward conservation and environmental nonprofits. It offers tools and training to help make all organizations more effective and efficient.
Hampton Roads Community Foundation: This site promotes goals of philanthropy and improving southeastern Virginia's quality of life with resources in grant applications, skills enhancement through the Academy for Nonprofit Excellence, a monthly e-letter, "drop-in days" for nonprofits each month, and endowment management assistance.
Southside Community Partners Nonprofit Resource Center: The Center is a specialized library and support center providing resources to local organizations and persons working to better their Southside regional communities.
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.