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
Washington recognizes different types of nonprofits. 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, social and recreational clubs may also qualify for nonprofit status in Washington. Not all Washington nonprofits qualify for tax exemption.
Considerations for Starting a Nonprofit
- Washington not for profits may be exempt from Washington sales and use tax in certain situations.
- Non-profit corporations may provide their shareholders, directors and officers with protection from liability
- Some Washington 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 sole proprietorships or partnerships.
- Grants from some federal and state government organizations may require non-profit status.
Requirements and Mandatory Forms for Creating a Nonprofit
- You must submit an original plus one copy of your Articles of Incorporation to the Washington Secretary of State Corporations Division.
- If your corporation is a 501(c)(3) nonprofit, submit Form 1023, Application for Recognition of Exemption, to the Internal Revenue Services. Nonprofits exempt from federal tax are automatically exempt from Washington franchise and income tax.
- Washington has no income tax
- Nonprofits in Washington may be subject to business and occupation taxes. All nonprofits must obtain a Unified Business Identifier, or UBI, from the Department of Revenue, Master License Service.
- Nonprofit organizations that will solicit donations in Washington must also register with the Office of the Secretary of State Charities Program by filing an application to register as a charitable organization, along with copies of the IRS exemption letter and IRS Form 990.
How to Retain Your Nonprofit Status
After forming your not for profit organization, you must meet certain guidelines to retain your nonprofit status.
- Nonprofit corporations must file annual reports with the Washington Secretary of State Corporations Division before the end of the month of incorporation.
- You must file an Annual Solicitation Renewal with the Secretary of State within four and a half months of the end of your fiscal 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 Washington Nonprofit
- Washington charges a $30 filing fee for non-profit Articles of Incorporation.
- The filing fee for the Annual Report for Nonprofit Corporations is $10.
- Filing the Annual Solicitation Renewal costs $10.
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. 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 Washington 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.
Washington & National Nonprofit Resources
Nonprofit Network of Southwest Washington: NNSW provides training, networking, information, discounts and advocacy for nonprofits in the Southwest Washington area.
The Nonprofit Roundtable of Greater Washington: This is an alliance of over 300 nonprofit leaders and community partners.
National Council of Nonprofits: This national organization with resources for starting and maintaining a nonprofit organization.
Washington Nonprofit Handbook: This publication is provided by the Washington Office of the Secretary of State. It details how to form and maintain a nonprofit in Washington.
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.