Consider the following information before starting a nonprofit:
Do you really need to be a nonprofit – being nonprofit is not easy.
You cannot exclude anyone as a client unless certain there is specific criteria such as Boy Scouts.
You must have a representative board – i.e. get others beside yourself to buy in (AZ allows board of one – bad idea but useful to get started).
Caveat competition – which incumbents will you replace – not all nonprofits want to grow – funders should know the marketplace.
Remember board controls (mission, bylaws, governance) – once you have selected them they can fire you.
Nonprofits are not for time limited events e.g. bake sales but these activities can be part of funding sources.
Arizona requires nonprofits file financials annually. This may not be true with for-profits. Remember if you donate equipment, etc. (vs. lease or loan) and take deduction, you cannot take things back without tax consequences. In Arizona, a nonprofit must be an Arizona corporation or LLC and file with both the IRS and the State of Arizona. Be sure articles of the nonprofit designate beneficiary if assets ever sold otherwise the county will do this for you. To provide a service, you do not need to be a nonprofit – for-profits can contract to provide service to nonprofits i.e. market themselves and their services including writing grant requests for the contract.
Please be that sure potential clients understand that success as a nonprofit requires adherence to principles for good governance and ethical practice.
Legal compliance and public disclosure
Strong financial oversight
Additionally, be sure clients carefully follow the checklist:
Remember the board is the governing body and can be self perpetuating – be sure bylaws flexible and board is diverse. It also has all the liability – even though federal and state laws may protect board our society is litigious – carry board liability insurance – ideal board size 7-9.
Mission statement includes who you are, what you do, why you are doing it, who you serve, where you provide the service, how you provide the service – caveat you cannot be all things to all people’
Be sure your business plan designates goals and responsibilities in these four areas:
administration / management
program (goals and responsibilities)
marketing (funders and clients)
fund raising strategies (research grant organizations, etc)
Organization structure begins with community that needs your service followed by board, board committees, executive director, staff.
Register your name, get application from and file articles with AZ Corp. Comm. [specifically use handout language added to state suggested wording to insure you get IRS 501c(3)] – remember you are a non- member organization.
Articles must be published three times – follow rules – most cost efficient is Capitol Times (cost +/- $400 to $850) – keep articles simple – model and good resource for articles and minutes of first meeting is AZ Bar Association – be sure first minutes state 501c(3) filing – best to create your own bylaws (terms of office, frequency of board and general meetings, method of election, etc.)
Develop budget (pro forma projections) – include income and expense – must be approved by board since raising money is board responsibility – budget for general and board / officers liability (Nat’l. Volunteering Immunity Act not a total defense) – in AZ no trustees, only directors – be sure you have an accountant who understands nonprofit accounting (no current software is adequate to follow grants, designated gifts, etc.) – plan for annual audit and monthly statements – major accounting firms will give advice / make recommendations
With application IRS wants projected income and expense – (990’s may not be required if revenue under $25K) – put EIN on every page of application – tax exempt status should be confirmed by letter (not number).
Hints on IRS 1023
all pages are in duplicate (one for you – one for IRS)
for activities give IRS lots of information – use key words like volunteers, etc. to show nonprofit status – where needed use attachments
submit 872-C in duplicate
IRS letter seldom expedited – normally takes as much as six months or longer, depending on the thoroughness of the1023. Usually IRS comes back with questions – when answer usually get letter. If no response in 10+ months call your senator
Caveat UBI (unrelated business income) – if compete with for profits income taxable – many nonprofits sustain selves with UBI (keep accounting separate) – if unique logo on tee shirts then not competing with for profits
In AZ raffles are donations – caveat tickets can be requested at no cost
Nonprofits are not sales tax exempt in AZ – currently are property tax exempt but must file annually
Must file IRS and AZ filings on time to avoid heavy penalties and interest
Form 990 due on the 15th day of the fifth month following end of fiscal year
Be sure letters for all donations over $250 with proper language
For in kind donations get appraisals
If use independent fund raisers be sure they are bonded – commissions frowned upon
Be sure you pay all payroll and other business taxes on time – funders will not fund your mistakes
Best defense for board against liability claims – show good faith by:
attendance at board meetings / training sessions / quorums
cannot profit from service on board (no conflict of interest)
be in compliance with bylaws
successors – bring best possible on board – screen in good faith and check them out
It was a pleasure to hear Joshua Becker speak at the NAPO (National Association of Professional Organizers) AZ Chapter. I wanted to share with you some of the inspiring things he said. They are followed by questions from me, ones that can move you to creating a more purposeful life and an intentional work space.
Joshua Becker is a renowned author that writes about minimalism as a lifestyle. His book Simplify hit #1 sales on Amazon in the first week of publishing, outselling many top authors. He has written 4 books on the subject.
Joshua is the Founder and Editor of Becoming Minimalist, a website dedicated to inspiring others to find more life by owning less. Joshua’s rational approach to minimalism is a rational one that focuses on passion and purpose. This has made him one of today’s most-influential simple living advocates.
How did this all get started for him? While taking the day to spend cleaning out his garage, he started a conversation with their neighbor who brought up the concept of minimalism. In 2008, Joshua and his family decided to pursue a more minimalist lifestyle. They decided to remove their nonessential possessions. Eventually, over 70% of their belongings were sold, donated, or discarded. In exchange for owning less, they found a life of more freedom, more contentment, more generosity, and more opportunity to pursue the things that mattered most.
“My possessions were distracting me from my purpose in life, the one thing that made me happy”
What is your purpose in life?
What are the non-material things that make you happy?
What are some of the distractions that hold you back from your purpose?
What hold you back from being happy?
“What is your passion, purpose and life and what are the things that support it? Keep those things that support that.”
What are you holding onto that does not serve you?
What are the things that support your passion, purpose and life?
“My intention was to remove anything that distracts me from my purpose.”
Is there something in your surrounding area that you know you could get rid of?
Do you have multiples of something, where you only need just one?
Is there anything outdated in your desk drawers? Old phones, cords, etc.
“I own less stuff so I can accomplish more with my life.”
What do you want to accomplish in life
What do you want to accomplish this year, month, week?
What can you own less of?
“People think it is a sacrifice to own less stuff, for me it was a journey inside myself, a better way to live and a better formula for living.”
Take one step towards organizing your space and towards minimalism:
Take 15 minutes, set a timer, go through your desk drawer or a small area you want to organize. Remove everything. Put back only the items that support your work and what you do. Good luck with it and let me know how it goes.
Want to learn more about a minimalist lifestyle?
Get Joshua’s most recent book, Clutterfree with Kids, it consistently ranks among the best-selling Parenting Books in America.
What’s your biggest challenge when it comes to being organized? Tell us in the comments below!
About the Author:
Margo Brown is a Productivity Coach and Professional Organizer with Wave Productivity. She works with entrepreneurs, small business owners and business professionals to help them get more focused, organized and productive in their workplace. She serves the Tempe and Phoenix area in Arizona. If you want to get more organized in your office and in your home call 602-677-8275 or email email@example.com.
I hate waiting. I openly admit that patience is a tough virtue for me. So when I spy a chic pair of shoes online, the first thing I do is see whether or not I can find them in-store. I don’t mind ordering and waiting the three- to five-day shipping period for commonplace, non-immediate items (i.e., a bulk order of K-cups, cleaning supplies, cat litter). But when I’m ready to put an outfit together, I’m ready now.
Photo credit: Kevin Dooley
Plus, there’s just something about actually holding a product. A blouse might look great online, but without seeing it in person I wouldn’t know it’s actually made of scratchy, second-rate material instead of the advertised silk. Yup, tangible pretty much always wins.
The good news is, if you’ve already got an online store, establishing a brick-and-mortar location can really boost your business. There are pros and cons to every venture, but here are some main highlights to consider when setting up a storefront.
Let’s start with the good.
The experience. As I mentioned above, physically touching a product can make a world of difference. The same can be said for going to a store. I don’t get a “hello” when I walk into a virtual shop, and online assistance is generally limited to impersonal FAQ. A little human interaction can go a long way.
Brand awareness. Have you ever Googled “cute blouse” on the internet only to be bombarded with options? It’s hard to stand out as an online boutique when the competition is so fierce. There’s unlimited potential for space, whereas there are a finite amount of locations for physical stores. Snagging one is guaranteed marketing for passerbys on the street, which could result in greater customer awareness — physically and virtually.
Feedback potential. It can be difficult to gather honest reviews online. People are busy, they forget to revisit the site and rate once they’ve received the product, or they simply don’t take the time. With physical customers, all you have to do is start a conversation (this plays into the experience factor I mentioned earlier). Which shirt do you prefer? What are you looking for today? Did you like those shoes? This kind of feedback can drive business and product-related decisions in the future.
Prep yourself for the tougher times associated with physical storefronts.
Newfound expenses. Wages for staff. Property dues and rent. Inventory. The list goes on. If you’re not prepared to fork out some cash, then reconsider opening a physical storefront. Make sure you have the spending money ahead of time before blindly opening and then encountering this problem later.
Location, location, location. It’s kind of a double-edged sword. As mentioned above, it’s great to have a physical representation of your brand. And yet, deciding on a physical property means settling down. The likelihood of working whenever you want, wherever you want, drastically decreases (especially with specific operating hours). You’ll have responsibilities as a store owner that you didn’t have before, and it’s your job to make sure that your business runs smoothly.
Customers. Foot traffic is largely dependent on a number of things — time of day/week, advertised sales, seasonal shopping, etc. Some days will creep by with little action. Others will have you wishing for more inventory. But when you compare that to the consistent number of users on the internet — roughly three billion — it’s not even a drop in the bucket (which is why having both an online store and a physical store can be beneficial).
The decision is yours
Regardless of what route you decide to go, be sure to keep your short- and long-term business goals in mind. Still not sure if a storefront is the right move for you? Head on over to the GoDaddy Blog and take advantage of our handy worksheet to decide if you’re ready for a physical location.
About the Author:
Maxym Martineau is a copy editor and staff writer for GoDaddy. She’s an avid reader with an unhealthy addiction to Dr. Pepper and chocolate. She binge watches TV shows like there’s no tomorrow and is always up for a good plot discussion. You can follow her on Twitter @maxymmckay for further shenanigans.
While making a profit is not their primary motivation, nonprofits must generate revenue in excess of expenses (in fact make a profit / surplus). This means that nonprofits do not exist to make money for owners or investors. Instead they are dedicated to a specific mission.
Another obvious issue lies in the assumption that acquiring nonprofit status creates the advantage of being a tax-exempt entity. Nothing could be farther from the truth. Nonprofit is not the same as tax-exempt. Organizing as a nonprofit is done under state law, preferably as a corporation. The articles of incorporation must contain a clear statement of exempt purpose and indicate the assets are dedicated to exempt purposes. A dissolution clause should also be included.
Nonprofits are not automatically entitled to a 501(c)(3) or any other tax-exempt designation under the Internal Revenue Code. As Stacy Schnieder, CPA, noted there are over 27 types of 501(c) categories. To be tax-exempt the organization’s activities must benefit the public. The original reason for the tax-exempt concept was that nonprofits could stand in for government in areas and activities in which government was not able to do so.
There are several other differences
Both profits and nonprofits operate in the competitive world. Nonprofits operate in a grant (donation) economy. For-profits operate in a market economy. Nonprofits must file Form 990 annually with the IRS unless they are church related. Additionally there may be filing and tax requirements specific to individual states. In terms of personnel, nonprofits may have the complex problem of dealing with unpaid employees, i.e. volunteers.
The 501(c)(3) designation is primarily for charitable, education, scientific, religious or literary activities that are of value to and benefit the public. This determination under the IRS Code exempts designated organizations (not individuals) from a variety of taxes. It also allows donors of gifts, under appropriate circumstances, to deduct these donations for tax purposes. To attain this status requires filing a completely detailed form 1023 or 1023 EZ, including by-laws, directors, purpose, etc. For all activities give the IRS lots of information – use key words like volunteers, etc. to show nonprofit status. Develop a three to four year budget and indicate funding plans. Where needed use attachments. Remember to put your previously obtained EIN on all pages. Note also that all pages are in duplicate (one for you and one for the IRS). The application must also be accompanied by the appropriate check ($400 for the 1023 EZ or $850 for the full form, depending on future receipt estimates). Approval, under the best of circumstances, can take to up to six months or more.
In summary 501(c)(3) tax-exempt status is an IRS determination. Application should be submitted within 27 months of formation. The entity must be organized and operate for a tax-exempt purpose, i.e. charitable, education, scientific, religious or literary purpose. The organization:
Cannot intervene for any candidate
Cannot lobby on broad policy issues except in self defense
Cannot make lobbying a substantial part of organization activities
Cannot have other then a public benefit purpose
Cannot benefit any private interest
Cannot grant excess benefits to disqualified persons
Must be of value to the public and/or service to the community
One easy way to differentiate between for profit and a tax-exempt nonprofit can be simply stated in terms of for-profit R O I and nonprofit I O I.
R O I = Return on Investment (for the investor)
I O I = Impact of Investment (for the public at large)
Get online, get found and grow your business with social media
By RuthAnn Hogue, GoDaddy
Social media has long since taken the leap from an ever-growing collection of forums and apps to enhance your social life to the realm of valuable business tool. If you’re still waiting to join in, here are some reasons why you should.
First, everyone else is doing it. Regardless of what your mother said, sometimes this does matter. Granted, it’s still not wise to jump off a cliff. You can trust her on that one. But if you are a small business trying to reach critical mass you need to get your message in front of potential clients. Today, that means being where they are. And that is on social media.
Isn’t it just a bunch of egotistical people posting selfies on Facebook and Instagram or snapping pics of themselves on Snapchat using apps to add silly pig noses?
Isn’t it just for kids or those who cannot be bothered express themselves in more than 140 characters on Twitter?
What about all those people going crazy trying to catch imaginary creatures using the Pokѐmon Go app on their smartphones?
And Periscope, isn’t that just a place where users gather to watch whatever someone else is willing to broadcast?
Yes, but each is so much more.
Here are some real-world social media business applications that might make your life better.
Buy the numbers
Still the big daddy of social media, Facebook as of June 2016 reported on average of 1.13 billion active users daily. While using Facebook is free, access to those users is for sale. Because Facebook has so much personal information on its users, targeting your demographic sweet spot is completely possible.
It’s a Snap
Meanwhile, Snapchat was reported as of June 2016 as having 150 million logged-in users. While its content is fleeting, new upgrades now allow users to save memories to create stories. Whether you use Snapchat to share pics of a live event, let people know about an event on deck, post a coupon or offer other perks, it also has the ability to target—now including geographically.
Instagram for Business
For those relying on a personal account to share Instagram images, it’s time to upgrade. The popular photo-editing and sharing app now offers accounts just for business. Unlike its personal accounts, Instagram business accounts allow you to run analytics. In addition to your own posts, you’ll also be able to purchase ad space when you make the switch.
Tweet it up
Twitter is heating up among teens and tweens who want to escape a Facebook landscape increasingly inhabited by their parents and grandparents. Its user base had reached 313 million by the second quarter of 2016, which can easily be targeted using hashtags. While sponsored hashtags for specific topics or events are available, anyone can create one at no cost. All it takes is a hot topic, a good network of followers and your message can be retweeted around the globe.
Scope it out
Periscope, an offshoot of Twitter, is no longer just for virtual voyeurism. Kind of. You still get to watch whatever someone else decides to live stream. You still get to post comments in real time. Unless marked with the hashtag #save, content disappears within 24 hours.
Only now, in addition to people broadcasting random content, marketing-savvy business owners are using the platform to share content featuring everything from tutorials for hairdressers on the latest cuts and styles to messaging on how they can brand or marketing your business.
Of course, social media is ever-changing and constantly growing. Keeping current is a must. Unless you want to hang out alone.
Based in Arizona, RuthAnn Hogue is the owner and founder of Whiptail Publisher’s Syndicate, a published nonfiction author and a contributor to the GoDaddy blog. The recovering journalist occasionally breaks out her 1979 Gibson Les Paul Custom Deluxe Silverburst rock ‘n’ roll guitar when she wants to let loose. A devoted fur mother, RuthAnn makes time to spoil all four of her Jack Russell terriers when she is not tweeting from @MyWhiptail or posting on Facebook @whiptailpublishing.
This is the first of a 3-part article on starting a Nonprofit Organization by Roger Robinson, PhD. and Certified SCORE Mentor
As counselors we are often faced with clients requesting guidance in starting a nonprofit organization. Keep in mind that the impact of the Nonprofit Economic Sector nationally is significant. It provides over five percent of the nation’s entire GDP. Employees of nonprofits account for over ten percent of the nation’s private sector workforce and over nine percent of all wages paid. In addition as recently as 2013, 62 million Americans volunteered contributing almost eight billion hours for an estimated value of $173 billion. In Arizona alone there are over 21,000 registered nonprofit agencies. Their revenue totals over 26 Billion and their assets exceed $43 Billion. Competition for board members, staff, volunteers and money is overwhelming.
Some SCORE clients are truly altruistic; they genuinely feel that they have a concept that will benefit the larger society that will enhance all our lives. Others appear to have the erroneous idea that they can more effectively benefit themselves by creating a nonprofit rather then by going the route of developing a for-profit business.
As noted in the SCORE Business Planning Tools for Non-Profit Organizations – Second Edition…
“In our democratic society we ask non-profit organizations to fulfill several important responsibilities, from providing public benefit and serving the underprivileged to advancing education and science and reducing the burden of government. We also expect non-profits to operate on a higher more noble plane than other organizations, and we insist they focus on public good rather than private gain in accomplishing their goals.”
Successfully operating a non-profit, according to Tom Fraker, requires fire in your belly, a focus on whom you serve, i.e. your mission as well as the ability to take no’s upon no’s, support from others, commitment, connection, and a balanced personal life.
With the above standards in mind, initially at least, we should take our usual approach, have the clients carefully explain their concept. Remind them that operating a nonprofit is, in fact, operating a business. We should take them through a thorough examination of their organization’s business plan, including their business model, their mission, vision, values, the environment they will be operating in, both external and internal, their goals and action plans. We should make them think through their management plans and their leadership skills, their personnel plans, their marketing plans and their financial plans. We must not let clients overlook the challenge of finding sources for start-up and operating funding. We should make them think through the inputs, activities, outputs and outcomes required for success. Today’s funders want to see value, measurable impact for dollars contributed.
If initially, at least, we treat both nonprofits and for-profits in the same way, the question then becomes how do they differ? While making a profit is not their primary motivation, nonprofits must generate revenue in excess of expenses (in fact make a profit / surplus). This means that nonprofits do not exist to make money for owners or investors. Instead they are dedicated to a specific mission.