Preparing IRS Form 1023 Application for Recognition of Exemption – 501(c)(3) Presented By: Leonard Steinberg, EA, NTPI Fellow Steinberg Enterprises, LLC

Topics for Discussion Nonprofit Application Requirements Programs Funding Sources Accounting Review of Parts I through XI of the Application Checklist

Nonprofit Application Requirements Proof of Incorporation or other Status Tax-ID Number – Copy of IRS Letter Name and Address of the Organization Article of Incorporation or Formation Bylaws of Operations Conflict of Interest Statement 2 Year Budget Profit and Loss for the Current/Proposed Year

Nonprofit Application Requirements Balance Sheet Compensation to Management Names and Social Security Numbers of All Board Members Mission Statement (Statement of Purpose) Media Samples Interviewing Executive Director and/or Board Members

Programs What Programs and Services does the Organization Provide? Types of Programs Management and General Fundraising

Types of Programs and Services Program Types Charitable Religious Educational Scientific Free Fee for Service Day Care, After School, Camps, Medicaid

Types of Programs and Services Unrelated Business Income No relationship or purpose with any of the programs, e.g. Operating a Parking Lot Prepare the 990-T, Taxable Income Management and General Day-today Operations Fundraising Events Beware of Gambling Activities

Types of Programs and Services Nothing Related to Taking a Political Position or advocating for a particular candidate Can be General Politics Voting Rights Candidate Forums Issue Forums

Funding Sources Unrestricted Funds Temporarily Restricted Funds General Donations – used for any purpose Fundraising Events Temporarily Restricted Funds Restricted by the Donor Time Restricted Program Restricted Time and Program Restricted Permanently Restricted Funds Endowments

Funding Sources Fees for Services Fundraising Events Golf Outing, Annual Dinner General Solicitations Federal Grants – May be subject to A-133 Audit State and Local Government Grants Partnerships with Other Organizations

Accounting Setting up the Books Balance Sheet Income Statement Cash or Accrual Balance Sheet Income Statement Record Income and Expenses by Program and Funding Source Grants Management Donor Restrictions

1023 - Application Part I, Page 1 - Identification of Applicant Make sure you have your signed POA 2848 Part II, Page 2 – Organizational Structure Part III, Page 2 – Required Provisions Part IV, Page 2 – Narrative Description Very Important, Succinct Part V, Pages 2 through 5 – Compensation Issues Use the Organization’s Mailing Address Beware of Personal Inurement

1023 - Application Part VI, Page 5 – Member Benefits Part VII, Page 5 – Organization’s History Part VIII, Pages 5 through 8 – Specific Activities Part IX, Pages 9-10 Financial Data Can attach Spreadsheets Part X, Pages 10 through 11 – Public Charity Status Part XI, Page 11 – User Fee and Signature

1023 - Application Schedules A through H – Organization Specific Schedule A – Churches Schedule B – Schools, Colleges, and Universities Schedule C – Hospitals Schedule D – Supporting Organizations Schedule E – Organization Not Filing Within 27 Months of Formation Schedule F – Homes for Elderly, Handicapped, and Low-Income Housing Schedule G – Successors to Other Organizations Schedule H - Scholarships, Fellowships, Educational Grants

1023 - Checklist Retain a copy for Your Records and for the Client Add all available Media, Brochures, Flyers, etc. as part of the packet. Adds to credibility of the organization Review the application with the Executive Director and the Board of Directors Request for Expedited Review – Additional Cost Engagement Letter, Signed 2848, and Retainer Fee May be Subject to Annual Audit Annual Filing of IRS Form 990, 990-EZ, 990-PF, 990-N State Filing Requirements

1023 - Checklist www.irs.gov – Charities and Nonprofits IRS Exempt Organization Helpline – 1-877-829-5500 www.Guidestar.org – Posting of annual 990 reports Websites Loss of Exemption for Not Filing OPM