1. How to Start Manage and Grow a Nonprofit Organization Alexandria, Small Business Development Center 1 JL Ayers Consulting, LLC www. jlayersconsulting.com

2.  Jennifer Ayers, MPA,Consultant, JL Ayers Consulting, LLC  Larry Checco, Checco Communications, Branding Expert  Tom Hay, Ph.D., A2B Research and Development, LLC  Page Moon, Focus Data Solutions  Cathy Pennington, CPA, Shareholder Renner & Company  Benjamin Takis, Attorney, Tax-Exempt Solutions, PLLC  Robert Weil, Law Office of Robert J. Weil, PLLC, Non-profit legal counsel 2 JL Ayers Consulting, LLC www. jlayersconsulting.com

3. Overview:  Reasons to start a non-profit  Is an NPO the right solution?  Why Non-profits have different rules (sort of) Board Development  Finding Board Members Getting Started  Types of non-profits and tax-exempt organizations  Steps to non-profit formation  Form 1023 issues Setting it up Right  Controls  Bookkeeping  Avoiding Problems  Open Discussion Lessons Learned 3 JL Ayers Consulting, LLC www. jlayersconsulting.com

4.  Change the world  Do good and help people  Solve a problem  Support a profession or shared goal  Change  Leave a legacy or make an impact  Give money to others JL Ayers Consulting, LLC www. jlayersconsulting.com 4

5.  Who will Benefit from this organization’s efforts?  What unmet need does it fill?  Will I let other People tell me what to do?  Are there other organizations that do the same or similar things? JL Ayers Consulting, LLC www. jlayersconsulting.com 5

6.  A donation to a reputable organization  A For-Profit Venture (sole proprietorship, LLC, C Corporation, Benefit Corporation)  Volunteering  Legacy Gift  In-kind donation JL Ayers Consulting, LLC www. jlayersconsulting.com 6

7.  Fundamentals of NPO Theory  Revenue should be used to support activities  Money supports mission and services provided  Cannot be distributed to individuals  Accountable to the public- to retain status they must do what they say they do JL Ayers Consulting, LLC www. jlayersconsulting.com 7

8.  Skills Needed  Start small, plan for growth  Personality and Strength  Mix of Experience  Application  Interviews  Strength finders or Assessment JL Ayers Consulting, LLC www. jlayersconsulting.com 8

9. Benjamin Takis Tax-Exempt Solutions, PLLC JL Ayers Consulting, LLC www. jlayersconsulting.com 9

10.  A non-profit is an entity (typically a corporation) that does not distribute net earnings to its owners or shareholders. Non- profit status is determined under state law  501(c)(3) (or other tax-exempt status) is a federal tax classification. Non-profits may or may not qualify (it is possible to have a taxable non-profit). JL Ayers Consulting, LLC www. jlayersconsulting.com 10

11. 501(c)(3) is one of many different tax-exemption classifications under federal law. Other examples:  501(a): qualified retirement plans  501(c)(4): social welfare organizations  501(c)(5): unions  501(c)(6): trade associations States generally rely on federal 501(c)(3) status when granting tax-exempt status under state law, but not always JL Ayers Consulting, LLC www. jlayersconsulting.com 11

12.  Earnings generally tax-exempt under federal and state law (also applies to other tax- exempt organizations)  Donations are tax deductible (unique to 501(c)(3) organizations)  Eligible for grants from foundations (unique to 501(c)(3) organizations) JL Ayers Consulting, LLC www. jlayersconsulting.com 12

13. JL Ayers Consulting, LLC www. jlayersconsulting.com 13  Charity  Education  Promotion of Health  Advancement of Religion  Advancement of Science  Lessening the Burdens of Government  Testing for Public Safety  Promotion of Social Welfare  Promotion of the Arts  Environmental Protection  Fostering Amateur Sports Competition  Prevention of Cruelty to Animals

14. (1) File Articles of Incorporation (2) Get an Employer Identification Number (3) Have your first Board Meeting: adopt Bylaws, Resolutions, and Policies (4) Open a bank account (5) File Form 1023 and applications under state law (27-month deadline) (6) File Forms 990 while you wait for tax-exempt status JL Ayers Consulting, LLC www. jlayersconsulting.com 14

15.  Corporate name  Duration (“perpetual”)  Statement of Purpose (required for Form 1023)  Whether or not you have members  Authority of the Board of Directors, and the process for appointment  Plan for dissolution of assets (required for Form 1023)  Names of initial Directors, Incorporators, and Registered Agent  Authority to amend JL Ayers Consulting, LLC www. jlayersconsulting.com 15

16. Once Articles of Incorporation have been filed, the Board of Directors should have their first meeting and take care of initial business:  Adopt Articles  Adopt Bylaws  Appoint Officers (Executive Director, Secretary, Treasurer)  Adopt Conflict of Interest Policy  Establish the authority of selected officers to open a bank account and sign checks on behalf of the organization  Establish the authority of selected officers to apply for tax- exempt status and sign a power of attorney This meeting should be documented by written resolutions and minutes JL Ayers Consulting, LLC www. jlayersconsulting.com 16

17.  User Fee: $400 or $850  Timing: File within 27 months of incorporation for retroactive tax-exempt status  Be prepared for a long wait: look into fiscal sponsorship in the meantime, and file Forms 990  Must have proper statement of purpose and dissolution clause in Articles of Incorporation  Treated as “public charity” (and not a private foundation) for first 5 years. Must satisfy “public support” test after that. JL Ayers Consulting, LLC www. jlayersconsulting.com 17

18.  Narrative:  Describe your major activities, and give some concrete examples (3-5 paragraphs is usually enough)  The Form 1023 narrative is not a grant proposal and shouldn’t look like one.  You should know all the IRS hot-button issues associated with organizations likes yours, and avoid triggering IRS concerns.  Note: if you engage in activities that are not described in the narrative or elsewhere in the Form 1023, the validity of your tax-exemption letter may be called into question. JL Ayers Consulting, LLC www. jlayersconsulting.com 18

19.  Conflict of Interest Issues:  The IRS closely scrutinizes transactions with officers, directors, and related organizations.  Be sure to adopt Conflict of Interest Policy  Procedure for approving compensation: (1) Approve compensation in advance: (2) Document compensation arrangements in writing; (3) Record board decision in writing (i.e. minutes of board meeting); (4) Obtain comparability data from at least 3 similarly situated organizations; and (5) Document the data and its source in the meeting minutes. JL Ayers Consulting, LLC www. jlayersconsulting.com 19

20. Why a Nonprofit? Catherine M. Pennington, CPA Renner and Company, CPA, PC

21.  It’s all about the mission  Some of it’s about the taxes  Who benefits  Does the world need another nonprofit?

22.  Most common:  501-c-3Charity  501-c-6Business League  501-c-7Social/recreational club  501-c-13Cemetery company

23.  Operate on behalf of others  Private benefit  Stakeholders not shareholders  Financial stability

24.  Separate bank account  Don’t cut corners  Filing  Reconciliations  Segregation of duties

25.  Chart of Accounts  Transactions  Monthly reconciliations

26.  Policies  Conflict of interest  Recruit a good Board  Do I need an audit?  Reporting  Board  IRS

27. Should NPO’s Operate Like a Business? Be profitable and earn money to support programs Market themselves and understand the market (stakeholders/those they serve) Efficient and effective use of dollars Retain and develop staff Follow Best Practices What types of people make the best leaders? When do I open my checking account? What do I need to do first? What are common mistakes? JL Ayers Consulting, LLC www. jlayersconsulting.com 27

28. February 25 March 27 Planning for Growth Bob Weil, Tom Hay & Jennifer Ayers Governance-  Running a board meeting  Do’s and Don’t of Being on a Board of Directors Policies & Risk  Legal Parameters for Good Governance  Why having good policies are important to reducing risk  Who’s liable? Development Strategy  Different types of fundraising  Where to find resources – build relationships  Building Metrics & Outcomes  Planning Basics- why you need a plan Operating Well Larry Checco, Page Moon, Ben Takis, Cathy Pennington & Jennifer Ayers  Charity Rankings- Best Practices  Financial Operations  Financial considerations for managing grants  reporting Financial Data  Auditing/Controls  Policy & Risk  What to know about employees  Marketing Strategy  Messaging and branding  Getting People to Notice  Developing an IT policy & determining your needs 28 JL Ayers Consulting, LLC www. jlayersconsulting.com

29. Benjamin Takis, Attorney, Tax-Exempt Solutions, PLLC btakis@taxexemptsolutions.com Catherine M. Pennington, CPA Renner and Company, CPA, PC cpennington@rennercpa.com Jennifer Ayers, MPA JL Ayers Consulting, LLC jayers@jlayersconsulting.com

30.  Society for Nonprofit Organizations www.sfnpo.org www.sfnpo.org  ASAE http://www.asaecenter.org/  Council for Nonprofit Advancement  Foundation Center  Chronicle of Philanthropy  Center for  Board Source  Nonprofit Oyster JL Ayers Consulting, LLC www. jlayersconsulting.com 30