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

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

3. 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

4. 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

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

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

7. 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

8. 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

9. 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

10. 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

11. 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

12. 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

13. 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

14. 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

15. 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

16. 1023 - Checklist www.irs.gov – Charities and Nonprofits
IRS Exempt Organization Helpline –
– Posting of annual 990 reports
Websites
Loss of Exemption for Not Filing
OPM