5 Things to Consider When Working with Nonprofit Organizations
When it comes to nonprofit organizations, there are certain measures that should be taken in order to ensure the best outcomes2 min read
When it comes to nonprofit organizations, there are certain measures that should be taken in order to ensure the best outcomes. Whether you are looking to work with a nonprofit organization in Chicago, or any other part of the United States, there are certain things to consider before making a decision. It is always best to consult with a legal team in order to ensure all legal obligations are met. Understanding the importance of legal counsel is the key to successful nonprofit organization management. Here are five things to consider when working with nonprofit organizations:
1. Corporate Formalities
The first thing to consider when working with a nonprofit organization is the corporate formalities. When forming a nonprofit corporation, it is important to follow all state and federal legal requirements. This includes incorporating in the state where the nonprofit is located, drafting and filing articles of incorporation, obtaining necessary licenses, authorizing proper capitalization, and acknowledging the liability protections of board members and employees. All of these steps are essential to ensuring the legality and proper governance of the nonprofit.
2. Federal Red Tape
Once the nonprofit is properly set up, obtaining federal tax-exempt status is the next step. This requires filing the IRS Form 1023 (Return of Organization Exempt From Tax) in order to obtain a 501(c)(3) designation. It is important to be aware of the various rules and regulations involved in obtaining this designation, which can vary depending on the type of nonprofit organization. Additionally, complying with reporting requirements is necessary in order to maintain the 501(c)(3) status.
3. Governance Structures
Having a formal governance structure in place is important for any nonprofit organization. This entails setting up a board of directors and a management team, setting up bylaws and policies, and generally delegating roles within the organization. Additionally, obtaining services such as legal and consulting services is also necessary in order to ensure the success of the organization.
4. Compliance
Seeking assistance from legal counsel is essential in order to simplify compliance with all relevant federal and state laws. Lawyers can provide advice and assistance with filing the necessary documents, as well as providing insight into the specific requirements for the type of nonprofit being set up. Additionally, legal counsel can be extremely helpful in understanding the intricacies of the tax code, as well as providing advice on how to maximize potential tax deductions.
5. Professional Liability Insurance
It is highly recommended that nonprofit organizations obtain professional liability insurance to protect against any lawsuits, claims, or other legal issues that may arise in connection with the organization. This type of insurance can cover costs related to legal settlements, judgements, or other legal expenses related to the organization.
Topics:
