How to Start a Nonprofit Organization in Ohio?
Nonprofits are charitable organizations that are exempt from federal taxation under the Internal Revenue Code.3 min read
Wondering how to start a nonprofit organization in Ohio? Follow these steps:
- Write a mission statement.
- Choose a name.
- File Articles of Organization with the Ohio Secretary of State.
- Apply for state tax exemption and 501(c)(3) status.
Nonprofits in Ohio
Nonprofits are charitable organizations that are exempt from federal taxation under the Internal Revenue Code. There are several types of 501(c)(3) nonprofits in Ohio, including public charities and private organizations. These groups may focus on religion, science, or other charitable pursuits. Social welfare groups, business organizations, and recreational groups may also qualify.
Advantages to Achieving Nonprofit Status in Ohio
- Nonprofit status can be advantageous for fundraising.
- Unlike other kinds of groups, nonprofits can outlive their original organizers.
- Nonprofits are often exempt from property taxes and are exempt from income taxes.
- Some grants from the governments require nonprofit status.
Other Considerations When Choosing to Become a Nonprofit
While there are some major advantages to being a nonprofit in Ohio, there are several other things to consider when deciding whether to apply for nonprofit status:
- You will lose some personal control over your group when you turn it into a nonprofit.
- Nonprofits require more time and money to create and maintain than other types of organizations.
- Nonprofit corporations must file an annual financial report with the Office of the Attorney General's Charitable Law Section.
- Nonprofits must file a Statement of Continued Existence every five years with the Ohio Secretary of State.
- It's also important to remember that nonprofits have a high level of accountability and need to be careful to maintain complete books and records and minutes of corporate meetings.
First Steps When Creating a Nonprofit
- Mission statement. One of the most fundamental parts of creating a nonprofit is articulating what your group will accomplish. The best way to articulate that to others, including future lenders, members, and potential employees, is through a mission statement. Your mission statement should clearly explain its goals. Make sure to answer who, what, where, when, why, and how. Make sure your objectives, activities, and resources are clear, and explain how you will procure funding.
- Name. You'll also need to name your organization. Your name establishes its brand and is essential for incorporating with the state. Make sure the name is available (not being used by another group) and meets state requirements.
- Articles of Organization. Once you've taken some of these steps, you'll need to make the important move to create and file your Articles of Incorporation with the Ohio Secretary of State. This officially marks the creation of your organization. It documents where and when the organization was formed. There are some basic points that the IRS will look for when you apply for 501(c)(3) exemption. Make sure your application won't be rejected by meeting all of the state and IRS requirements.
- Apply for state tax exception and 501(c)(3) status. This will allow you apply for grants and fundraise.
Other Important Steps
Once you've taken these first steps, you'll also need to do the following:
- Hire a director and appoint officers. Nonprofits are required to have a president, secretary, and treasurer. They also do not have residency or membership requirements, and more than one position may be held by the same person.
- Obtain an Employer Identification Number (EIN) from the Internal Revenue Service (IRS) using form SS-4.
- Open a business bank account. Personal finances must be completely separate from the nonprofit's finances.
- Register for charitable solicitation (Fundraising).
Lastly, while you are establishing your nonprofit and its staff, you'll want to ensure that all staff and board members understand the ethical issues involved with a nonprofit.
- Board members should step aside whenever they have a potential conflict of interest.
- Nonprofits should honor the requests of donors in regards to anonymity and the use of gifts. Getting those wishes in writing can help to avoid any confusion.
- Nonprofits should make their work transparent. Make sure to keep appropriate records of finances regarding grants from federal or state agencies.
- State and federal grants and loans are a major source of funding for nonprofits. In order to stay in good relationships with your grant providers, you'll want to have a strong reputation for allocating money correctly. Make sure to keep grant money separate from the general account. For record-keeping purposes, it will be important to know how exactly all of your grant money was spent.
If you need help with starting a nonprofit in Ohio, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.