Forming a 501c(3)? Here’s what to do next…

  • July 29, 2014
  • Maria Montie, CPA, MST, CVA, MAFF

non profitForming a 501c(3) non profit organization starts with filing an application (Form 1023) for tax exempt status.  Once you file your application, here’s what you should do next in order to start fundraising for your organization:

1.  Open a Bank Account
You can open a bank account in the name of
organization at any time, but may need an “opening resolution”.

2.  Make Solicitations
You can begin to solicit contributions at the same time you receive contributions (ensure you have filed the solicitation registration with the State of Michigan.

3.  Receive Contributions
You can receive contributions as soon as the IRS confirms receipt of your application (when the check for the application fee clears the bank it indicates that IRS has received the application).  However, if for some reason the IRS denies your application to qualify as a 501(c) 3 those contributions would not be deductible to the individuals who made the contributions.  The individuals could elect to deduct their current contributions in the following year in order to ensure the charitable status is accepted.  If you are going to receive contributions prior to receiving the “determination letter” it you will need to make it clear to the contributors that the status is pending.  This can be communicate on the required contribution acknowledgement (individuals must be given a receipt in order to deduct any contribution of $250 or more.

If you have a 501c(3) organization and need more information on how to handle formation and contributions, please contact a ShindelRock tax professional.