A public charity is another term for the coveted Internal Revenue Code Section 501(c)3 status. This designation allows all donations made to the charity to be tax deductible for taxpayers. To obtain this designation, the organization must have the proper provisions within the organizing documents.
Non Profit Organizations
Non Profit Organizations, commonly referred to as 501(c)3 organizations, serve a community purpose as their primary reason for existence. Their secondary purpose is to provide security for the employees and finally earn enough money to continue operations.
Section 6033 of the Internal Revenue Code requires tax exempt organizations to file an annual report. Form 990 fulfills this requirement. Many citizens utilize the information from Form 990 to evaluate the non-profit organization they donate to annually. The 990 covers much of the information any citizen desires to know about the charity of their choice.
Step three of starting a non-profit organization is gathering the potential board members for the first meeting. In step one; you formed a brain trust to validate the mission of the non-profit organization. In step two; you generated a list of potential board members by identifying sources and creating profiles. In this step, you have to get everyone together, present the mission to the group, get commitments to help, and set a date to legally form the non-profit organization.
I have played in about eight of those fundraising golf tournaments and personally ran two more. I found them to be very low in the return on the investment. Furthermore, the risk associated with weather hampers the real bottom line. Overall, I don’t endorse this type of fundraising for your charity. Allow me to walk through the math.
Before you do anything towards starting a non-profit organization, you need to form a brain trust. This is a group of friends that will add their thoughts to your idea and provide you with a platform to begin the process. Their ideas, questions, suggestions, misgivings, and other thoughts expand your thinking beyond a simple idea to a core value of what is important.
I have had many clients come to me to ask how they could start a non-profit organization. The main purpose of starting a nonprofit is to gain the contribution advantage the Internal Revenue Service (IRS) provides. Why do you need the IRS to authorize this? What is the difference between tax exempt and a charitable organization? How does the church fit into all of this?