Registering as a Nonprofit

Bill Ricker bill.n1vux at
Fri Jul 25 05:00:44 BST 2008

IANAL but ... been there, done that, got the scars, ain't doing it again.

> Registering as a nonprofit makes it easier to collect donations.
Ever done it before? It is a major pain.

How many thousands are we going to collect?

Should we be a 501(c)(3) or local operating arm of a national 501(c)(3) ??

It does make big donations subsidized by the tax man, so they come
even bigger.
It makes corporate sponsorship a little easier, but since corp can
write off both charity and PR expense, most corporate sponsors could
write donating a free banner that shows their logo in the corner
equally well without even incorporation.

> I'd love to
> have Google checkout/Paypal buttons on the website for donations

We could do that if we had a checking account registered under the
tresurer's SSN too, but it might mess with the treasurer's taxes ...
being taxed as their personal incomie ... unless it it's spent on
behalf of a national 501(c)(3), for no net  income? dunno.

> wikihow has an article on how to do this

Such advice from a non-lawyer is to be taken with salt.
Details vary by state. Doing this without an attorney who knows Mass
corp + charity law and 501(c)(3) law is fraught and awkward. FSF's
legal arm may have counsel licensed to practice in Mass who can help.

Is it the Wiki or just this posting that  incomplete and out of sequence?

IANAL but ...

> Formulate a mission statement (which we basically have already:

not really /needed/ however much it's expected in MBA circles.

A Manifesto -- longer but written in real paragraphs, not a run on
sentence, is likely useful. In today's PR age, a "Mission Statement"
may fill a perceived PR niche, but to pull in extra volunteers ...
including a pro bono attorney ... you need a Manifesto instead/also.

> Form a board of directors

NO. Too early.
There is no Board before there is (are?) bylaws.

Before there is bylaws, one has an ad hoc committee acclaimed by the
last general meeting only (which ought be renewed by re-acclamation if
progress meetings of the whole are held).

* Get incorporation paperwork packet from Secretary of State's office,
Commonwealth of Mass
* Revise list below if it contradicts with above
* read Robert's Rules of Order chapter on "Forming a new Society"
* Find a pro-bono attorney wise in these matters to assist

* widely advertise a general meeting of interested parties under the
"mission statement" or the rallying cry as we used to call it.

At that meeting, using Robert's Rules of Order unless other Rule
adopted, transact the following business -
* meeting acclaims a chairman pro tem for the meeting and approves agenda
* founders explain mission, history, motives, manifesto; give demos; whatever
* invite more volunteers to join the conspiracy ^W core team
* propose a resolution to form a society with purpose of incorporation
for charitable purposes.
  * Spirited debate
  * perhaps amendment
  * it passes, continue;
    it fails, well, call another meeting and try again, applying some
learning about WHY it failed.
*  request nominations / volunteers for exploratory ad hoc committees
to guide nascent society through bylaws incorporation -- steering
committee OR the meeting (meeting to choose) to pick ad hoc bylaws and
nominating committees, to report to a reconvened meeting at a later
    nominated committee(s) approved by acclamation.
 * Adjourn to a date named far enough in advance for next steps

> File articles of incorporation
> Draft bylaws (does the ubuntu Code of Conduct count?)

Incorporation requires a copy of bylaws attached.

so committees will

* consider draft debate re-draft and refine the bylaws
* ditto any other required items  etc
* line up likely officers, board members
  -- including "adult supervision" from larger Community
  (usually a banker, a *clean* politician, and that helpful lawyer)
  ensure Officer nominees understand Responsibilities including Filings
  and Legal Penalties to Corporation and Officers..
* Publish draft bylaws, meeting notice, nominations (if any, if not
all from floor)
* get quote on Officers and Directors Indemnity Insurance

* General meeting on announced day & place
* to pass (or amend and adopt) Bylaws
*  and elect first Board and Officers under bylaws..

only NOW
* INCORPORATE in Mass, form with Secretary of State's office downtown,
with Bylaws and initial BoD+Officers.

This has requirement of annual filing of form listing date + place of
last annual meeting, Board and Officers, within N weeks of same.
Without which you become legally semi-un-incorporated, a

* Pay premium on Officers & Directors Indemnity (now, and annually)
  IMMEDIATELY upon incorporation.

I WILL NEVER AGAIN serve on a Board without such insurance, and
neither should anyone who has (or desires to have) positive net worth.
Even Frivolous Lawsuits can bankrupt the officers before hopefully
being thrown out.

> Develop a budget
> Develop a record-keeping system

Some of this an ad hoc committee could start on pre-incorporation, as
first Board meeting after the Incorporation meeting OR the
Incorporation meeting itself should adopt the initial budget and
system and (if not covered in the bylaws) should prescribe how to
revise budget.

Certainly at least how to afford the Indemnity must be considered ...

> File for 501(c)(3) status
> Apply for a federal employer identification number

I suspect this is reversed sequence. I am quite sure you need EIN to
apply for 501(c)(3).

501(c)(3) says filling annually is optional below a certain level, but
file anyway -- if you aren't in the published list of annual filers,
many firms assume you aren't really 501(c)(3) and won't donate, period
-- and getting the first big donation that puts you into required
filling becomes impossible. If you ever want a big donation, file

> File for state and local tax (exemption)

Local only required if owning real-estate, as no local income tax in Boston.
State tax exempt *purchase* form can be requested before 501(c)(3),
and doesn't require state Charitable status either.
Exemption from *collecting* tax is harder, and may require Mass public
charity status.

> Fulfill charitable solicitation law requirements

Attorney General of the Commonwealth, Office of Public Charities.
Annual filing Form  required.  Different deadline than Feds or Sec'y State.

> Apply for a nonprofit mailing permit

Dubious benefit -- bulk rate mail gets discarded.
Mail with a real stamp gets opened.
Do our audience use the USPO anymore anyway?

n1vux at bill.n1vux at

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