Let me introduce myself. My name is Monique Gary and I live in Southeastern Michigan in the Metro Detroit area. I currently work for Ware and Associates, a consulting firm. I work as an Instructional Designer and Project Manager. Recently I've started a new company I named Apex Grant Writing. At Apex we work collaboratively with your organization to identify funding opportunities that align with your organization's vision and strategic plan and to pursue grants that support your initiatives. We also serve as a resource in all aspects of proposal preparation including budget development and review, formatting, and adherence to all internal and external guidelines, regulatory requirements and policies.

Thursday, January 7, 2010

Non Profits 101

After some thought, I decided that I would focus the first few blog entries on very basic information such as:  What is a nonprofit organization (NPO),  Starting a NPO, and Writing your NPO's missison statement to name a few.

Today the topic is What is a NPO?

The term, nonprofit, is used rather loosely to describe groups that come together to achieve a mission, rather than to make a profit. The term "nonprofit" does not imply any specific type of legal structure. If the group incorporates, it is a nonprofit corporation. If it does not incorporate, it is an unincorporated nonprofit association.

Examples of unincorporated nonprofit associations could include a group of neighbors who want to keep a neighborhood park clean and kept up, or a group of cheerleading moms who sell candy to fund their children's trips to cheerleading tournaments.

Both groups could be called "nonprofits" simply because they are mission-driven, not profit-driven. If the park group never does anything to create a formal structure. It would be considered an unincorporated nonprofit association.

The cheerleading moms file papers with the state to become a corporation. The group is then a nonprofit corporation. As a result, this group, because it works for the "common good," would be exempt from the state taxes a for-profit corporation would have to pay, making it, to some extent, publicly subsidized.

To make sure that the nonprofit corporation actually works for the public good and earns its tax breaks, the state will required it to set up certain organizational structures such as a board of directors or board of trustees. The board is responsible for keeping the group on track and fulfilling its nonprofit mission.

Any nonprofit, the unincorporated and the incorporated, could become tax-exempt from federal income taxes by applying to the IRS. However, incorporated nonprofits stand the best chance of actually meeting the IRS standards for tax-exemption.

There are several types of federal tax-exempt status, but the most favorable one is "501(c)(3)" status. A 501(c)(3) nonprofit is exempt from federal taxes but, in addition, donors to the nonprofit can take a tax deduction for the amount of their donations. This is a powerful incentive for donors.

Other classifications offer exemptions from federal income taxes (for instance 501(c)(4) or 501(c)(6) status) but only 501(c)(3) status allows donors to deduct contributions.

As you can see, the very first decision any group will need to make is what kind of nonprofit it wants to be.

Next: Starting a NPO.

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