Fundraising Ideas That Work

How to raise $500 to $5000 quickly for your school, church, sports, or public service charity.

 

 

There are different types of nonprofit groups

Philip Copitch, Ph.D.
(CC) FundraisingIdeasThatWork.com

 

4 major types of nonprofit groups

1. Unincorporated nonprofit, without tax exempt status

2. Unincorporated nonprofit, with tax exempt status

3. Incorporated nonprofits, without tax exempt status

4. Incorporated nonprofits, with tax exempt status

 

Let’s look at a brief overview of these 4 groups.

Unincorporated nonprofit without tax exempt status

This is a group of like minded people that is operated without corporate or recognized tax exempt status.

It is legal to run a group this way, especially while it is small. This type of group works well for small organizations, such as school soccer teems or local clubs that are primarily ask for donations from their membership, with the funds raised being used for the sole benefit their group.

Most groups find it is usually better to get the legal protections offered with an IRS tax exempt status.

Unincorporated nonprofit with tax exempt status

This is a group that has not incorporated but does have IRS, and usually state, tax exempt status.

Some groups do not want to deal with the paperwork of incorporation, but still want tax exempt status, and may feel there is little risk of liability.

A nonprofit group does not have to be incorporated, however being a corporation often makes it easier to receive IRS recognized nonprofit status.

Incorporated nonprofits without tax exempt status

This is a group of like mined people that have filed for incorporation but, to date has not received state or federal tax exempt status.

A group may choose to forgo tax exempt status for many reasons. For example, if the group is a church with, on average, less than $5,000 of annual gross receipts, they are automatically exempt from taxes according to the IRS.

Incorporated nonprofits with tax exempt status

This is a group of like minded people that has successfully applied in their state for nonprofit incorporation, and to the IRS for tax exempt status.

This is the most common path that groups choose to show that they are “legitimate” nonprofit agencies.

The government wants to know what you are doing with your nonprofit money

This brief overview is just that, brief. It is important that the intricacies of tax exempt status be understood for your particular type of group. I often joke that, “I am afraid of two things: cancer and the IRS, not necessarily in that order.” It is a good idea to follow IRS rules when it comes to getting and dispersing donations because you don’t want to have to explain yourself to the IRS.

It is important that you have counsel from professionals that regularly deal with nonprofits such as experienced Certified Public Accountants(CPA), Enrolled Agents (EA) and tax attorneys.

I highly recommend the books that follow. I have successfully done the paperwork for numerous nonprofits by following the clear advice from the first book on the list. It wasn’t fun, but it wasn’t hard either. It was most definitely time consuming. The biggest positive of doing the nonprofit status paperwork was that it forced my idealistic group of do gooders to properly formulate a workable plan and figure out how to delegate tasks that helped move us towards our caring goals.

 

What does it mean to be tax-exempt?

In general, organizations that are often called charitable organizations, are groups that use their income (donations) for public good (charity). No earnings can go to private shareholders or individuals.

The most common nonprofit category is called a 501©(3), named after the IRS statute of the same name. According to the IRS a tax exempt purpose is:

 

The exempt purposes set forth in section 501(c)(3) are charitable, religious, educational, scientific, literary, testing for public safety, fostering national or international amateur sports competition, and preventing cruelty to children or animals.  The term charitable is used in its generally accepted legal sense and includes relief of the poor, the distressed, or the underprivileged; advancement of religion; advancement of education or science; erecting or maintaining public buildings, monuments, or works; lessening the burdens of government; lessening neighborhood tensions; eliminating prejudice and discrimination; defending human and civil rights secured by law; and combating community deterioration and juvenile delinquency.

 

 

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