[freegeek-startup] Filling out paperwork for a 501(c)(3) - Please need help, advise, or suggestions

[Scott Merrill]

Shawn Campbell wrote:
> When you are in "provisional" status with your 501(c)(3) how are the
> donors allowed to file the donation (is there anything different for
> filing compared to being a full 501(c)(3)?

It is my understanding that donors need not do anything different while
you're in your provisional phase.  I _assume_ that if your application
for exemption were rejected for any reason, you'd need to notify your
donors so they could update their record keeping as necessary.  A tax
attorney can probably help here.

I also recommend your local library for all the "start your own
non-profit" books you can find.  In our case, we found many of the books
to be extremely helpful with things we'd never have thought of.

For example, soliciting donations often requires you to register with
the attorney general in some states.  It's _your_ responsibility to
determine which states require this and register as appropriate.  Since
internet donations can cross state lines, soliciting donations online
may require you to register in _all_ the states that require it.  That's
quite a burden on a startup organization.  As such, FreeGeek Columbus
has opted not to pursue (or accept) online donations at this time.

> How do you prove to your donors that you are a legal non-profit until
> the 4-5 years is up? In today's age, many people are leary and want
> solid proof they are giving the objects and money to a legimate cause.

You can show them a copy of your IRS 1023 form.

I don't think the IRS sends any confirmation of receipt of your
application; though if they do you can certainly use that.

> So much to learn, and so little time. I would like to push our starting
> goal up to 11/1/06. Does this sound feasible to do within two months. I
> please need some feedback on this and what should all be prepared
> initially to make this happen.

Have you read the IRS 1023 form and it's associated instructions?  It's
pretty thorough, though there are a few places where ambiguities can
make your head spin.

The instructions have some pretty clear advice for things that would
otherwise cause problems.  For example, the number one reason for
applications to be delayed or rejected is because the submitting
organization lacks a dissolution clause in their bylaws.

In our case, we're finding that a proposed budget is one of the harder
aspects of the form.  We simply don't know what to project for our
income and expenses, so we're not sure if our estimates are way too high
or way too low.  And, indeed, we don't know how much this will matter in
the IRS's determination.

You're welcome to review the FreeGeek Columbus application, which is
pretty close to done.  I'm scheduling to meet with a tax attorney, who
will review our application pro bono before we officially file it.  If
you want to see our paperwork, please reply to me offlist.

Cheers,
Scott

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