hey y'all today i'm going to talk about how to prepare to apply for 501c3 status and we're going to talk about seven things you should have ready to go before you submit your application let's get into it [Music] hey y'all this is tiffany with boss in the budget i help new and small nonprofits get up and running so if you need help with your nonprofit or you need help raising money for your new nonprofit you should be subscribed to this channel because i drop videos every single week and today i want to talk about seven things you just need to have handy when you're ready to apply for 501c3 status now a lot of the videos that i have recorded already pertained to 501c3 status but i wanted to share a video about like what do you need to have handy especially if you are doing it yourself and i did talk about this in another video should you do your own application should you get someone else so i'm linking that above so make sure you check it out but even if you're working with an organization that's doing it for you you still need this information so i'm gonna go through seven things you should have handy when you're ready to go ahead and submit that application now just keep in mind that there are two different applications there's a 1023 easy and then there's the 1023 form now the 1023 form is the long form so the easy is the streamline version so you're going to need to produce more information with that long form then you would the easy so just keep that in mind as i share this and i'll try to point out if there are any differences as i go along between like what you need to have for each form now if you've never heard of the 10 23 form or you're completely confused about what i'm talking about then i linked another video that can give you information on how to apply for 501c3 status so this list is not in any particular order but absolutely these are things you need to have handy so the first thing is your articles of incorporation so typically if you're a 501c3 nonprofit you are a non-profit corporation so you actually have to start at the state level first by creating your business entity so your secretary of state's office usually is the office that you will go to to figure out how to apply to start your business that's essentially what you're doing you're starting your non-profit business but in most states there's a specific type of business you have to start so it's a non-profit corporation non-stock corporation it may have different names but you need that articles of incorporation to get started right and so without that you really should not be applying for 501c3 status because what business are you attaching it to so you start there you need to make sure you have that handy and in your articles of incorporation there is particular language that you have to have if you're applying for 501c3 status so i talk about all these kind of details that you need to know when you're getting started in a non-profit startup master class so if you're interested in learning that process and understanding like why you make certain decisions in the beginning what the irs expects of you as a non-profit really important information that every non-profit founder should know then make sure you check out that masterclass and i'm linking it below number two is your employer identification number okay so before you apply for 501c3 status you need to get that number first because you're going to actually list that number on the application and that's how they identify you and once you're approved that becomes your 501c3 number so you absolutely need to have that number first all you have to do is go to the irs website and apply for it it takes five minutes it is free i talked about this in another video you should not be paying for someone to get your ein for you it is completely free and it's a really simple process you just identify that you're a non-profit organization and then you go through the remaining questions and it's really not a lot so that's the second thing you need to have your employer identification number number three you need to have a board in place now this is the tricky one right and so i can't go into all the details of how do you get a board what if you don't know anybody i don't want a board i only have to list one person on my articles of incorporation so can it just be one person listed as the board like those are all detailed questions i can't get into this video i've shared in other videos that i'm linking below but i will say this when you are applying to get 501c3 status you have to list your board on that application and you should i recommend that you put at least three people and the irs needs to see that there are people who are holding different offices like you know the chairperson secretary treasurer so you need to identify who those people are so i know a lot of you are like this is my solo thing i don't really know anybody i don't trust anybody i don't want to put their names on the application so that's a whole other conversation that we need to have later but essentially you need to list someone or some people at least three people on that application all right now you do have the opportunity when you submit your annual information to update those names so don't feel like just because you submitted an application that you're stuck with those people but just keep in mind that you need to have that ready when you're applying okay number four are your bylaws so your by-laws are like the governing it's the governing document for your organization and it really does speak to how the board is to operate how the board makes decisions how the board is elected all those kind of things that govern how you all act in your position right so remember that as a board member of a nonprofit you're legally and you're ethically responsible for the decisions made by the non-profit and so that those bylaws kind of speak to the rules of how you all are supposed to do things right so you need to make sure you think about your bylaws and they have enough detail so you don't get in sticky situations and you don't know how to proceed for example how do you remove a board member what's that process like how do you add board members how long should board members serve on the board those kind of questions should be answered in your bylaws among other things so this is the thing you don't necessarily have to have your bylaws in order to apply for 501c3 status but it's a good idea at least to have some bylaws in place and this can be very state specific as well so your state will likely have non-profit law or some kind of code specific to how nonprofits are supposed to operate and they may speak to things like board term limits and how you elect people how you remove people so when you're creating your bylaws just make sure it follows the rules of your state so you can make sure you're in compliance number five you need to have some sense of a budget or like some kind of projections for your organization now why am i saying this i'm saying this for a couple reasons um one of the simplest reason is that if you are interested in filling out the 1023 easy so the streamline version of the 1023 form you may be eligible to do that if you're not going to make over 50 000 for the first three years right if your receipts that you bring in for your organization don't total more than 50 000 for the first three years so if you are projecting that you're not going to make that much money then that's one of the eligibility criteria for being able to submit the 1023 ez which is way easier and it's more streamlined it's cheaper so you need to know that you need to understand how much money you're trying to make if you're filling out the 1023 form you're going to have to fill in some projections you're going to have to understand some of your financial data so if you've been operating for a while you're going to have to submit past financial data and you're going to have to project out in future years as well so you just need to have a sense of where where you think your money is coming from and how you're going to make that money another reason i'm saying you need to have a sense of a budget and a financial like projection of how you plan to make money is because it just makes sense it's smart it's strategic so you should never approach a non-profit assuming that the money is just going to come that is such a mistake and you really put yourself in danger of burning out in danger of really going broke because you think that nonprofit status automatically grants you something now what it does grant you is a promise of a lot more work so you're going to have to do the work to become more visible to raise money systematically and regularly for your nonprofit in order to survive so c 3 status does not automatically give you anything so it's just smart to think about how do we plan to make money how much do we plan to raise how much do we plan to spend having all that budget information together before you apply for 501 c 3 status number six you should have some idea of what your mission is so every non-profit should have a vision statement and a mission statement so your vision is kind of what you want the world to be when you complete all the tasks that you have before you right like what's the end state what is the outcome of everything it's your big goal right your mission is basically how you plan to get there and your mission is a crucial statement because it's one of the most used most said most written statement that you're gonna to write or say as a non-profit founder so you need to be really clear on what you do who you serve and why you do it that's essentially the mission statement you probably missed it because i threw it out there real quick but don't worry because i have a video on it where i share my formula but really it's just who you serve what you do and why you do it right and putting that in a succinct statement so people can get it right away you should know what your mission statement is just because that's how people resonate with you that's how people figure out whether or not they want to support you but also you have to you have to list your charitable purpose in the application so you have to let the irs know what you plan to do and what are your activities because you're going to have to list that in the application now they don't actually want you to just by wrote put your mission statement in the application but they want a sense of the types of activities that you're doing so you can be categorized as a certain type of nonprofit but also to make sure that it aligns with their definition of a charitable organization and you meet the qualifications of being a 501c3 organization and the last thing you should have ready when you're applying for 501c3 status is some of your baseline board policies right so there are certain policies that the irs is going to ask you about that you should have handy right and some people don't realize this at all and some people start their non-profits and are doing their non-profits for years before they realize they're supposed to have certain policies or it's good practice right the irs may ask you do you have this policy in place and even if you say no you can give an explanation or kind of explain what you do in these situations right if you don't have a policy then what is your practice right because they want to know how you're managing things like conflict of interest but there are definitely certain policies that just make sense and are good governance from the sense of the irs that you should have things like your conflict of interest policy a whistleblower policy and the document retention policies those are like the baseline they're not the only ones but they're the baseline policies you should have in place now again i share some of this information in my non-profit startup master class but i also go into detail about different policies and committees that the board should be managing and i have that also in a board's master class so if you need kind of breakdown from that perspective from the board you can also check out that master class so all in all like there are certain things you just need to have handy or they're some of the first steps you need to take before you decide to proceed with 501c3 status and some of the things that i mentioned like i said before you can get by with having not done them but it's just smart to do them right it's just smart to have this in place because there's so much you can miss starting non-profit because there's so much that people just don't know so the more prepared you are the better all right so thank you so much for watching if you need more help with your non-profit make sure you visit me at www.bostonthebudget.com and i will see you in the next video [Music] you