![]() ![]() In this alternative, the founders establish a nonprofit entity. Expedited option 2: Set up a fiscal sponsorship with an existing tax-exempt entity In addition to the obvious cost savings on overhead expenses, the name recognition of the existing tax-exempt entity will frequently open doors that would not be available to a brand-new startup entity. In such a partnership the founders, volunteers and donors of the new project do everything they would otherwise do with a new entity, but under the umbrella of the existing tax-exempt entity. Often the fastest way to get up and running is to join forces with an existing tax-exempt entity that is already working on a similar or complementary mission. Expedited option 1: Partner with an existing tax-exempt entity In the face of natural disasters, public health or humanitarian crises, and other urgent needs, many would-be founders of tax-exempt entities ask how they can expedite this process. Accordingly, many potential donors will insist on the receipt by the entity of a favorable determination letter from the IRS before contributing to the entity. Such donations will not be tax-deductible if the entity’s application is rejected by the IRS. ![]() The organization must then pay a $600 filing fee and can expect to be contacted by the IRS within 180 days of submission with confirmation of receipt.ĭonations received prior to the entity’s application receiving approval from the IRS will generally be retroactively treated as tax-deductible contributions if the entity’s application is approved. A typical application package is 50 – 100 pages long, including both a lengthy application form and dozens of pages of attachments. After forming a legal entity (usually, a nonprofit corporation under state law), the organization will fill out and submit an application for tax-exempt status on IRS Form 1023. Under normal circumstances, forming a new entity and obtaining an IRS tax-exempt determination letter takes anywhere from a few weeks to 10 months or longer, depending upon a variety of circumstances including the IRS’s current volume of requests. nonprofit founders often have questions about how to start a nonprofit, and how to accelerate the process. Many of those groups consider starting a nonprofit - that is, forming a new entity that qualifies as a tax-exempt charitable organization under Section 501(c)(3) of the United States Internal Revenue Code. Groups ranging from small neighborhood projects to large national initiatives sometimes want to mobilize quickly to meet a community need or another charitable purpose. Our purpose is to raise funds for our member groups, primarily through employee giving campaigns, to foster a strong and viable network of social change organizations in Tennessee, and to provide members with training and technical assistance.Many thanks to Steph Gentile and Buff Miller for their review and contributions to this article. ![]() Model C, Preapproved Grant RelationshipĬommunity Shares’ mission is to support Tennessee social change organizations in order to promote a more just and caring community.Model B, Independent Contractor Project.People or communities of color/minoritiesīased on Fiscal Sponsorship: 6 Ways to Do It Right: Our model(s) of fiscal sponsorship are:. ![]() Types of projects or services we sponsor: Executive organization became a 501(c)(3): 2004Ģ% for regular transactions, 7% for grant administration and reporting ![]()
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