Beginning Basics Nonprofit Organizations

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Beginning Basics - Nonprofit Organizations

• Lindy Turner, Coordinator
• Clinch-Powell RCD/EC

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For Information

• First of of ten sessions on Building an Effective
  Nonprofit Organization
• Download presentation from website
• Go to www.clinchpowell.net
• Go to Whats New
• Click Beginning Basics - Nonprofit Organizations

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Kinds of Nonprofit Organizations?

• Informal
• Incorporated
• Tax exempt

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Informal Nonprofit

• Group with common interests for some purpose such
  as a self-help group

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Incorporated Nonprofit

• Legal entity incorporated with the Secretary of
  State
• May own property and have own bank account
• Ensure the NPO can continue on its own
• Some personal legal protection
• Governed by a Board of Directors

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Tax Exempt Nonprofit

• Exempt from federal taxes with IRS
• Donations also tax-deductible

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Kinds of 501(c) Tax Exempt Nonprofits

• 501c3 Charities
• Charitable, educational, religious or scientific
  purposes
• No proceeds of organization go to benefit any one
  person
• Donations are tax-deductible

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Kinds of 501(c) Tax Exempt Nonprofits

• 501c4 Social Welfare Organizations
• Advocacy groups
• Looser restrictions to lobby and participate in
  advocacy activities and political campaigns
• Donations are NOT tax-deductible

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Kinds of 501(c) Tax Exempt Nonprofits

• 501c6 Professional and Trade Associations
• Promote the business section like Chambers
• Other industrial professional associations
• Contributions not tax-deductible but membership
  dues are deductible as professional development
  fees

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Kinds of 501(c) Tax Exempt Nonprofits

• Other types such as fraternal societies,
  associations, veterans organizations,
  cooperatives, child care organizations and more
• 26 types of 501c organizations under the IRS
  code.
• www.irs.gov/bus_info/eo/index.html

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501c3 Nonprofit Organization

• Most numerous and useful for community fundraising

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What is a Nonprofit Organization?

• The role is to provide essential services within
  our communities and fill a gap left by government
  and private business.
• Provide direct services, give a voice to those
  unspoken for and unite communities along common
  interests.

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Governance

• Board of Directors oversees the operations
• Ensures effectiveness
• Manages resources
• Assesses its own performance
• Board is directly accountable for actions of the
  organization

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Administration

• Required reporting including tax returns
• Recognition of donations
• Management of grant contracts
• Fundraising
• Volunteer management
• Staff supervision

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NPO is Mission-Focused

• Formed to fulfill a gap in the community and
  driven by a focused mission
• All programs should forward the mission by
  working toward goals
• Funding from grants, donations and fees for
  services or products
• Structure includes Board of Directors, volunteers
  and often staff

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What is a Mission Statement

• It is the core reason for existence
• Worthy effort that elicits passionate response
• An ends statement of desired future condition

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Examples

• To end hunger in the midst of plenty
• To promote mental health and prevent mental
  illness
• To strengthen communities while protecting
  resources
• To ensure quality education for all citizens

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Considerations

• Is there a need for the new nonprofit
  organization?
• Will your services be duplicative?
• Are you prepared for the administrative and
  governing responsibilities?
• What is the purpose/core mission?

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Building a Better Nonprofit Series

• 1. Beginning Basics
• 2. How to Start a NPO
• 3. Developing a Strong Board
• 4. Board and Committee Members that Work
• 5. Gaining Tax Exempt Status

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Building a Better Nonprofit Series

• 6. Reporting Requirements
• 7. Fundraising Readiness
• 8. Grants I - Seeking Funds
• 9. Grants II - Proposal Writing
• 10. Grants III - Managing Grant Contracts

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Chris Osborn, Tele-Democracy Project
Manager chris_at_clinchpowell.org Lindy Turner,
Coordinator lindy_at_clinchpowell.org Clinch-Powell
Resource Conservation Development Clinch-Powell
Enterprise Community 865/828-5927www.clinchpowel
l.net