Starting a nonprofit isn’t something you just do one day—it’s a complex administrative process that allows you to begin operating and fulfilling your mission. Every nonprofit is different, and any changes will have to be made carefully and with counsel to make sure the organization is compliant with the law.
You’ll need to know how your nonprofit is set up, since not all organizations have the same tax status. Nonprofits that haven’t registered as a 501(c) will receive tax-exemptions at the state level, but not the federal level.
Does Your Business Model Need A Refresh?
“Business model” might sound out of place at a nonprofit, but it really isn’t—it’s the way you’re set up and the mission you set out to do.
Are you still working on your original mission, or have circumstances required that to change? Have you taken on different projects that aren’t necessarily in line with your original goal? It may be time to re-examine what your nonprofit was set up for, and the direction it’s going to now. “Mission drift” may be over-taxing your nonprofit, or require you to make changes both to the organization and business structure.
Check Your Bylaws
Before making any changes, make sure they’re in agreement with your nonprofit’s bylaws. They dictate everyday operations, including changes to the organization’s structure. If the bylaws require a vote by the membership, you’ll announce the changes and the acceptable methods of voting. If you don’t, any changes can be fought and overturned. Some changes may only require a vote by the board of directors.
Contact The Illinois Secretary Of State
Your incorporation status must be renewed yearly, so address and other changes may need to be made. Visit the Secretary of State’s website to find out more, and for contact information to make sure your changes can be made and are compliant. The Secretary of State also has its nonprofit administrative code available online.
Determination Letter
When filing tax returns, a nonprofit must report any changes to at that time. Required documentation includes:
· Signed or state certified articles of incorporation or association
· Constitution, trust instrument or other organization document
· Bylaws or other governing document showing changes. If signed or state certified copies of a governing document are not available, you’ll need to provide certification from an authorized officer showing that the governing document provided is an accurate, complete copy of the original document.
Your organization may be required to submit a determination letter to document the intended changes to your nonprofit. You may be upgrading your tax status, or changing the public charity status, and the determination letter explains it.
If the organization isn’t sure about how the changes will affect its nonprofit status, it can request a private letter ruling.
The IRS has nonprofit information available on its website.
Get The Best Legal Representation For Your Nonprofit
With 20 years’ experience, James C. Provenza has helped Glenview area nonprofits and individuals reach their goals. He provides legal and business counseling services including articles of incorporation, registration with the State of Illinois, as well as other related services. Call him today at (847) 729-3939 to schedule an appointment and talk with him about how to bring your nonprofit to life.
