Preparing IRS Form 1023 Application for Recognition of

Preparing IRS Form 1023 Application for Recognition of Exemption – 501(c)(3) Presented By: Leonard Steinberg, EA, NTPI Fellow Steinberg Enterprises, LLC 1

Topics for Discussion • Nonprofit Application Requirements • Programs • Funding Sources • Accounting • Review of Parts I through XI of the Application • Checklist 2

Nonprofit Application Requirements • Proof of Incorporation or other Status • Tax-ID Number – Copy of IRS Letter • Name and Address of the Organization • Article of Incorporation or Formation • Bylaws of Operations • Conflict of Interest Statement • 2 Year Budget • Profit and Loss for the Current/Proposed Year 3

Nonprofit Application Requirements • Balance Sheet • Compensation to Management • Names and Social Security Numbers of All Board Members • Mission Statement (Statement of Purpose) • Media Samples • Interviewing Executive Director and/or Board Members 4

Programs • What Programs and Services does the Organization Provide? • Types of Programs • Management and General • Fundraising 5

Types of Programs and Services • Program Types • • • Charitable Religious Educational Scientific Free Fee for Service • Day Care, After School, Camps, Medicaid 6

Types of Programs and Services • Unrelated Business Income • No relationship or purpose with any of the programs, e. g. Operating a Parking Lot • Prepare the 990 -T, Taxable Income • Management and General • Day-today Operations • Fundraising • Events • Beware of Gambling Activities 7

Types of Programs and Services • Nothing Related to Taking a Political Position or advocating for a particular candidate • Can be General Politics • Voting Rights • Candidate Forums • Issue Forums 8

Funding Sources • Unrestricted Funds • General Donations – used for any purpose • Fundraising Events • Temporarily Restricted Funds • Restricted by the Donor • Time Restricted • Program Restricted • Time and Program Restricted • Permanently Restricted Funds • Endowments 9

Funding Sources • Fees for Services • Fundraising Events • Golf Outing, Annual Dinner • General Solicitations • Federal Grants – May be subject to A-133 Audit • State and Local Government Grants • Partnerships with Other Organizations 10

Accounting • Setting up the Books • Cash or Accrual • Balance Sheet • Income Statement • Record Income and Expenses by Program and Funding Source • Grants Management • Donor Restrictions 11

1023 - Application • Part I, Page 1 - Identification of Applicant • Make sure you have your signed POA 2848 • Part II, Page 2 – Organizational Structure • Part III, Page 2 – Required Provisions • Part IV, Page 2 – Narrative Description • Very Important, Succinct • Part V, Pages 2 through 5 – Compensation Issues • Use the Organization’s Mailing Address • Beware of Personal Inurement 12

1023 - Application • • Part VI, Page 5 – Member Benefits Part VII, Page 5 – Organization’s History Part VIII, Pages 5 through 8 – Specific Activities Part IX, Pages 9 -10 Financial Data • Can attach Spreadsheets • Part X, Pages 10 through 11 – Public Charity Status • Part XI, Page 11 – User Fee and Signature 13

1023 - Application • Schedules A through H – Organization Specific • • • Schedule A – Churches Schedule B – Schools, Colleges, and Universities Schedule C – Hospitals Schedule D – Supporting Organizations Schedule E – Organization Not Filing Within 27 Months of Formation • Schedule F – Homes for Elderly, Handicapped, and Low-Income Housing • Schedule G – Successors to Other Organizations • Schedule H - Scholarships, Fellowships, Educational Grants 14

1023 - Checklist • Retain a copy for Your Records and for the Client • Add all available Media, Brochures, Flyers, etc. as part of the packet. Adds to credibility of the organization • Review the application with the Executive Director and the Board of Directors • Request for Expedited Review – Additional Cost • Engagement Letter, Signed 2848, and Retainer Fee • May be Subject to Annual Audit • Annual Filing of IRS Form 990, 990 -EZ, 990 -PF, 990 -N • State Filing Requirements 15

1023 - Checklist • • • www. irs. gov – Charities and Nonprofits IRS Exempt Organization Helpline – 1 -877 -829 -5500 www. Guidestar. org – Posting of annual 990 reports Websites Loss of Exemption for Not Filing OPM 16