Non-Profits

How BCA can help non profits:
If your organization is involved primarily in educational, scientific, religious, or charitable endeavors, you’ll probably want to form a nonprofit corporation for the liability protections and tax advantages this status provides.

How to become a 501c3:
Incorporating your nonprofit will set legal protections in place that can keep you and your directors’ personal assets separate from the company’s liabilities. There are a number of other benefits to forming a nonprofit, as well.

It is common for organizations to go through four distinct stages during development. While it may seem easy and efficient to complete the entire process at the onset of the new organization, many new nonprofits find it more manageable to grow slowly into their nonprofit status. Following these stages can allow your new organization to grow and succeed at its own pace.

Four Stages of Development
As an organization goes through these stages of development, it may choose to stop at any point and not proceed further.

1. Many nonprofits begin as an unincorporated association. Organizations can continue with programs and activities informally with financial activity being conducted by one or more individuals within the group.

2. As donations and activities grow, the organization may find a fiscal sponsor to aid with reporting requirements, administrative tasks, and to lend their tax-exempt status. This allows the organization to continue to focus its attention on programs.

3. An organization may incorporate at the state level and maintain fiscal agency, or begin to establish itself on its own.

4. Finally, the organization may apply for tax-exempt status from the Internal Revenue Service. If accepted, the organization is now able to accept tax-deductible donations and is responsible for following regulations set by the IRS and the state, and for reporting annually to the IRS, Minnesota’s Secretary of State’s Office, and Minnesota’s Attorney General.

While many people are tempted to incorporate first, there are a number of options for undertaking a new activity without starting a new organization.

Because most people thinking about starting a nonprofit have more passion for the purpose than the paperwork, it is wise to understand the ongoing reporting and record keeping requirements for nonprofits. These obligations represent substantial time and financial requirements and can be an obstacle to success and an unwanted distraction for people wanting to spend their time directly involved in serving people, creating art, or promoting a cause.

Since many nonprofits are formed with high hopes and a few dedicated people and never get off the ground, investing time on the front end to determine the level of interest and availability of funds can help you better understand whether a new organization is needed.

It takes time and effort to start a new nonprofit in Minnesota. Following all legal guidelines through the process can be especially difficult if unprepared and not fully informed. Fifteen key steps should be followed in order to successfully start a nonprofit. The steps below are meant to be used as a basic guideline and may not apply to all situations. Please note that some seek legal counsel during this process, although it is not required.

Steps to becoming a nonprofit is divided in the following stages:

  • Visionary Stage
  • Planning Stage
  • Federal Filing
  • Minnesota Filing
  • Annual Filing

A comprehensive list of forms, fees and publications is also available.