Information For Start-Ups:
If you are seeking to start a new nonprofit, we recommend that you do the following:
- Review the information on Nonprofit Organizations on the Texas Secretary of State’s website: http://www.sos.state.tx.us/corp/nonprofit_org.shtml. Do not file Form 202 if you want to form a tax-exempt nonprofit.
- Get to know Texas C-BAR’s online Legal Resource Library.
- Our Legal Resource Library was created so that anyone running or starting a nonprofit can educate and help themselves on a variety of topics affecting nonprofits including the start-up and formation phase. We have included guides and manuals, sample forms and documents, as well as helpful links and recommended outside resources.
- Read the following from Texas C-BAR’s Legal Resource Library:
- Forming a Nonprofit Tax-Exempt Corporation in Texas, 2015 Edition: Provides information on what to expect when applying for 501(c ) 3 tax-exempt status and step-by-step guidance on how to prepare for filing IRS Form 1023 (the Application for Recognition of Exemption under Section 501(c) (3) of the Internal Revenue Code).
- Business/ Corporate Law Section: Provides guidance on pre-incorporation, incorporation, nonprofit management, and fundraising matters.
- Nonprofit Legal Toolkit, 2011 Edition: Provides guidance on governance matters including how to organize, run, and manage a nonprofit’s operations.
- Read the following from the Internal Revenue Service’s website:
Instructions to Form 1023, link is: http://www.irs.gov/pub/irs-pdf/i1023.pdf
- Publication 4220, Applying for 501(c ) 3 Tax-Exempt Status: This publication provides basic information about the application process and requirements for nonprofits seeking charitable status.
- Frequently Asked Questions About Form 1023: This FAQ gives guidance as to the kind of information that must be included with the 1023 application packet (the Application for Recognition of Exemption under Section 501(c) (3) of the Internal Revenue Code).
- Instructions to Form 1023: These instructions provide assistance on how to fill out and interpret Form 1023. Page 8 of the instructions provide guidance on how to write a Narrative Description of the nonprofit’s past, present, and planned activities. A nonprofit must be able to provide this in order to get a referral to one of our volunteer attorneys and in order to apply for 501(c )3 status.
5. Do market research:
- Will your organization serve an unmet need?
- Are there other competing organizations?
- Will it duplicate part or all of an existing program within another nonprofit?
6. Develop a mission statement.
7. Develop a detailed plan for your programs and activities.
8. Research and find existing organizations that you can collaborate with.
9. Recruit qualified people to serve on your board of directors.
- Texas law requires a minimum of three directors/board members at all times.
- Texas C-BAR recommends that you maintain seven directors/board members.
10. Determine whether you will have members and if so, develop a plan for your membership including benefits and fees.
11. Compile a list of sources of financial support (actual, anticipated or potential).
12. Develop a fundraising plan and programs.
13. Meet with potential donors.
- While many donors are not willing to provide financial support until tax exempt status is achieved, they are able to indicate whether a nonprofit’s proposed programs are those that are likely to be funded. We recommend that you meet with potential funders early, not to ask for donations necessarily, but to gauge their level of interest in the mission and purpose of the organization, and whether it is the type of organization that they would be willing to support. This also provides a networking opportunity with potential donors. If donors lack interest in the organization’s mission, obtaining 501(c )3 status will not cure this lack of interest. If the nonprofit is going to survive financially, it should cultivate potential funding sources early on.
14. Prepare a budget for the current year and for the following two years.
- This is a must. Even if you are a brand new organization and are just getting started, you will have to provide an actual and/or projected budget for the first three years.
16. If you are eligible and ready, fill out our Application for Pro Bono Services. If your case is accepted, you will need to provide the following upon request:
- A copy of your Certificate of Formation (if you already filed with the Secretary of State)
- A copy of your Bylaws (if you have adopted bylaws)
- A copy of the minutes for your first meeting (if applicable)
- A copy of your EIN/ Employer Identification Number
- A list of people who have agreed to serve on your board of directors and their qualifications
- A narrative description of your past, present, and planned activities
- Information on your membership plan, benefits, and dues (if you have or plan to have members)
- A list of sources of financial support (historic, current, or projected)
- A description of your fund-raising plan and programs (historic, current, or projected)
- A three-year budget (historic, current or projected)