1. Are the services that I offer through my nonprofit required to be free?
Charitable organizations are not required to offer services or products free or at cost.
2. Can a nonprofit pay its staff?
A nonprofit can pay reasonable salaries to officers, employees, or consultants.
3. Are All Nonprofits Tax-Exempt?
No, they are not. Tax-exempt means that a nonprofit does not pay taxes on the income it receives to the federal government and (2) that its donors can take a charitable contribution deduction on their personal income taxes.
4. When do I need to apply for 501(c)(3) tax exempt status?
In order to receive a tax-exemption dating from the date of your incorporation, you need to apply within 27 months of the date of your incorporation.
5. Can we ask for donations before we get our tax-exempt status?
Yes. But the “effective date” of your nonprofit organization’s tax-exempt status will be the day that status was originally created.
6. What Is Unrelated Business Activity?
Conducting activities that are not in line with the purpose for which you formed the nonprofit organization. For example, if your nonprofit organization is a church and you lease space to a computer learning center. This is not related to church activities.
7. Can a Nonprofit Charge Fees for Its Services?
Many nonprofits count on fees from services they offer to clients for part of their annual incomes. There are several things to be aware of…
8. Can a Nonprofit Compensate Its Board Members?
Yes. Only about 2 percent of nonprofits compensate board members. However, they are usually not compensated, but volunteer.
9. Can an Organization Be Part Profit and Part Nonprofit?
No. The nonprofit organization must only provide services that comply with IRS rules and regulations as charitable, educational or religious.
10. Does Our Nonprofit Board Need Liability Insurance?
Most experts think that nonprofits need “Directors and Officers (D & O) liability insurance.
11. Can one make part of a for-profit business into a nonprofit?
You must establish 2 separate entities – For profit – to carry out for profit oriented purposes; and Nonprofit – to carry out charitable, educational or religious oriented purposes.
Karmen A. Booker is an Attorney, Business Consultant and Owner of Compu-Perfect Professional Services, a business consulting firm specializing in Business Entity Formation (Corporations, Limited Liability Companies, and Nonprofit Corporations), Completing 501(c)(3) Federal Tax Exemption Applications, Grant Research and Writing services, and more. Call her today at (301) 408-1082.
Attorney Karmen A. Booker has developed a Report entitled “Fundraising for Nonprofits”, which provides information regarding:
- Developing a Fundraising Plan
- Writing a Fundraising Letter
- Over 27 Specific Fundraising Tips such as selling advertisement space in your newsletter and on your website, and more.