How Can We Help?
The Foundery helps startup nonprofits with the essential task and processes to organized a legal structure and gain tax-exempt status with the IRS. During the startup stage. The Foundery provides temporary tax exemption and financial management under a fiscal sponsorship agreement.
Frequently Asked Questions
A Nonprofit organization is a ‘business’ that uses all its proceeds to benefit members of the public instead of private individuals. Nonprofit organizations have no shareholders and pay no dividends, all earnings are reinvested in the organization in furtherance of its charitable purpose.
The most basic level, starting nonprofit is the same as starting any business. One makes a business plan, chooses an organizational structure, and files the needed documents with the Secretary of State. Most organizations also want tax-exempt status under IRS code 501(c)(3) so that all their funds can be used to further their mission, and to encourage donations. This requires filing IRS form 1023 and providing substantial written documentation about how the organization will be run, by whom, and how the process will be used.
Tax-exempt status means that an organization is exempt from paying federal corporate income tax on income generated from activities that are substantially related to the purposes for which the entity was organized. Nonprofits are able to extend this tax-exempt status to the people who donate money to the organization for the amounts they donate.
Via fiscal sponsorship, new nonprofits operate under the sponsor’s 501(c)(3) status as a new existing charity project while they work on filing their IRS 1023. By engaging in a fiscal sponsorship agreement, the new organization in a fiscal sponsorship agreement, the new organization secures the ability to solicit tax-deductible donations, apply for and distribute grants, host fundraisers/events, and operate mission-driven programs. The fiscal sponsor manages the financial reporting and ensures compliance with IRS regulations.