Quick Guide: How to Start a Non-Profit Organization in Virginia

How to Start a Non-Profit in Virginia

Source: https://law.richmond.edu/faculty/files/Short_Guide_for_Nonprofits_1st_ed.pdf

FORMATION

1.       Needs Assessment

i.         Research the community demographics to determine size and needs of geographic area that your organization would like to serve

ii.       Identify area competitors and other organizations that provide the same/similar services to ensure there is need for your organization

iii.     Identify stakeholders with whom the organization can collaborate to promote and maintain the organization

2.       Mission Statement

i.         Draft a mission statement that explains the nonprofit’s purpose in a concise manner

ii.       Include a short one-sentence statement that is easily remembered

iii.     Include another longer version with more detail. Keep it broad to allow space to expand and reinvent in the future

3.       Articles of Incorporation

i.         The Articles of Incorporation serve as the defining document for your organization, listing the purpose and the main aspects of the organization and governance. Included in the articles should be:

                                                               i.      Corporate name

                                                             ii.      The director(s) of the organization

                                                           iii.      A registered agent and office

                                                            iv.      An incorporator

                                                             v.      Whether the organization will be member-based

ii.       Include less rather than more, including only what is formally required by statute to avoid the need for frequent amendment

iii.     Upon completion, submit to the State Corporation Commission along with fee

4.       By-Laws

i.         File by-laws to secure tax-exempt status. File at the same time as the Articles of Incorporation

ii.       The by-laws outline the internal governance structure and operations of the board

iii.     Should be general enough to allow for flexibility but specific enough to serve as a guiding document concerning the responsibilities, structure, and operations of the Board of Directors

iv.     Outline the structure of the Board of Directors:

                                                               i.      Number

                                                             ii.      Terms

                                                           iii.      Leadership Positions

                                                            iv.      Committees

v.       Create provisions for keeping copies of the Article of Incorporation, By-Laws, and financial statements in specified location

5.       Determine Board Structure

i.         The duty of the Board of Directors is to carry out the mission of the corporation:

                                                               i.      Make decisions about the policies and operations of the corporation

                                                             ii.      Has the responsibility to tend to the legal, financial, operational, and human resources functions

ii.       Fully brief board members about the organization’s history, goals, and operations. They must be able to commit to monthly/quarterly meetings.

iii.     Documents board members should be provided with:

                                                               i.      Mission Statement

                                                             ii.      Articles of Incorporation

                                                           iii.      By-Laws

                                                            iv.      Most recent annual report

                                                             v.      Financial statements (budget and tax filings of form 990)

                                                            vi.      Policies

                                                          vii.      Expectations for meeting attendance and committee work

                                                        viii.      List of current board members with complete contact information and committee designations

iv.     Board members are bound by two primary duties:

                                                               i.      Duty of Care:

1.       To act in good faith

2.       Act with the care an ordinarily prudent person in a like position would exercise under similar circumstances

3.       To act in a manner the director reasonably believes to be in the best interests of the corporation

                                                             ii.      Duty of Loyalty:

1.       Requires board members to pursue the organization’s best interest, avoiding conflict of interest. Prohibits a director from engaging in self-dealing unless:

a.       There is a full disclosure to the Board

b.       The conflicted board member does not participate in any decision relating to their personal interests

c.       The transaction is clearly in the corporation’s best interest

MAINTENANCE

6.       Corporate Status

i.         Organization must file an Annual Report with the State Corporation Commission to maintain corporate status each year

7.       Tax Requirements

i.         If organization exceeds $5,000 in gross receipts an application for tax exempt status must be filed within 15 months from the organization’s creation (Form 1023)

ii.       Section 501 (c)(3) exempts the organization from federal taxes and allows donors to deduct contributions from their taxes

iii.     Must apply for an Employer Identification Number (EIN) even if your organization does not have employees (Form SS-4)

iv.     File Annual Report (Form 990) once tax exempt status is obtained

                                                               i.      Must state specifically:

1.       Items of gross income

2.       Receipts

3.       Disbursements

4.       Other information required by IRS

8.       Fundraising

i.         The organization must properly register with state and local government before fundraising or soliciting donations

ii.       Apply for grants from government agencies, foundations, and corporations that are applicable to the mission of your organization

iii.     All fundraising professionals must be registered with state/proper local authorities before solicitations begin

9.       Employees/Volunteers

i.         Have a handbook in place to outline guidelines, policies, and procedures of your organization