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Avoid long delays when starting your nonprofit.

Are you planning on filing your own nonprofit paperwork?  According to the 2012 report issued by the Advisory Committee on Tax Exempt Entities, 40% of the applications for tax exempt status took 6 months or more to receive an approval.  Approximately 10% received no determination, for reasons including missing required information, incomplete applications and IRS refusals to rule.

What causes nearly half of the 1023 applications to be denied or delayed six months or longer?

According to the report, 75% of the applications are “self-prepared”.  These applications are prepared by people just like you, trying to do it on their own.  They have good intentions, but have never completed Non Profit Articles of Incorporation, or submitted the 16 page IRS Form 1023, (click here to view the 35 pages of instructions), written narratives and explanations; developed budgets or constructed financial projections.   And those are just the first steps to getting your application in the IRS queue.

The reason Attorneys and CPA’s hire us.

Most attorneys and CPA’s have never completed a 1023 application in their entire career. I am not trying to put them down; most are very good at what they do.  But, unless their practice is focused on nonprofits, they tend to outsource nonprofit work to specialists, instead of trying to do the work themselves.  One third of our customers are referrals from attorneys and CPA’s.  (The IRS application process is so time consuming, it is not very profitable for them – unless they are charging you by the hour!)

How to avoid nonprofit “no man’s land”. 

You are passionate about your mission.  Your donors, board members and volunteers are lined-up and ready to go.   Perhaps someone is ready to give you a grant.  There is just one problem – your application has been submitted to the IRS, and you haven’t heard anything for months!   Your organization is neither approved or denied!

5 Keys to a Successful Determination.

There are 5 keys to a successful 1023 application.

1.  The Articles of Incorporation must have the required IRS language.

2.  You must clearly articulate your programs in an acceptable format.

3.  The explanations and narratives must demonstrate how the exempt purpose will be achieved and how the organization conforms to the IRS requirements for 501c3.

4.  The application must include accurate budget and financial information.

5.  Your application packet must include all required schedules, descriptions and pages.

If your application is lacking  information, it will be assigned for “further development”.  It is possible your application will be delayed by 8 months to a year, or more!

There are no short-cuts.

The only way to eliminate costly delays and get your nonprofit IRS approved is to know what is required before submitting your 1023.  Don’t try to do this alone.  Join our teleclasses or give us a call.  We are here to help you!

 

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