Notes on Forming a 501(c)(3) for Nightingale - AMNS/Nightingale GitHub Wiki

  • Want to apply for tax-exempt status under Sec. 501(c)(3) of Internal Revenue Code

  • Information sources:

    • IRS publications f1023 (form), i1023 (instructions), p4220 (booklet on applying)
    • ...maybe also pub. 557, Tax-Exempt Status for Your Organization?
    • Info on 501(c)(3)'s specifically for open source projects
      • Q: can we get a sample application for an open-source organization? It might be VERY helpful!
      • Google "501(c)(3) open source" => lots of promising webpages
      • e.g., http://www.linkedin.com/answers/startups-small-businesses/incorporation/STR_INC/695741-8919
      • http://blog.cashmusic.org/2011/06/23/the-tough-road-to-501c3-status-for-open-source/
        • Uh-oh!! "CASH Music finished its state-level nonprofit filings in January of 2009, and we promptly proceeded to file for federal 501(c)(3) status a few weeks later in February..." It really sounds like they know what they're doing (more than we do), but as of mid-April, they're still waiting for the IRS to decide :-( . And several comments on this page refer to similar experiences :-( . Apparently the IRS has been reviewing its policies on 501(c)(3) status for entities doing open-source software for a very long time, and they haven't decided on their (new?) policy :-( .
        • Q: Perhaps we should consider a path other than going for 501(c)(3)? Ideas:
          1. Since CASH Music does open-source music software, join them? Not that that would necessarily save much time/effort getting 501(c)(3) status.
          2. Forget 501(c)(3) completely.

  • David's links from April:

  • Organization

    • Form: must be corporation, trust, or unincorporated association
    • Q: Which one? unincorporated is almost certainly the simplest
    • Organizing docs (articles of incorporation, trust documents, articles of association) must limit purposes to those described in Sec. 501(c)(3) of IRC; not expressly permit unrelated activities; and permanently dedicate assets to exempt purposes.
    • Exempt purpose: one or more, stated in organizing docs
    • Also classified as "private foundation" or "public charity"
      • We'd probably be a private foundation, but public charity might make sense

  • Other Non-Profit/Tax-Exempt Organizations Non-profit organizations include corporations, trusts, limited liability companies, and unincorporated associations that qualify for tax-exempt status under Internal Revenue Code (IRC) 501(a) as described in Publication 557 (Tax-Exempt Status for Your Organization).

  • Responsibilities: recordkeeping, annual filing, disclosure

  • Forms to file

    • Application for Employer Identification Number: file online ASAP
    • 1023: Application for Recognition of Exemption under Section 501(c)(3) of IRC
      • according to http://www.irs.gov/charities/article/0,,id=232771,00.html , filing requires user fee of $400 (if average annual receipts averaged or are expected to < $10K/year over 4 years) or $850
      • according to the form itself, fee is $300 or $750, but it's from 2006
      • Q: Can we assume the lower fee? I'd guess so, but better to check!
      • Q: Where is the money going to come from? DAB is willing to contribute >= $100
    • 2848, 8821 (optional; probably not necessary or helpful)
    • 5768 (optional; almost certainly not necessary or helpful)

  • Specialized assistance available: www.irs.gov/eo

  • Caveat

    • Open Source Matters (non-profit organization for Joomla! open-source project) is not a 501(c)(3); FAQ (opensourcematters.org/frequently-asked-questions.html) sez it's because "501(c)3 organizations may not derive most of their income from "unrelated business" sources such as advertising, & most of their income is.
    • Q: Does anything like this apply to us? Probably not.

  • Miscellaneous

    • Q: Is it worth talking to a lawyer before filing?

Questions for obtaining an Employer Identification Number (EIN) (from form SS-4)

1 Legal name of entity (or individual) for whom the EIN is being requested: Q: Avian (or Advanced?) Music Notation Foundation (AMNF)? Or... ?

4-6 Address: 1248 E. Wylie St.; Bloomington IN 47401-5086

7 Name of responsible party: Donald Byrd

9 Type of entity: Other nonprofit organization (specify) private foundation

10 Reason for applying: Started new business (specify type) 501(c)(3) nonprofit private foundation

11 Date started: July 2012

13 Highest number of employees expected in the next 12 months: 0

16 Principal activity: Other (specify) software development

17 Indicate principal line of merchandise sold, specific construction work done, products produced, or services provided. software

Checklist: What to Submit

Based on the Checklist (Form 1023, p. 29), and assuming we're skipping the optional forms (2848, 8821, and 5768) and not asking for expedited handling, we must submit:

  • Application (Form 1023 Parts I thru II, and Schedules A through H, as required -- probably just one)

    • Must provide specific details about past, present, and planned activities
    • Describe your purposes and proposed activities in specific easily understood terms
    • Financial information should correspond with proposed activities

  • Complete articles of organization

    • Be esp. careful to include Purpose Clause, and Dissolution Clause "or by operation of state law"
    • We need officers and Board of Directors

  • Bylaws or other rules of operation and amendments

  • Documentation of nondiscriminatory policy for schools, as required by Schedule B (Q: do we need it?)

  • All other attachments, including explanations, financial data, and printed materials or publications (Q: do we need any?)

  • User fee payment