Document Preparation Agency

 

Why can’t we simply change the tax status of our organization instead of setting up a separate Foundation?

Many organizations have a group tax status that cannot be changed; clubs such as Lions and Kiwanis fall into this 501(c)(4) category. 501(c)(4) organizations are not tax exempt.

How long will it take to establish our Foundation?

It depends on how fast the organization can obtain signatures and answer questions on the forms I will send you. IRS may have administrative personnel review your application or may send it out for a full agent investigation that takes longer. They typically quote 120 days.

What will this cost?

For filing Articles of Incorporation, each State’s fee is different and ranges from $10.00 to $80.00. IRS charges either $300 or $750 depending on whether the organization’s annual budget is under or over $10,000. My fee is currently $600 for complete services.

How do we pay this?

I will ask for a check for the State’s filing fee at the time Articles of Incorporation are filed. The IRS fee is paid by the organization at the time of the IRS filing. My fee is not payable until all documents are completed and IRS has approved the application. Alternate payments can be arranged.

Who does the work?

You will identify one person as my contact. That person needs to be responsive, able to obtain signatures and answer questions on the forms I will send. I will produce all documents, forms, letters and interface with federal and state agencies in all phases of establishing your 501(c)(3) tax status.

Do we need legal counsel to establish our 501(c)(3) Foundation?

I am an independent para-legal licensed in Charlotte County, State of Florida, license number 144808 and have established nearly 100 Foundations for various organizations nationwide. I have never had an application denied by IRS. I do not give legal advice, but the material I produce is time tested and as such, is legally accepted. In fact, I have established Foundations for attorneys themselves.

Are there additional bookkeeping requirements for the Foundation?

No additional requirements beyond good fiscal responsibility regarding bookkeeping. Good record keeping is essential since IRS will be asking for information about your Foundation after you have been formed 4 to 5 years. They will send you the form to be completed; it is not a difficult task. The report (form 8734) asks questions about sources of your income during first the 4 to 5 years.

What is the difference between a Private Foundation and a Public Foundation?

Private Foundations are those that do not have broad financial support from the general public; they derive their income from one individual or family. A Public Foundation is one that has broad support from the general public or are organizations that support one or more other organizations that are themselves classified as public charities. Public charity status is a more favorable tax status than private foundation status.

What annual tax returns are required of 501(c)(3) organizations?

IRS requires that form 990 and related Schedules be filed by 501(c)(3) organizations. Form 990-EZ can be filed by those whose gross receipts during the year were less than $100,000 and total assets at the end of the year were less than $250,000. After several years of filing tax returns, IRS may opt to notify you that filing is no longer required. State tax returns vary state to state.

How do we communicate with you?

All documents are sent to you by first class mail and returned to me in the same manner. Messages can be sent via e-mail and I am available by phone at any time.

Do you sign a contract with us?

Yes. We will sign an "Agreement for Service" that is basically a confidentially agreement that provides that whatever I might learn about your organization or that you learn about me is privileged and must remain so. It also provides a list of what I will deliver in terms of work product.

How do we publicize our Foundation? Do we need a public relations campaign?

You will absolutely need a good public relations campaign to let the world know you have your own Foundation. Use newspaper articles, local Chamber of Commerce and similar organizations. Be sure to produce a brochure and/or letter placed in the hands of attorneys who specialize in elder care, wills, trusts and estate planning to pass on to their clients. You can also place your Foundation with available web sites that will register your organization and provide links to your web site. Be sure that employees and retirees of large corporations know you have a Foundation. Most large corporations such as IBM, GE, Prudential, Wal-Mart, major oil companies and automobile companies give their employees and retirees access to community service funds that can be directed to your organization.

Why would we want to do this; that is, establish our own Foundation?

The question should be "Why would you not do this?" With your organization having its own Foundation, you become eligible for grants, bequests and funding from individual and corporate donors who only give to 501(c)(3) tax exempt organizations. Each year, millions of dollars in available grants go undistributed because no one applied or were not eligible because they did not have tax exempt status ! There are many success stories that demonstrate how organizations with the proper tax status have been able to bring increased humanitarian services and community support because they have the dollars to spend.