Pennsylvanians who want to champion a cause, support a specific community or address a social concern often choose to form a foundation. Once formed, these organizations generally rely on grant awards and public donations for the bulk of their funding. Because potential funders are less likely to support organizations that do not offer the tax benefits provided by a nonprofit, new foundations often use a nonprofit corporate structure to facilitate their funding efforts. A lot of paperwork is required to start a nonprofit foundation in Pennsylvania. The process can take several months.
Lay the Groundwork
Write a strong mission statement first; it will provide succinct guide for selecting appropriate board members and determining which nonprofit structure is right for the organization. While 501(c)3 is the tax designation most often used by foundations, the Internal Revenue Service offers many others; contact the IRS or an attorney to explore lesser-known options. Name the board of directors; in Pennsylvania, a nonprofit corporation must have at minimum a president, treasurer and secretary and call an initial board meeting to vote on corporate structure, adopt bylaws and complete director appointments.
Notify the Public
To start a nonprofit foundation in Pennsylvania, you must file articles of incorporation with the Department of State. These include the foundation’s contact information and a statement indicating the intent to request tax-exempt status. Pennsylvania further requires a docket be filed with the articles. This must state the foundation name and provide the fictitious name registration; it must also provide contact information for the person responsible for tax reports, a description of intended business activity, the specified effective date and the fiscal year ending date. The articles and docket are not considered filed until they are published publicly. Costs are determined by the group's projected donations and range from $210 to $465.
Complete the Federal Paperwork
Pennsylvania requires that a foundation obtain an employer identification number, or EIN, from the IRS before it can apply for state tax-exempt status or open a bank account. Download IRS form SS-4 to request an EIN. Additionally, file IRS form 1023 with the foundation’s budget attached to request tax-exempt status from the federal government. This step is crucial and must be completed within 15 months of filing the foundation’s articles of incorporation; failure to do so can result in denial of the determination letter that makes donations tax deductible.
Additional State Requirements
Obtaining federal tax exemption has no bearing on whether Pennsylvania will grant the same status. The foundation is required to file form REV-72 with the state Department of Revenue and await a determination. If you start a nonprofit foundation that will raise money in Pennsylvania, you must register it with the Pennsylvania Bureau of Charitable Organizations before requesting or accepting donations. The foundation is required to provide proof of enrollment in the state unemployment insurance program or documentation of private insurance coverage before beginning operations.
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