So, you want to start a nonprofit in Montana. . .

First, you may wish to consult with an attorney and accountant who specializes in incorporating nonprofits.

There are four things to consider before starting a nonprofit organization.

1) A nonprofit is a business and running any business takes time, money, effort and organization.

2) You will not own the nonprofit, it becomes a public organization and your books will be open to the public.

3) There is no such thing as free money. Do not assume that funding with be easily forthcoming; for example, many foundations will only fund organizations that have been in existence for several years.

4) If your proposed organization will have more than $25,000 per year in functional expenses, you will be required to file an annual 990 form with the IRS.

Tips & Items to Consider – Should You Start a Nonprofit Organization?

Evaluate the idea for your proposed organization, then ask others to do the same.

What is your mission and vision?

Can you articulate your mission in two to three sentences?

Will it be clear to others what you are trying to do?

What will be your goals and objectives?

Can your goals be easily defined?

Can your progress towards your goals be evaluated?

Can your idea work on its own?

Can I/we afford to do this?

Is there anyone else is doing this in Montana? …the region?

…nationally?

Would it be better to collaborate with an existing organization with a complementary mission?

Do you want to be a membership organization or governed by a board of directors who elect their own successors?

What interests or constituencies should be on the Board?

Be sure you can answer the following questions BEFORE you move forward:

Is the proposed project something a nonprofit organization can legally do?

Is there a demonstrated need for this service/project that is not being fulfilled elsewhere?

Can you clearly state your mission (it should be three sentences or less)?

Have you carefully considered a partnership with an existing organization?

Can you describe what success would look like?

Can you clearly describe the steps needed to succeed?

If you succeed, what will become of the organization?

Will others (foundations & government grantmakers, individual donors, board members & volunteers) commit time and resources to your cause?

Do you and your supporters have the needed skills to start and maintain the new organization?

Reasons NOT to start a new nonprofit organization:

It is for a time-limited special project that will benefit the community

You wish to support a specific needy individual

You think a lot of grant money is available

You feel your current work is not meaningful

You have important knowledge or perspectives to share

You want to do things your own way, without the “bureaucracy” normally involved

Steps to Incorporating your Nonprofit Organization

Choose a name for the organization. Check availability for your proposed name by visiting the US Department of Patents and Trademarks (link) as well as the Montana Secretary of State’s office. If you want a particular name, file an application for Reservation of Business Name through the MT-SOS.

File Articles of Incorporation with SOS

File IRS form SS-4, Application for Employer Identification Number.

Prepare By-Laws. There are many resources over the Internet on how to prepare by-laws.

Prepare IRS form 1023, Application for Recognition of Exemption under Section 501(c)(3)–this is not a quick process, and you may need assistance. This is the single most important step on your way to incorporation as a charitable organization. Expect the approval to take at least several months.

Finally, to become a recognized nonprofit by the Montana Department of Revenue, you are required to mail your By-laws, Articles of Incorporation, Form 1023, appropriate fee, and Secretary of State ruling to the Montana Department of Revenue to begin the final State process for recognition as a charitable nonprofit organization.

You will need to file an Annual Report with MT Secretary of State – $20 annually (on anniversary of incorporation)

Prepare Form IRS 990 annually – if your organization’s revenues exceed $25,000 per year, and your organization is not a religious institution (i.e. a church)

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Many thanks to Brad Robinson of the Montana Nonprofit Association http://www.mtnonprofit.org for passing this along. One other item you need to do – join the MNA to help maximize the success of your nonprofit. Russ