How to Become a Non-Profit Organization in Wisconsin

Leaders who want to change the world via social service work are referred to as Social Entrepreneurs. If you are a Social Entrepreneur who has a unique idea for solving a community problem or meeting a community need, you may consider starting a nonprofit organization. Wisconsin has a very thorough and specific set of guidelines for starting such an organization. There are so many things to be done that the task can seem overwhelming, but the following list of the major administrative tasks should help you to form a nonprofit in Wisconsin.

Difficulty: Moderate

Instructions

1. Create a name for your organization. Minnesota law requires that your nonprofit has a legally registered, unique name that no other organization can duplicate. The Minnesota Secretary of State's office has a directory of names you can search through to verify the originality of your organization's name. Once you have the name selected, you must fill out the name registration form and pay the accompanying $35 fee.

2. Create a mission statement. Nonprofits are required to have a mission statement that guides the activities of the organization. According to the Minnesota Council of Nonprofits, "a mission statement should be brief, timeless, and descriptive of what the organization is trying to accomplish." The mission will be at the root of all you do, so make sure you have it just right.

3. Assemble a board of directors. The board of directors comprise the bosses of the organization. They hire the director and other key staff, raise funds, market the organization, plan for its future and steer its present activities. Board members should come from broad backgrounds to represent different areas of the community and to offer different services and skill sets to the organization.

4. Write the agency's articles of incorporation. This is the job of the board of directors. The articles of incorporation are the legally binding documentation of how the agency will be structured and managed. Organizations are required to have completed articles of incorporation that contain very detailed information before the organization can file for nonprofit status with the Secretary of State's office and the IRS. See the Resources section for detailed information about writing your articles of incorporation.

5. Incorporate as a nonprofit with the Secretary of State's Office. This is necessary to obtain tax-exempt status from the IRS and to apply for most types of funding. It also protects agency leaders from certain legal liabilities that organizations can face. The filing fee is $70 and the forms can be obtained at the Secretary of State's office.

6. Apply for tax-exempt status with the IRS. This is done by completing IRS Publication 557, IRS Form 1023 and IRS Form 8718. These are the forms for standard 502(c)3 status. There is a $300 to $750 fee depending on the anticipated size and budget of your organization. It can take up to 6 months for all forms to be processed, and any incomplete or missing information will further delay the process.

7. Apply for the Minnesota State sales tax exemption. Many but not all nonprofits can qualify for sales tax exemption, which is handled at the Minnesota Department of Revenue Sales and Usage Tax Division. Contact them to determine eligibility, then apply using Form ST-16.

8. Register as a charity. Minnesota law requires all nonprofits who will be soliciting funds, excluding religious organizations, to register as charities under the Charitable Solicitation Act, Chapter 309 of the Minnesota Statues. Filing is done at the Attorney General's office by providing a Charitable Organization Registration Statement. You will also need to include your most recent financial statement, your agency's articles of incorporation and your IRS determination letter, which you receive upon being granted tax exempt status. There is a registration fee of $25.

Tips & Warnings

• Try to find similar agencies in the area to partner with. When requesting funds from donors, collaboration makes it seem like funds are stretching and can get you to the top of the approval list.
• Never start a nonprofit for personal gain. Benefiting directly from your nonprofit can cause legal and tax problems and is a crime in some situations.

Resources

• The Nonprofit Center of Milwaukee
• Minnesota Council of Nonprofits

[cl4bo]

on 10/25/2009 The title of the article refers to the State of Wisconsin but the laws referenced in the article are for the State of Minnesota. Are the laws for the two States exactly the same on this matter? Kindly respond to my e-mail address.