For the Greater Good
Whether a club formed by individuals with common ideals or interests, or an operating business sets up to provide a needed service within the community, a non-profit, tax exempt entity may be advantageous structure for your endeavor. The key of tax exempt entities, commonly referred to as “501(3)(c)s” are their ability to receive government and foundation grants and that donations made my individuals are generally tax deductible. Given the benefits of tax exempt status, it is not surprising that the process of obtaining such status is daunting.
How Epiphany Law Can Help
The attorneys at Epiphany Law have helped countless organizations obtain this favorable tax status. We will assist you with formation of the non-profit corporation, completion of the application for exempt status, and provide advice with regard to corporate governance and compensation issues. We know the “tricks of the trade” to have the process go as smoothly as can be expected. Most importantly, we appreciate the passion that you have for your cause, and want to reflect that in providing our service to you.
Questions & Answers
Q: What is the difference between a non-profit and tax exempt?
A: A non-profit entity is simply one that is formed under Chapter 181 of the Wisconsin Statutes, or the state’s corresponding statute. Wisconsin actually uses the term ‘non-stock corporation”. Without stock, there are no owners, and thus, the entity exists for the purpose defined in its organizational document. Tax exempt means the IRS has granted the organization with the tax favorable status, meaning that it is eligible for grants and that documents to the organization are deductible.
Q: If there are no owners, who runs non-profit entity?
A: A key consideration of the IRS in granting exempt status is that the organization is serving exempt interests rather than the interests of any private individual. As such, the organization is run by an independent board of directors. While certain organizations may elect to have members who vote on certain matters, the governance is reserved to the board. Directors serve in a fiduciary capacity, meaning that they must have the best interest of the organization at heart.
Q: What are the ongoing obligations to maintain exempt status for the organization?
A: It is vitally important to continue operating in accordance with the purpose stated in the articles of incorporation. If the organization is going to “solicit donations” in Wisconsin, it will need to register with an appropriate state office. Additionally, while no taxes are generally due, the organization will have annual state and federal reporting obligations. These requirements are in place to ensure that the organizations is taking proper care of the public money that is being entrusted to it.