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Q: Does our Nonprofit Organization have to pay taxes?

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When people think about forming a "nonprofit" - hoping they'll obtain grant funding - they don't realize that in order to "qualify" for grant funding, they need to be formally recognized as a federally tax-exempt, nonprofit corporation. It's the moniker “nonprofit” that can be confusing; in fact it's not quite accurate: "tax-exempt” is the proper terminology.

In reality, tax-exempt organizations are actually allowed to make a profit!  What’s important to remember is the IRS looks at where that profit (the money your organization earns) comes from and where it’s used, when managing a “nonprofit” organization.  Nonprofits do not pay federal income tax on funds that are obtained from legitimate sources and which are to be used for their stated programs: for example grant funding.
 
Additionally - you'll need to check to be sure, but most states will exempt an organization from income taxes, sales taxes, property taxes, and more, but in most states you will need to request such exemptions.

Read more: Q: Does our Nonprofit Organization have to pay taxes?

Q. How do I Apply for Grant Funding?

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The Application, Letter of Appeal or a Grant Proposal?

You need one and (in most cases) two to three completed documents when requesting grant funding: an Application, a Letter of Appeal; and/or a Grant Proposal.

1. An Application - The Application is usually a form you may request and receive from a potential funder, which will need to be filled out by you. If you are requesting a small amount of money (up to $2,500.00) just send an application. The Application will usually come with a set of guidelines to walk you through the process, and it is simply a matter of "filling in the blanks," as the funder's guidelines suggest!

2. A Letter of Appeal - This is a summarized version of the Grant Proposal. Your Letter of Appeal should include a brief but concise outline, summarizing your needs. For example: If you are requesting money for a school project which will reduce violence, here is a sample request: "We would like to request a Grant in the sum of $25,000 to assist in the costs associated with the after-school program we have just developed to reduce crime within our community." You will need to include a brief summary of your program, as well. Remember to carefully look at the average monies usually granted by the Foundation to whom you are applying. If the Foundation only Grants funds ranging from $3,000 to $20,000 and you need $25,000, you should only request that which the Foundation will grant. You can, however, apply to another Foundation for the remaining $5,000.

3. A Grant Proposal - If you are requesting $5,000.00 to $50,000 or more, here are the steps you must follow: You must first send a Letter of Appeal. Once you've received the guidelines and Application, follow the directions, submit the Application, and then submit your Proposal. A proposal is a comprehensive document that goes into much more detail and depth, regarding your project and need for funding.

Q: What Type of Grant Funding can I Expect for My Nonprofit Org?

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Every day you hear about Government spending, but do you realize that you may be entitled to receive some of the billions of dollars the Government GIVES AWAY EVERY YEAR? Once you have received tax-exempt, 501(c)(3) status, you'll be eligible for grant funding. Grant funding comes in a variety of formats, including but not limited to the following:

•   Formula Grants
•   Project Grants
•   Direct Payments with Unrestricted Use
•   Insured Loans
•   Other!

Additionally, there are thousands of Government and Private Programs available. Federal and State Governments give FREE MONEY to businesses, students, men, women, children, minorities and the list goes on. Whether it's to develop an idea, continue or change your career path through education, work at your artistic vocation or simply to obtain help with expenses for your nonprofit organizatoin, there are numerous Programs out there for you to utilize in order to obtain this funding, but there are conditions.

The question is, how do you identify them? That is the biggest stumbling block for those who think and hope they might qualify for Grant funds in some way. The key to obtaining Grant money is easier than you realize. If you are an organized person who can follow instructions, THE CHANCES OF RECEIVING GRANT MONEY is that much closer! KEEP IN MIND, HOWEVER, if you're trying to get grant money for personal needs - like to help with mortgage payments, buying a house for individuals, groceries, rent, utility payments, child care expenses, car payments, insurance, debt consolidation, or free grant money for "individual use" - you're out of luck. Except for welfare or State-type "aid to families" programs, we've never been able to find this sort of funding for anybody. 

Grant money can provide you with the independence you need to get your non-profit organization viable; develop your local community center, youth facility; help you to create and market your invention through SBIR grants, or even launch you on a new career destination. These grant dollars can also help you acquire the schooling you lack or help you with your other expenses. All it takes is organizational skills, the ability to write a proper Grant Proposal, find someone who can do it for you, and figure out how to find the Grant Applications...or knowing someone who can find them for you!! A properly written Grant Proposal and the knowledge of where to apply for your Grant can improve your chances of securing your GRANT MONEY dramatically!

For more information on forming your tax-exempt organization, please comment below or call us: 865.408.8833.