Forming a Nonprofit

PANO staff are not trained or able to assist organizations file paperwork to the IRS and state. We recommend consulting an attorney or accountant that specializes in nonprofits.


PANO provides other assistance to members who are starting a new nonprofit organization through discounted trainings, sample policies, etc). You can join even if your paperwork is not finalized. Join as a nonprofit at the budget range reflective of your organization; we recommend referring to the "Pennsylvania Nonprofit Handbook."

PANO´s Tips on How to Become a Nonprofit Organization in Pennsylvania

1. Determine the purpose of the organization.
Every organization should develop a mission statement that describes their reason for existing. This can be developed by meeting with potential clients, constituents, board members and other interested parties.


2. Determine the structure of the organization.
This stage should include determining the type of organization that you will form (e.g., a charitable corporation under 501(c)(3) or another kind of nonprofit: member or not, corporation or unincorporated, association, or trust). 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?


3. Choose your board of directors.
Your board will help you transform your ideas into reality by helping establish goals and fundraising strategies. Pennsylvania law requires every nonprofit corporation to have a President, Treasurer, and Secretary (i.e. officers who perform comparable duties) and a single person may hold all three offices.


4. Write bylaws.
Your bylaws will guide your organization's day to day operations. These should be drafted carefully and may require the assistance of an attorney experienced in nonprofit law to reflect the proper power relationships among those with an interest in the group.


5. File Articles of Incorporation with the Department of State.
For organizations that plan to be incorporated, this is a key step. In Pennsylvania, you need to file your Articles of Incorporation with the Department of State's office. For more information or copies of the basic forms contact:


The Department of State
Corporation Bureau
308 North Office Building
Harrisburg, PA 17120-0029
(717) 787-1057


If you expect to seek exemption as a charitable organization under Section 501 (c)(3), be sure to include the language required by the Internal Revenue Service as seen in this sample.


6. Develop strategic and fundraising plans.
A strategic plan will help you outline the steps needed to fulfill your organization's goals, determine your staff needs and establish operational priorities for the upcoming year and beyond. The strategic plan should determine your budget priorities, identify potential donors, establish bookkeeping practices and delineate fundraising activities (e.g., mailings, dinner-dance, silent auction, etc.). There are six core elements of a successful nonprofit:
(1) fundraising, (2) marketing, (3) internal operations, (4) programs, (5) volunteer development and (6) community involvement.


7. Establish a system for record keeping and accounting.
A protocol should be established for keeping all your organization's official records (such as board meeting minutes and financial reports) and records should be preserved for the life of the organization. Establishing written, board-approved, financial and internal management policies and procedures is essential for the organization's success.


8. Obtain a Taxpayer Identification Number from the IRS.
You'll need this number to open a bank account, file informational returns with the IRS and withhold your employees' income tax. It helps when requesting a Pennsylvania sales tax exemption. You can obtain a Taxpayer Identification Number (also called an Employer Identification Number or EIN) by filling out an SS-4 form. Contact the IRS at 1-800-829-FORM or click here for an SS-4 form or more information.


9. Request recognition of tax-exempt status from the IRS.
Without a "determination letter" from the IRS, donors who want an income tax deduction may not make gifts to your charity. Nonprofit corporations that are charities and meet the definitions in IRC §501(c)(3) may request recognition of their tax-exempt status. To receive §501(c)(3) tax-exempt status from the IRS, you must fill out an IRS 1023 form and attach your proposed budget, Articles of Incorporation (certified), and bylaws (a true copy). Resumes of your board members are helpful as well. This application should be filed within the first 15 months of your organization's existence. Contact the IRS at 1-800-829-FORM or click here to receive a copy of this form. There are other nonprofits that are not charities, such as Chambers of Commerce, etc. Different IRS forms are required for these. You may find this document helpfulHow to Apply to Be Tax-Exempt.


10. Filing for Pennsylvania sales tax-exempt status.

To request exemption from paying sales tax in Pennsylvania contact:


Pennsylvania Department of Revenue, Tax Forms Service Unit
711 Gibson Blvd.
Harrisburg, PA 17104-3200

Request Form REV-72 or download it here.


Your organization's Federal tax exemption status has no bearing on PA sales tax-exempt status policy.


11. Register with the Pennsylvania Bureau of Charitable Organizations.
If your organization will be requesting donations within Pennsylvania, you must register with the Bureau of Charitable Organizations prior to beginning any fundraising activities. There are exemptions and exclusion for certain organizations, and you should contact the bureau for the requirements. To receive a packet of information that includes the long and short forms, requirements for exemption, excerpts of the law and instructions for filling out the forms contact:


Department of State
Bureau of Charitable Organizations
207 North Office Building
Harrisburg, PA 17120

website

1-800-732-0999


12. Obtain a nonprofit bulk mail permit from the U.S. Postal Service.
If your organization will be doing any large mailings, you may want to obtain an imprint authorization for bulk mailing. The permit provides a discount on the cost of mailing, if you are sending at least 200 pieces, and the mailing is sorted and processed within the regulations of the Postal Service. There is a one-time imprint fee and the permits must be renewed annually. Certain nonprofit organizations may qualify for reduced rates. For more information on bulk mailing call, (901) 576-2062 or visit the web site.


13. Establish personnel policies.
Before hiring employees, the personnel committee from the board of directors should develop written personnel policies. They can be expanded as the organization develops but should cover basic operational procedures. PANO sells a sample policy at our online store ($40 members/$70 nonmember).

14. Register for unemployment compensation or opt out to self-insure or participate in an alternative program.
Most nonprofit organizations must participate in an unemployment compensation program or reimburse directly for this benefit. The Federal government mandates that all states allow 501(c)3 nonprofit organizations and governmental entities to opt out of paying the SUI tax and reimburse directly.


To receive an employer packet describing your compensation responsibilities contact:


Office of Employment Security
Bureau of Employer Tax Operations
Labor and Industry Building
7th and Forester Streets, P.O. Box 60849
Harrisburg, Pennsylvania 17106-0849

To learn more about the alternative program promoted by PANO visit First Nonprofit.


Note: Some faith based organizations are exempt.


15. Be sure to withhold employment taxes for the IRS.
Employers are required to withhold their employees' wage income and FICA taxes and submit these to the IRS regularly. Failure to do so can result in significant fines and potential personal liability for the responsible officers. Contact the IRS at 1-800-829-3676 or click here to receive appropriate forms. The state and some local governments also require withholding.


16. Obtain liability insurance for your organization.
Like the business community nonprofits are exposed to legal risks. Contact PANO, your insurance representative or your attorney for more information on general liability insurance, Directors' and Officers' liability insurance and general professional liability coverage.


As a PANO member, PANO can assist you by providing more information, contacts at state agencies, lists of attorneys, accountants and other professionals who specialize in the nonprofit sector.

Not from Pennsylvania? Find an association from your state.

Resources

How to Start a Non-Profit Organization in Pennsylvania

This guide from Harbor Business Compliance gives guidance on costs and timeline.

Top 10 reasons why the IRS delays exemption approval.

We are attempting to get an updated link for this page. The IRS changed their site recently.

What do I do if I have a complaint about a charitable organization?

PANO is a charity, not a government agency, so we are not equipped to respond to complaints about charities. The only exception would be if the agency has been certified through our Standards for Excellence Program. Otherwise, we have produced a document that provides guidance on who to contact. We request that callers do not contact our office about this matter and instead consult the appropriate agency.

Information on merging or dissolving a charity

Your organization needs to provide notice to the IRS and to the state Attorney General Charitable Trust Division. You should consult an attorney for more information to make sure you follow all of your legal requirements. See IRS guidance.