This month we celebrate our first anniversary as a non-profit, so we thought it would be instructive to document the steps we took to establish our private foundation for anyone else who might be thinking of doing the same thing. The commentary below, it should be noted, is limited to our experience creating a foundation in the State of Missouri. Your mileage may vary.
Establishment
There are perhaps not as many steps as you might think to create a non-profit. To begin, we did investigate a few non-profit organizations that are in the business of helping other non-profit get established. If you launch with an endowment of $1 million or more, it might be a good idea to outsource this work to someone else. But be advised that the fees they charge can run as high as $5,000, and that did not make sense for our foundation with a relatively small endowment. But I did want to mention one organization in particular – The Foundation Group – their rates are competitive, and they offer a ton of services, so if you are leaning in this direction, you should consider using them. They also run their own YouTube channel with a wealth of information for anyone who is new to the non-profit game.
When you are ready to pull the trigger, your first step should be to hold an initial meeting with the individuals that will form your board of directors, and in the case of a private foundation, these are likely going to be members of your family. At this meeting, we elected people to the different roles (Chair, Treasurer, Secretary, etc.) and talked about our mission statement and decided on a name for the organization. Be sure to take minutes from this meeting and then the next place to go is the Secretary of State’s website to search for the name you are planning to use, and confirm that it is not already taken.
If your desired name is available, you will move on to filling out the Articles of Incorporation, also known as Form Corp 52 on the Missouri SOS website. This is a simple two-page form that you will file with the Secretary of State’s office (either via mail or electronically) along with a $25 filing fee. We mailed ours and received a response within two weeks. The most important fields on this form are 2, 7, and 8. Even though we are a private foundation (which carries certain legal quirks), the answer to question #2 is Public. For question #7, it is important to remember that if your non-profit corporation eventually dissolves, all assets must be given away to other non-profit corporations. We completed this one with the words “to various 501(c)(3) organizations pursuing similar missions, in accordance with Missouri law.” We recommend this wording because our first submission of the form was rejected because of our answer to this question. Lastly, question #8 should include a brief summary of your organization’s mission (you don’t have a lot of space on the form). Our answer was “for higher education scholarships and other charitable activities as allowed by Missouri law.” If you’re still unsure about how to fill out this form, you can search for other organizations on the SOS website and review their Articles of Incorporation to get ideas.
The last major step to create your non-profit corporation is to apply for an Employer Identification Number (EIN) on the IRS website. Once you have a response from the State of Missouri, and an EIN, you are a real corporate entity and you can move on to the other important steps, which we will cover in our next post.
