Part 2 - Establishing Your Agency's Internal Revenue Service 501(c)3 Designation
So what is all this nonsense about a 501(3)c? Oh, wait a minute, I mean a 511(c)3, or could it be a 510(c)3? Believe us, over the years we have heard it called all those names and several others. In this article, we will attempt to clear up the "federal waters" and give your emergency services organization the straight scoop on establishing your Internal Revenue Service (IRS) 501(c)3 designation, which is a category of the IRS's designation for a non-profit organization.
The world is full of generous individuals, with corporate foundations alone donating a record $3.6 billion in 2005 to reputable non-profit organizations across the nation. Unfortunately, mixed in with these hard-working non-profits are a few bad apples that attempt to receive funding under false pretenses by requesting funding for a particular need, then spending the money for something different, or worse, utilizing the funding for their personal gain.
A 501(c)3 designation is an industry-recognized checks-and-balances system managed by the IRS to ensure improprieties do not occur with donated funding. In reality, it's a great system and more importantly a required element for your emergency services organization if you plan to seek funding from any private or corporate foundation. "Hint" - We stated above that these groups donated more than $3.6 billion in 2005 to non-profit organizations. When you start your foundation search, you will immediately be asked whether you meet several rules of participation before proceeding to the next step. Unequivocally, the first or second question asked will be, "Does your organization have its IRS 501(c)3 designation?" The next step is simple: If you have the designation, proceed; if you do not, come back when you do.
Regardless of whether your organization is volunteer, combination or career and you are not in business to make a profit, all philanthropic organizations still require you to have a 501(c)3 designation to receive donated funding. Your organization can follow the following six essential steps to start the process of receiving your 501(c)3 designation and begin your journey to financial independence. Remember, this is not about hoselines, high-angle rescues or patient care; this is about the almighty dollar. So put on your budget director hat as we walk you through these steps.
Step 1 - Speaking in the simplest of terms (and having been personally involved with many non-profit organizations), your first step will be to establish a community association group, or board, which will serve as the foundation to your non-profit status. The best place to start this is from within, as your organization will be a critical part of this group. You should consider including representation from several disciplines, including a certified public accountant (CPA), clergy, school system, health department, media, local medical center, insurance industry and legal representation. Your group should be representative of your entire community.
Step 2 - With this group now loosely formed, the next step is to establish a set of bylaws. These will be the rules you will follow to exist and conduct business. They will briefly state why you are organized, what you will accomplish, how often you will meet and how funds will be raised and distributed. The bylaws will also set the rules for membership and describe the process for electing officers of the organization and setting their term limits.
Step 3 - The next step your organization must take is to elect operational officers. This usually involves several core positions and the remaining members who are usually designated as directors. The core leadership usually includes a president, vice-president, secretary and treasurer. As stated in Step 2, you must elect these positions by vote of the membership as well as set their term limits.
Step 4 - With these parliamentary procedures complete, you will now need to record your newly formed organization with your state corporation commission (SCC) or its equivalent. Localities can impose slightly different requirements, so we suggest you consult the SCC from your state for a definitive set of rules.
Step 5 - With the prior four steps complete, your organization now has the core information to start completing the proper schedules and forms with the IRS. Start by printing a hard copy of the application (very large) and fill out everything in long hand. Once this portion has been completed, tap into the expertise of the local CPA on your board, as they can speak of the language of the IRS and help complete this paper work electronically. Once completed, you will add the additional required documents, such as your articles of incorporation, bylaws and SCC documentation, which will all be mailed to the proper department within the IRS.
Step 6 - Be patient, for this entire process can take nine to 12 months. When you do receive your initial designation, it will be only a preliminary one. The IRS requires you to operate for five years, properly completing all requirements set forth by the 501(c)3 regulations. Once you have satisfied the time frame and all requirements have passed, you will be given your final designation. The good news is that all the foundations we spoke of earlier accept the preliminary designation, allowing you to request funding.
There you have it. Now our challenge to you is to hit the ground running, as you are just a few simple steps away from being able to capitalize on the non-profit funding your organization will need to take you into the future. Start your grant search now; as time spent locating potential foundation funding will pay dividends as soon as you receive your organization's 501(c)3 status.
C. E. "GENE" REAMS is a retired division commander for the Chesterfield, VA, Department of Fire and EMS. He is currently the marketing and client relations director for Diversified Ambulance Billing. MARK R. NUGENT is an operations battalion chief for the department and the owner of SecureGrant of America, providing grant-writing and consultant services.
