Forming a Non-Profit

Forming a new organization can be an important and fulfilling means of meeting a public need. However, sustaining a successful non-profit is a challenging undertaking under the best of circumstances, and it may not always be necessary or appropriate to start a new group. Before deciding whether to proceed, you'll want to have a full understanding of what is required and the various alternatives to non-profit start-up that could accomplish your goals.

BEFORE you begin the legal process in New Jersey:

Read carefully the Center's "Thinking of Forming a Non-Profit?" booklet (available in English & Spanish). Also see the New Jersey Division of Taxation web page, "Starting a Non-Profit in New Jersey: Questions and Answers."
Have a clear idea of the problem you want to solve.
View Pro Bono Partnership's on-demand Webinar - "Starting a Nonprofit"
Do some thorough research to find what organizations exist that already work on the problem you want to solve. What activities do they do? What efforts have succeeded / failed in addressing my focus area? Can you partner with them, perhaps conduct a project within their existing framework?
Identify the resources you have to create a viable organization - finances, skills, time, access to supporters, etc.
Consider whether your cause would be best served by contributing to or working with an existing organization since that will save you the time and money needed to establish a separate organization.

Not in New Jersey? If you are thinking of forming an organization outside New Jersey, you may want to contact one of the other state associations that is part of the National Council of Nonprofits network for more information on your state regulations.

The Center's Legal Assistance Services

The Center for Non-Profits has helped well over 1,000 New Jersey organizations gain their non-profit, tax-exempt status. Our Legal Assistance program (available for $750 plus Center member dues) includes

A comprehensive "Toolkit" of informational materials, such as sample certificate of incorporation, sample by-laws, and a host of valuable resource articles.
Up to 4 hours of our consulting attorney's time to help guide you through the process of completing the applications. Assistance includes telephone/email consultation and a review of your draft documents before you file them with the appropriate government entities.

Center membership is required to participate. As a Center member, you can continue to call us for information on legal, management and other non-profit issues after your organization is established, and your organization can tap into a wide array of other member benefits to save time, money and build its effectiveness.

TO APPLY for Legal Assistance Services: Please complete and submit the “Ready to Start-Up?” questionnaire.

PLEASE NOTE: Legal services are limited to advice and/or review of documents related to non-profit incorporation and charitable tax-exempt status. All services are provided by telephone, mail or fax. Neither the Center nor its attorney consultant engages in litigation on behalf of Center members. On issues other than the law of charitable tax-exempt organizations, our consulting attorney may provide basic information regarding the law but neither the Center nor its attorney consultant will represent you, advise you, or render legal opinions. You are strongly advised to obtain independent counsel for guidance with legal matters outside the scope of the Center's services.

You will be asked to agree to the Legal Assistance program's Terms and Conditions including policies on cancellation and use of professionals as liaison.

For more information, call the Center for Non-Profits at (732)227-0800.

A Brief Outline of the Incorporation/Tax Exemption Process

To incorporate your organization as a non-profit in New Jersey, you must file a Certificate of Incorporation with the NJ Department of the Treasury, Division of Revenue. You can expect to pay $115 for this, which includes the filing fee, expedited service (to speed up the turnaround time for filing your Certificate), and the return of a certified, stamped copy of your certificate for your files.

On the federal level, , the IRS will want more information in your organizational documents than is required by the State of New Jersey for state-level non-profit status. Therefore, the State forms alone are not sufficient if you want to pursue federal tax-exemption from the IRS. You will also need to develop a set of by-laws and have them adopted by your Board of Trustees. You will also need:

SS-4 - Employer Identification Number
Form 1023 - Application for Recognition of Exemption
Publication 557 - Tax-exempt Status for Your Organization

These and other IRS forms commonly used by exempt organizations are available online from the IRS Web site at www.irs.gov/app/picklist/list/formsPublications.html. The IRS site also provides important information about a wide variety of tax-exempt topics http://www.irs.gov/Charities-&-Non-Profits/Charitable-Organizations.

The Form 1023 is the application that is filed to request recognition from the IRS as a tax-exempt organization. The filing fee depends on your organization's gross receipts for the next four years. Effective January 3, 2010, the fee is $400 (if your average will not be more than $10,000) or $850 (if your average gross receipts will exceed $10,000). Once your form is submitted, expect a turnaround of 3-4 months for the IRS to process your application.

There are also a number of reporting requirements that must be adhered to after your organization is up and running.

State of NJ http://www.state.nj.us/treasury/grants.shtml

IRS http://www.irs.gov/Charities-&-Non-Profits/Exempt-Organizations---Required-Filings.