Congratulations, you’ve received 501(c)(3) status! Now what? Paperwork and meeting! And also, of course, working for the greater good. Let’s go through your annual obligations as a nonprofit organization at the federal (IRS), state, and board governance levels.
Level 1 – Federal (IRS) Compliance
Nonprofit organizations must comply with annual IRS filing requirements to maintain their tax-exempt status. For information on keeping your tax-exempt status, see our articles How to Keep Your Tax-Exempt Status: Part 1 and Part 2. To do this, you will need to file the following every year:
- Annual Form 990 – Now that you’re an official nonprofit, the IRS requires you to file an informational return called Form 990 every year by the 15th day of the 5th month after the end of the organization’s accounting period. Different types of 501(c)(3) organizations may file slightly different versions of this form: Private foundations file Form 990-PF; nonprofits with gross receipts of less than $200,000 and total assets of less than $500,000 at the end of the tax year can file Form 990-EZ; and some small nonprofits, whose annual gross receipts are normally $50,000 or less, can file Form 990-N.
- Form 990-T for Unrelated Business Income – If you received unrelated business income, you must file a Form 990-T. Unrelated business income is income from a trade or business that the nonprofit regularly carries out that is not substantially related to its exempt purposes. More on this here.
- Annual Report – Although an annual report doesn’t have to be filed with the federal government every year, nonprofits are still required to disclose certain information when requested by the public. Publishing an annual report on your website proactively makes that information transparent—and serves as a powerful marketing tool. Learn more here.
Level 2(a) – State Compliance (California)
All nonprofits must also comply with various filing requirements put forth by their State’s Attorney General, State Tax Agency, and sometimes the Secretary of State. For California, the Franchise Tax Board (FTB), Attorney General, and Secretary of State’s requirements include:
- Franchise Tax Board (FTB) – Nonprofits must file Form 3500 (if filing before you receive your IRS Determination letter) or Form 3500A (if filing after you have received your IRS Determination letter) to get tax exempt status at the state level.
- Annual Information Return – The Annual Information Return is filed with the FTB and comes in two different flavors depending on your organization’s gross receipts and formation date. Typically, if you are not bringing in all that much (say, $50,000 or less) you only need to file the 199N electronically. However, if your gross receipts are more substantial, the full form 199 is required. Use this table to determine which Annual Information Return you need to file.
- California Attorney General Initial and Annual Requirements – Nonprofits must initially register with the California Attorney General’s Office within 30 days of receiving assets, such as property or funds, by filing Form CT-1. Each year after, nonprofits must file Form RRF-1 within four months and 15 days after the end of an organization’s accounting period.
- California Secretary of State’s Statement of Information: Finally, nonprofits are also required to file the California Secretary of State’s Statement of Information, Form SI-100, initially within 90 days after filing your Articles, and then every other year after that.
Level 2(b) – State Compliance (New York)
For nonprofit organizations based in New York, you must comply with annual filings with the New York Charities Bureau, which include:
- Form CHAR500 – This form is the New York state version of the IRS 990 form that must also be submitted in accordance with this chart.
- HHS Accelerator – For nonprofits operating in New York City, the completed CHAR500 must be uploaded to this platform to remain compliant with the municipality.
Level 3 – Board Governance
Nonprofits must hold at least one board meeting per year and must hold a board meeting each time a director is elected. That said, since board meetings are such a crucial part of running an effective organization, we recommend more frequent (say, quarterly) board meeting.
So what exactly is board governance? For nonprofits, “board governance” refers to the process in which the board of directors provides strategic leadership to the organization. In doing so, the board of directors helps set the organization’s direction, decide policy and strategic matters, oversee the organization’s performance, and ensure overall accountability. Read our article here, for more on how to run a regular board meeting.
Wrapping It Up
As you can see, there are a number of annual filing requirements now that you are a nonprofit. Feel free to reach out with further guidance on these requirements!
Revised by: Zachary Avina — 3/24/18
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