Starting an Advocacy Organization
So, you’ve got a community in need of bicycle advocacy and a small (or hopefully large!), committed group of folks interested in making things happen… now what?
Georgia Bikes is here to help!
Below, you will find information on the types of organizational structures you have to choose from and the steps you’ll need to take for each one. If you ever have any questions, contact us and we’ll be happy to help your organization get on its feet!
Bicycle clubs are typically non-incorporated associations of riders who are primarily interested in riding for fun, fitness, and training. Clubs are a great way to enjoy cycling and improve physical fitness. Most have modest dues and allow non-members to participate in rides at no charge. Clubs typically do not engage in much advocacy, but they certainly can! If they have a formal structure, clubs are usually informal nonprofit associations or LLCs, but they can be incorporated nonprofits as well.
Advocacy organizations are engaged in activities that promote bicycling, seek to expand bicycle facilities (e.g. bike lanes, multi-use paths, bike racks), educate the public about safe cycling practices and road sharing, or other public benefit activities. Advocacy organizations that seek tax exempt status are typically classified as 501(c)3 organizations by the IRS. Examples of advocacy organizations in Georgia include Georgia Bikes!, Atlanta Bicycle Coalition, Bike Roswell!, and Bike Walk Savannah.
What is a Nonprofit Organization?
The term “nonprofit” simply refers to “not being commercial motivated.” Nonprofit organizations can, do, and should make profits. It is where profits come from, how much is made, and what is done with profits, that helps establish if the organization is a “nonprofit” corporation or a for-profit corporation.
There are three basic types of nonprofit organizations:
- Informal Nonprofit Organizations
- Incorporated Nonprofit (Corporation)
- Tax-Exempt, Incorporated Nonprofit Organization (Corporation)
Informal Nonprofit Organizations
You can form an “informal” nonprofit, simply by getting together with other people to provide support or services to benefit others. There are no special benefits in being an informal nonprofit, other than personal satisfaction in helping others, but there may be certain legal liabilities.
Be sure to check with an attorney before starting an informal nonprofit to discuss possible legal liability risks. If you plan to deduct expenses, receive donations, or charge any fees, you also need to talk with a tax accounting professional.
Informal nonprofit organizations are not, and cannot be, tax-exempt organizations.
Incorporated Nonprofit Organizations
This type of nonprofit is formed by incorporating in a particular state to form and be recognized as corporation. A corporation takes the place of individual ownership. The corporation “owns” itself, and therefore, can own its own property, have its own bank account, take out its own loan, and can continue on its own eve if the founder leaves the organization.
One of the major benefits of incorporation is that the corporation takes on legal liability and financial risks so that founders, officers, and board members have little or no liability (with the exception illegal acts, or gross fiscal misconduct).
Nonprofit corporations can be classified in many ways, including as a public benefits corporation, public charity, or educational foundation.
Nonprofit corporations may be formed to benefit members of an organization (a club, or mutual benefit society) or for some public purpose (such as a disaster relief, social assistance programs, or youth development programs).
A nonprofit organization is not automatically tax exempt.
Nonprofit corporations must file with the IRS as a separate step in order to receive tax exempt status. An organization cannot receive tax exemption unless it has first formed as a corporation with an accepted charitable structure and purpose.
Not all nonprofit organizations are eligible for tax exempt status. Only those that meet certain requirements, as defined by the IRS, will receive exempt status. You will need to complete an IRS Form 1023 to apply. The form is long, the process is expensive, and it can take up to one year to receive a decision. However, you can take advantage of the tax exempt status of another established nonprofit organization in an arrangement known as “fiscal sponsorship.” Georgia Bikes will serve as a fiscal sponsor for appropriate organizations while they await their IRS tax exempt determination. Go here for details on working with us as your fiscal sponsor.
NOTE: Tax-exempt corporations are required to operate their organizations in certain ways, file a Form 990, and meet other IRS requirements, or risk losing their exemption status.
How Do You Incorporate as a Nonprofit?
Just as with forming a for-profit business, you need to do a feasibility study, develop a mission statement, and write a strategic plan. In addition to the standard requirements involved in starting any business, to form a nonprofit you need to:
- Get an Employer Identification Number (EIN): This substitutes as a social security number for the corporation. You can apply for an EIN online through the Internal Revenue Service (IRS) website.
- Form a Board of Directors: All incorporated nonprofit organizations must have a board of directors.
- File Your Founding Documents: These include Articles of Incorporation and Bylaws.In Georgia, you file these documents with the Secretary of State Corporations Division.