Easy Steps To Protect Your North Carolina Nonprofit and Keep Your Nonprofit Compliant

As with any other business, there may be risks involved in running the nonprofit. Getting insurance for your nonprofit allows you to focus on your passion while minimizing your liability.

Here are some of the common types of insurance you may want to consider for your organization:

• General Liability Coverage
• Directors and Officers Coverage
• Social Service Professional Coverage

Your coverage needs will vary based on your organization and the work you do.

There will be times when you will be signing a document on behalf of your nonprofit. It is important that these times are easily distinguishable from when you are signing a document as an individual. If a document isn’t properly signed, you might suddenly find yourself personally responsible for something the organization should have been liable for.

To avoid such confusion we recommend you and all the members of your organization follow the following format:

• The official name of your nonprofit
• Your signature
• Your full legal name
• Your position in the organization

Nonprofits that have incorporated are required to maintain a registered agent with an office address in North Carolina. If the agent or the office address changes, you must file Form NA-02 with the Secretary of State to effect a change to the articles of incorporation.

Failure to update this information may result in termination of the corporation.

Annual reports are not required.

Every nonprofit corporation in North Carolina needs to pay a franchise tax unless the organization has received an exemption from the North Carolina Department of Revenue. State Franchise and Income Tax exemptions can be applied for at the same time.

As a nonprofit in the state of North Carolina, your organization will not need a general business license, but permits will be required if you will conduct certain activities such as selling beer, etc.

If your organization will raise money by hosting charitable gambling will have to follow these rules:

Bingo

Your organization will be required to obtain a North Carolina Bingo License.

Raffles

Nonprofit organizations are only permitted to conduct raffles if they follow these guidelines:

• No more than two raffles per year.
• The maximum cash prize is $5,000 and the maximum non-cash, non-redeemable merchandise prize is $25,000. See 1993 N.C. Sess. Laws 219 (maximum cash prize raised from $1000 to $5000 effective June 28, 1993).
• Real property is not offered as a prize.
• The raffle is not conducted in conjunction with bingo.
• No less than 90% of the net proceeds from such an event can be used for charitable, religious, educational, civic or other nonprofit purposes. Net proceeds equal receipts of the event less the cost of the prizes awarded.
• None of the net proceeds are used to pay for another person to conduct the raffle or to rent premises to sell or receive raffle tickets or to conduct the raffle. N.C.G.S. 14-309.15 (1986).

The state of North Carolina has very specific rules regarding charitable fundraising. Unless your organization is exempted under G.S. 131F-3, your organization will be required to obtain a license to solicit contributions within the state of North Carolina.

Refer to the North Carolina Department of the Secretary of State Charitable Solicitation Licensing document for full details.

If your organization will have employees you must register with the North Carolina Department of Revenue.

You can easily apply online, fill out the NC-BR, or find the contact information for your local department of revenue on their website.

All organizations that have been granted the 501(c)(3) status are required to disclose the following documents to the public when requested:

• Annual returns for 3 years after the due date (this includes returns like Form 990, 990-EZ, 990-PF, and any Forms 990-T)
• All Form 990 Schedules (except portions of Schedule B), attachments and supporting documents.
• Application of exemption and all supporting documents such as Form 1023
• The official paperwork from the IRS that shows that your organization has tax-exempt status.

The following do NOT need to be shared with the public

• Portions of schedule B of Form 990/990-EZ that identify the contributors. (You only need to disclose the amount contributed and the nature of the contributions)
• Any unfavorable rulings such as an earlier denial of tax-exempt status.
• Any information the IRS has said you can withhold. This may include things like sensitive patents and trade secrets.

FAQ:

How long do I have to produce these documents if requested?

Ideally within the same day. If your organization doesn’t have an office or maintains limited hours during parts of the year, the information should be made available within two weeks.

Do I need to provide copies of the documents?

If someone asks for copies in person or in writing you must provide them with copies.

Can I charge for copies?

You can charge a reasonable amount for making copies of the documents requested.

NOTE: It may be easiest to have the documents available on your website so that anyone who requests copies can be sent to the site. This allows you to stay compliant without having to spend a lot of time dealing with document requests.

Most tax-exempt nonprofit organizations are required to file an annual return with the IRS (Check the list of exceptions).

Which form you should use to file the annual returns depends on the annual gross receipt amounts for your organization.

"Gross receipt" is defined by the IRS as “the total amounts the organization received from all sources during its annual accounting period, without subtracting any costs or expenses”

• For gross receipts ≤$50,000 --- File 990-N
• Gross receipts <$200,000 and total assets <$500,000 --- File 990- EZ
• Gross receipts >$200,000 or Total assets >$500,000 --- File 990

For any questions, you can call the IRS at

• (800) 829-3676 (Form-related questions)
• (800) 829-1040 (General information)

When is form 990 due?

You have a little over 4 months after your taxable year comes to an end to file Form 990. It is due on the 15th day of the 5th month. So if your taxable year ends on Dec 31st, your form 990 is due on May 15th.

NOTE: If your organization fails to file form 990 for 3 consecutive years, it will automatically lose its tax-exempt status.

If your North Carolina organization has a gross income of ≥$1000 from a trade or business that is not related to the stated purpose of the organization, then it must file Form 990-T to pay tax on that income.

IRS - Information for Charities & Nonprofits

IRS - Required Provisions for Organizing Documents

IRS - 990 Series for Tax-Exempt Organizations

IRS - Applying for Tax-Exempt Status

IRS - 501(c)(3) Compliance Guide

Small Business Administration - License and Permits

North Carolina Department of Revenue - Request Refund of Sales and Use Tax

North Carolina Secretary of State - Launching a Business