How To Make A Non-Profit Chess Organization!

 

Do you have BIG vision for your chess organization?  Is your club exploding at the seams? Do you want to start a school chess program in your town?  Maybe open a chess center?

You will need to open the doors to the kind of funding required to realize your dreams.  It may be time to consider becoming a non-profit!  Contrary to popular belief, you don't need to pay a lawyer or a consultant thousands of dollars to make this happen. You can do it yourself if you have the organizational skills and just a little start-up money.

Our chess organization recently became a non-profit, and I've compiled a list of steps to help you do the same!  (Note:  Every state is different, so there may be more steps where you live. This list is not authoritative). The steps are presented in this order because some items are prerequisites for the others.

STEP 1:  First, you will need a document called Articles of Incorporation.  This includes your mission, organization address, your initial board of directors, and a little "legalese" and is only about two pages long.  We used our state chess organization's document as a guide for our own.

STEP 2:  Apply for an Employer Identification Number (EIN) at this website: https://www.irs.gov/charities-non-profits/employer-identification-number.  There is no charge for this, and you will need this for some of the other steps.

Peshka likes non-profits!

STEP 3:  Draft your Bylaws.  This is a document that tells all about how your organization is structured and operates.  The wording can be pretty legal, and it could be several pages long.  You can get a copy of the US Chess Bylaws as an example here: http://www.uschess.org/docs/gov/reports/Bylaws/2015bylaws.pdf.  You might also use your state chess organization's Bylaws as a guide.  This document doesn't need to be adopted and signed yet, but you will need to attest to having it for the next step.

STEP 4: Next, you will need to incorporate -- don't freak out.  It's easy.  In our state, we did this by filling out a short form to become a non-stock corporation through our State Corporation Commission.  There was a small filing fee for this, and we received our certificate within days.  Your state may have an annual reporting requirement and small annual fee.

STEP 5: Now you can become a 501(c)(3)!!!  This was so simple.  Just fill out a 1023-EZ (unless for some reason you were already operating with a huge budget) at https://www.irs.gov/uac/about-form-1023ez. The filing fee was $275. We got our designation letter within days.

                               

STEP 6: Formally elect your Board of Directors and hold an annual meeting per the procedures you outlined in your draft Bylaws.  Once the Board is elected, you can formally adopt your Bylaws.  You will need a copy for the next steps.

                           

STEP 7: Apply for authorization to conduct fundraising in your state. This will be different everywhere. For our state, it was an agency called the Department of Agriculture and Consumer Services.  There may be a very small filing fee for this.

 

STEP 8: Apply for state sales and use tax exemption.  Check your state tax website for the procedures.  Your 501(c)(3) status does not automatically exempt you from state sales and use tax. You must go through your state for this.

STEP 9: Many churches, schools, etc. require your organization to have insurance in order to use their venues for your programs and events.  Many chess organizations use http://www.rvnuccio.com/specialty-insurance-products/non-profit-insurance/. We paid around $325 for our policy, and we raised the money through annual dues for our members and proceeds from our annual National Chess Day Festival.

STEP 10: Keep those kids safe!  Time to conduct Background Checks on your volunteers and employees.  There are many organizations out there that provide this service.  We use http://www.verifiedvolunteers.com/ and pay $19 per check, and you can have the volunteer pay, or your organization can pay.  They required our insurance policy as one of the documents to verify our non-profit status since we were a new organization.

STEP 11: Complete your annual reporting requirements with state and federal government. If you pass less than $50,000 through your organization per year, you can use the federal postcard at https://www.irs.gov/charities-non-profits/annual-electronic-filing-requirement-for-small-exempt-organizations-form-990-n-e-postcard. In your 1023EZ, you set the end of your own fiscal year.  You have to file the postcard by the 15^th day of the 5^th month after that.  Don't freak out about this -- you don't need an accountant.  It consists of answering two yes or no questions!  This is required to keep your 501c3 status. Some states may also have annual filing requirements.                             

 

STEP 12: Did you pay any coaches or tournament directors? Be very careful to read the IRS rules for employees vs independent contractors. This website can help:  https://www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-self-employed-or-employee.  If you determine that you have employees, stop here and hire professional help!  If you determine anyone you paid during the year is an independent contractor, issue a 1099-MISC by January 31st for anyone who was paid $600 and up, and then file a Form 1096 with the IRS and send them copies of your 1099s.   

That's it!  It might seem overwhelming, but if you are organized and follow each step, you will be able to complete everything in a matter of months.  I hope you find this helpful -- good luck with your 501(c)(3)!!!