There are approximately 13,340 nonprofit organizations registered with the state of Nebraska. Of those, 5,000 nonprofit sector corporations are recognized by the IRS as 501(c) tax-exempt organizations.
Some of the best nonprofit organizations striving for the greater good of the community in Nebraska are Keep Kids Alive Drive 25, Assistance League of Omaha Nebraska Inc, and Habitat for Humanity of Omaha.
There are many reasons to start a nonprofit organization in Nebraska; however, prior to deciding to do so, you need to ask yourself exactly what need your nonprofit will fulfill.
Once you’ve established the need and have an idea of how you plan to meet it, starting a nonprofit organization may take anywhere between two weeks to three months.
However, once your organization is up and running and has received federal tax income exemption, you’ll enjoy several benefits, including credibility with the IRS, U.S. Postal Service discounts, and access to government grants and private funding.
Follow this step-by-step guide to learn more about starting a nonprofit in Nebraska.
1. Select a name for your organization
One of the first things that the public and potential donors will discover about your organization is its name. This is all the more reason why you should consider it carefully.
Additionally, you should ensure that it meets the rules for naming nonprofits in the state of Nebraska. Your Nebraska nonprofit name shouldn’t be too similar to other existing businesses in the state.
It should also not contain language that is misleading or misleads the public about the purpose of the nonprofit. You don’t need to include an organizational designation at the end of the nonprofit name.
When in doubt, the Nebraska legislature’s official guidelines are available, and it contains the complete rules for naming a Nebraska-based nonprofit organization.
2. Nominate a Nebraska registered agent
Every Nebraska nonprofit organization is required to have a registered agent with a Nebraska address. A registered agent is often referred to as a statutory or resident agent and is a person responsible for receiving all legal documentation on the nonprofit’s behalf.
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Ultimately, the registered agent may be considered the organization’s point of contact with the state. You may choose any individual, including yourself, as your nonprofit registered agent so long as they meet the following requirements:
- The resident agent must have a physical street address in the state of Nebraska
- The resident agent must maintain normal business hours
- The resident agent must be at least 18 years of age
- The resident agent must consent to the appointment
3. Recruit your board members
In order to be eligible for 501(c)(3) tax-exempt status, your Nebraska nonprofit will need to recruit an incorporator, directors, and officers. Incorporators are responsible for signing the Articles of Incorporation on your organization’s behalf.
The directors, together with the officers, make up your board of directors. You need to nominate a minimum of three directors who can be any person you deem fit to serve this role. There are no membership or residency requirements.
All directors must serve a minimum term of one year unless stated otherwise in the Articles of Incorporation or the nonprofit’s bylaws. Ultimately, the term of service may not exceed five years except in the case of appointed directors.
Additionally, your Nebraska nonprofit will need a president, secretary, and treasurer. One of the officers needs to prepare minutes of organizational board meetings and authenticate records for the incorporation.
As per Nebraska law, two or more offices may be held by the same person.
4. Consent to bylaws and conflict of interest policy
A Nebraska nonprofit needs to prepare two essential documents. These two documents are an integral part of running the organization.
The bylaws are the rules that determine how your nonprofit will be governed and operated.
- Conflict of interest policy:
This policy is put in place to ensure that when decisions are made for the nonprofit organization, they are always in the organization’s best interest and not in the best interest of individual members.
It is advised that you compile both of these documents during the organization’s first meeting, where the directors and officers are also officially appointed.
They do not need to be filed with the state; however, they must be kept on file and used as the nonprofit’s management handbook.
5. Select a Nebraska nonprofit startup corporation structure
In order to receive the most amount of benefits to the type of nonprofit you are planning on forming, you should understand the types of nonprofits or organizational structures available.
Let’s take a look at the four nonprofit structures available in the state of Nebraska:
- Corporation: This structure is the most common and usually the best option for most nonprofit organizations. In order to register this type of nonprofit organization, you must make periodic filings and disclosures as well as register with the state. Some of the Corporation structure benefits include protection from liability and eligibility for grants.
- Trust: There are a few organizations formed as trusts. However, this is usually not the best choice for most organizations that have members since the trustees are not protected against liability. This is because trustees are held at a higher fiduciary standard and may experience great liability exposure.
- Association: The Association structure is common when a group of people comes together for a common purpose, such as a parent-teacher association or A ski club. This is often referred to as an unincorporated association.
While these groups are entitled to legal rights, such as opening a bank account, they also have legal liabilities. Therefore, it is suggested that if your nonprofit is going to be involved in potentially risky activities, you should incorporate it.
6. Prepare and file nonprofit Articles of Incorporation
All nonprofit corporations in the state of Nebraska must file Articles of Incorporation in order to register the organization. The Articles of Incorporation must be filed with the Nebraska Secretary of State. There is no form or template provided by the state, and each nonprofit must create the articles themselves.
When it comes to the requirements for filing Articles of Incorporation with the state, you need to refer to the Nebraska state statute.
The articles must disclose some basic information for the public record, such as:
- Nonprofit name
- Name and address of the nonprofit’s registered agent
- The number of shares the nonprofit is allowed to issue and their par value
- The name and address of the nonprofit incorporation
Additionally, the articles must include a purpose and dissolution clause. Every nonprofit organization is created or formed for a specific purpose. The specific purpose must be clearly stated in articles.
Additionally, the nonprofit organization must be limited to one or more nonprofit categories, which may be found on the Nebraska state statute.
When compiling the dissolution clause, you need to state what the organization’s possessions and assets will be used for and what will happen to these resources and assets if the nonprofit is ever dissolved.
Upload Instructions: Select “forming a new entity/qualifying a foreign entity,” then select “Domestic Non-Profit Corporation.”
The next step is publishing incorporation. The articles need to be published over the course of three continuous weeks in either a general circulation or legal newspaper near the designated office.
7. File an initial report
Nebraska nonprofits do not need to file an initial report the state.
8. Secure an EIN (Employer Identification Number)
An Employer Identification Number is often referred to as an EIN and is basically a social security number for your nonprofit organization. It’s used by the Internal Revenue Service to identify a business entity.
- The EIN comes with many benefits, such as allowing you to:
- Open a business bank account via Nebraska nonprofit
- Apply for federal and state tax exemptions
- Hire employees
- Submit 990 returns to the Internal Revenue Service
9. Apply for federal tax exemption
A Nebraska nonprofit organization will only be granted 501(c)(3) tax-exempt status if the purpose of the organization is limited to one or more of the following categories:
Fostering national/international amateur sports competition, Preventing cruelty to animals/children, Testing for public safety, Charitable, Religious, Scientific, Educational, Literary.
If your organization falls into one of the above-mentioned categories, you can go ahead and file Form 1023. Filing Form 1023-EZ is recommended for small business organizations. Form 1023-EZ is a streamlined application or basically a simpler and shorter application form for smaller nonprofit organizations.
Both of these application forms will need to be filed with the Internal Revenue Service under the Internal Revenue Code, section 501(c).
The IRS will receive, vet, and either decline or approve your federal income tax exemption application.
If the application is approved, then a determination letter will be sent to your organization stating that it is one of the existing organizations or exempt organizations that are not liable for federal taxes under section 501(c)(3).
Make use of the IRS compliance guide to ensure that your nonprofit remains compliant and continues to enjoy all the benefits of tax exemption.
10. Apply for Nebraska state tax exemption
If your organization has already been approved and granted federal income tax exemption, then you are also automatically exempt from Nebraska state income taxes.
However, unrelated business income is also taxable in the state of Nebraska under Nebraska corporate taxes. So depending on your organization’s scope and activities, you may need to file to obtain sales and use tax exemption.
In order to do this, complete Form 4 and mail it to the following address:
Nebraska Department of Revenue
P.O. Box 98903
Lincoln, NE 68509-8903
11. Other applicable permits and licenses
Nebraska nonprofits do not require statewide business licenses. However, you may need to obtain more specialized permits and licenses depending on the activities your nonprofit is planning on holding.
The Nebraska Department of Revenue provides helpful licensing information. All you need to do is check with your city and county licensing divisions to determine whether you need to secure any permits or licenses for the organization.
Additional state registration and reporting requirements
Charitable Solicitation Registration licensure is not required on the State level in Nebraska. So there’s no need for public charities to register with the state prior to fundraising.
12. Submit an annual report
Nebraska nonprofits must file their biennial report to the Secretary of State. All Nebraska nonprofits must submit their reports during odd-numbered years by the 1st of April.
The report needs to confirm relevant and updated information pertaining to your charitable organization, such as its address, the name and addresses of the registered agent, and the names of the directors.
Costs of starting a new nonprofit in Nebraska
The following filing fees are applicable to all Nebraska nonprofits:
- Filing Articles of Incorporation: $10 + $5/page
- Filing Nebraska tax application: usually $0
- Application for federal income tax exemption or 501(c): $275 or $600 IRS fee
After you’ve started your nonprofit, there are a few necessary steps that you should take to keep your organization running smoothly. Let’s take a closer look at them below:
Open a business bank account
- Maintain accounting and tax filing
- Ensure that your personal assets are kept separate from your nonprofits’ assets
To open a bank account, you will need to provide:
- Your EIN
- A copy of your articles of incorporation
- A copy of your organization’s bylaws.
Hire a business accountant
- Simplify payroll and bookkeeping
- Prevent your nonprofit from avoiding penalties and tax errors
- Manage your nonprofit’s funding
- Focus on growing your nonprofit
- Manage risks
You may opt for General liability, Personal liability, or Worker’s compensation insurance.
Build a website
As we mentioned earlier, you may want to create a website for your organization to legitimize your business or give it more credibility. A dedicated website is also one of the best ways to share your nonprofit’s vision, mission, and story with supporters. Consequently, it’s also a great way to announce upcoming events and goals.
Sign legal documents
One aspect that tends to get overlooked is signing legal documents in your personal capacity instead of as an authorized representative of your nonprofit.
If you’ve appointed yourself as a registered agent of the nonprofit, then the following tips will help avoid personal liability:
- State the registered name of your nonprofit
- Use your name and signature
- State your position/role in the organization as its authorized representative
When signing legal documents on behalf of the nonprofit, it is important that you do so in your capacity as the registered agent, as opposed to your capacity as an individual.
Example: Instead of signing your name only, state the name of the nonprofit and then your name and position within the organization before signing.
For-profit organizations aim to maximize profits and then distribute these profits to the company’s shareholders, stakeholders, and owners. Nonprofit organizations aim to fulfill an unmet need in the community or provide society’s needs. Additionally, nonprofit organizations do not have owners, but founders.
Fundraising is a core part of running a successful nonprofit organization. The good news is that there are many ways to raise funds for your nonprofit in line with your organization’s mission statement, including attracting people for fundraising, researching donors, promoting word-of-mouth, social media, Internet, and brand ambassador tactics, as well as building your brand equity.
Some of the benefits of receiving 501(c)(3) tax-exempt status in Nebraska include accepting tax-deductible donations from sponsors, limited liability, credibility with the Internal Revenue Service, and access to grants from the government and private foundations.
An organizational board meeting is the first meeting held by your nonprofit. The purpose of this meeting is to appoint board members, adopt bylaws, adopt conflict of interest policy, and take attendance to determine that you have a quorum.
A nonprofit may use its business plan to persuade major donors or foundations to provide funding, recruit organizational board members, apply for business loans, and ultimately use the business plan as a compass for the nonprofit in the event that they get off track.