Writing I’d Prefer Not To Do: The Nonprofit Paperwork Blues
Post date: Jul 24, 2018 1:46:46 AM
Warning: This is a tirelessly long description of a tirelessly long process, but I sprinkle in some flying monkeys and a yellow brick road for good measure and comic relief. Tuck in!
There are all types of writing, but at the most basic level I can break writing into two simple categories:
• writing I want to do, and
• writing I’d prefer not to do.
I thought I’d talk a little about the writing I’d prefer not to do, but am doing, in hopes that it will help get me and many other local writers to a place (a physical place) where we can do a whole lot of writing we want to do.
What kind of writing am I talking about? I’m referring to all the documents and legal forms I’ve had to write up in order to receive the legal determination of "nonprofit" for The Room to Write. Becoming a nonprofit is an extremely complex process and it honestly boggles my mind how any corporation that is quite literally not making a profit could possibly afford to be legally recognized as a nonprofit. Beyond the mere application fees that you must first pay to the State, then the Feds, then to the State again, but this time to the Attorney General’s Office because apparently the Secretary of State and the Attorney General’s Office don’t talk to each other—oh, and then you pay the Secretary of State again in order to get a certified copy of the document you thought you already paid to file, so you can send it to (you guessed it) the Attorney General’s Office.
Aside from the basic upfront fees (which equal $35 + $375 + $100 + $50 [The $50 is if you want to solicit donations, which at this point you have to since you’ve given any of your (non)profits to the state and federal government] + $15 = $560 total) you need to pay an attorney who is fluent in legalish and taxish if you don’t happen to be friends with or related to one already. Oh, and just because you know three attorneys and two CPAs does NOT mean they know the first thing about nonprofit forms and laws which is a whole category all its own.
Enough complaining and sarcasm (ok, the sarcasm may come back) let me just try to tell you what I learned—most of it the hard way and in such a way that often made my head hurt. Quite honestly I don’t know how there are any nonprofits. It’s that complicated. First apply for an EIN number. Pop the champagne after that because that’s the easiest thing you’ll do and just the beginning of the eye-crossingly complex road you’re choosing to travel.
This reminds me of Robert Frost’s poem, The Road Not Taken, often referred to--even by me--as The Road Less Traveled. In reality, I guess those titles would be the complete opposite: the road Rob-O doesn't take and the road he does. Perhaps even Robert Frost was trying to tell me not to go this way! But don’t picture a hiking trail through the woods or a path through snow-covered hills in Vermont. Picture the scene in The Wizard of Oz when Dorothy sees the sign “I’d turn back if I were you.” Sure, she eventually makes it home to Kansas but she goes through some pretty nasty stuff first along with her travel companions (substitute your newly minted board members in place of the scarecrow, the tinman and the lion).
So, you’ve decided to ignore the sign and you venture into the haunted wood where flying monkeys lurk (that’s the IRS) and poppies grow (only these are not the poppies that will make you sleep—you’ll wish they were because, instead, you’ll be up all night and exhausted). After receiving the EIN (which stands for Employer Identification Number) you file as a corporation with the State Secretary’s office. Here begins the writing I’d prefer not to do: Articles of Organization. Make sure you write “Inc” after your organization’s name because the State will reject your application if you don’t and the best part is that they will not tell you this. They do not send a letter or email.
If some time has passed and you have heard nothing but crickets—give the State a call. The good news is that when you call the person on the other end will be very kind, patient and helpful. When writing your Articles do some homework and put in the legal tidbits that are usually required. A great resource for legal documents is the NOLO Book Series. Look them up in your library if you are truly a nonprofit and can’t afford to buy the book (like us:). At this point you need a board because you need to list them in your Articles, so get going down that yellow brick road and keep your eyes peeled for friendly faces.
Onto the IRS. These were my least favorite documents because, quite honestly, I didn’t even know which ones to fill out because everything is so very densely packed and for a gal who loves words—the words they use in the combinations they use them in just ain’t right! Nobody speaks IRSish natively. Find a lawyer at this point or face those flying monkeys alone. I’m sure it’s possible, but I was almost instantly overwhelmed just thinking about it. Picture the tinman. I froze! FYI: when you become a corporation with the State, the instructions tell you to file an 1120 form, but what they don’t tell you is that if you’re becoming a nonprofit, you don’t do that. Ignore that. Nonprofits file a 1023 form.
My goodness—knowing those forms off the top of my head feels similar to completing the first year of Spanish in middle school. I’m nearly giddy about knowing the beginnings of what seemed like a secret code and then realize how much more there is to know that I may never absorb.
You fill out the 1023-EZ, which is stunningly EZ if you’ve looked, as I did, at the not-so-EZ 1023 form and your eyes bugged out of your head. It’s mind-numbing to even recall briefly. Here’s when you need your Board’s Bylaws adopted and signed by your board members (remember that highly flammable man of straw, the cool cat with the hollow chest and the big fluffy frightened fella you were supposed to collect along the way?). Oh—and you need numbers. You know, IRSy-type numbers.
Here’s where not making much money finally pays off (no pun intended) because then there are not a whole lot of numbers to look up in order to use those math skills your teacher promised would come in handy one day. Here’s the thing though, while the numbers may not be hard to find, it’s the words that will seem at the same time familiar and completely foreign. Each line will make you wonder, “Who actually understands this?”
Here’s where I went wrong being the glutton for punishment that I am. I must have just started filling out everything with an “EZ” after it because while I filled out the 1023-EZ forms, I completed the 990-EZ form that I had seen mentioned in the “instructions” somewhere along that wonky, brick road. Picture the cobblestones at Fanuel Hall after all the bars close. There’s no skipping along in shiny, red heels and doing side-kicks into the sun whilst singing “We’re off to see the wizard!” This brick road is a mass of Boston cobblestone pounded in by a bunch of drunken Puritans—oh, wait, I don’t think they were allowed to have a pop. Well, whoever it was, what’s left is an ankle-breaking mess where you constantly feel dizzy.
Please understand that when I refer to IRS “instructions” you should not be picturing the two-sentence instructions that we all ignored in school but were urged endlessly to read. IRS instructions are so diggity-dang long that they actually don’t even include them on the same form that you are being told to fill out. The “instructions” are actually a whole, separate, million-page document which often refers you to other “instructions” and other “schedules” (schedules translates as horrible, horrible digressions. Worse than any digressions I have ever made and that’s saying something as I have a tendency to digress and to even digress from my digressions) with complete sets of instructions all their own. Who came up with this stuff?!? (Ok, yeah, yeah—lawyers:)
Back to where I went wrong in my attempt to do right, but as a mere mortal, not some IRS demigod. I filled out the 990-EZ and sent it in. Picture me coming back from vacation to find an envelope from the IRS. Even when flying monkeys don’t actually show up at your door and ring your doorbell, a letter from them still makes you tremble as you imagine them swooping down and snatching your first-born if you don’t submit to their demands: Surrender Dorothy (insert your name for Dorothy). Of course, although I filed the 990 two solid months earlier, this envelope arrived at the exact time I was gone on the first week-long vacation I’ve taken in an entire year and furthermore it stated the need to correct and refile within 10 days, which of course happened to be the very next day.
The very next day (the day it was due and I was to Surrender) I called the IRS knowing I had to hear it from the horse’s mouth (or in this case the flying monkey’s mouth) what exactly I needed to do and to explain that I was away when the letter arrived, etc etc. I had forgotten to file Schedule A. “It was in the instructions,” the patient woman on the IRS side of the phone explained. “Instructions.” Oh, right—those very simple instructions. The word really did sound simple when she said it, but then again she was fluent in IRSish. She talked about how, actually, I didn’t need to file anything at all because I was not legally formed until this year, and that when I do need to file, I can just file the 990 postcard. For those following the Wizard of Oz metaphorical thread, this is when Glinda tells Dorothy that she could have simply clicked her heels together three times to get home. Ugh!
It’s simple. “Right!” I said, “I saw something about that and set my account up and everything, since it was an online-only filing, but when I tried to do it the EIN number I put in was rejected. The nice lady (Shall we call her Glinda? She didn’t seem like one of those mean, flying monkeys at all!) who spoke fluent IRSish told me then that the number was rejected because I didn’t need to file. Ahhhhh . . . if only there could have been a little message that popped up telling me that. Maybe they could have put that little detail in one of the volumes of “instructions” for first-time filers. Perhaps it was there but I just didn’t see it. Anyway, I’m telling you. If I can at least turn my miserable mistakes into a slightly better journey and a “Get Out of the Haunted Woods Free” ticket for you, please let me know and that will make it all a worthwhile bother.
Now—go register with the Attorney General’s Office. Give them their cut of the nonprofits of course. But, give more money to the Secretary of State’s office first so you can pay to have a certified copy of the Articles of Organization that you thought you already paid $35 for, sent to you so that you can then send that to the Attorney General's Office. It's kind of like when you passed notes in school between two kids who refused to talk face to face. Gather all those documents together.