Under Iowa law, your exemption from state-level income tax is automatic once federal exemption has been obtained. However, there are Iowa taxes beyond income tax which you need to consider as your organization engages in different kinds of transactions. These include sales, use, and property taxes. The Iowa Principles and Practices for Charitable Nonprofit Excellence states, "The charitable nonprofit entity should make application for other state and local tax exempt status, such as property and sales tax (see Iowa Code 427.1(8), Iowa Code 422.45)." (II,D, 4) Take property tax for example. An additional filing is required in order for nonprofits to be exempt. The circumstances under which the nonprofit can gain exemption from property tax are limited. A nonprofit that owns the property from which it runs its business can apply for exemption from property tax. A nonprofit renting real estate is not entitled to any exemption on behalf of the landlord. Nonprofits which generate revenue from the real estate have more difficulty getting property tax exemption and should consider partial property tax exemption if the revenue generating portion of the real estate (such as a museum’s gift shop) can be distinguished from the rest of the facility. The application for property tax exemption is available online. A valuable resource for Iowa nonprofits is Iowa Tax Issues for Nonprofit Entities on the Iowa Department of Revenue's Web site.

Yes there are stricter limitations on gifts to private foundations. Gifts to public charities by individuals have an annual limit of fifty percent of the donor's adjusted gross income. Gifts to private foundations however place that limit at thirty percent of the donor's adjusted gross income. The figures are somewhat different for corporate donors who can deduct ten percent of their taxable income. If the contribution is capital gain property rather than cash, the limitation is then thirty percent for public charities and twenty percent for foundations. The Iowa Principles and Practices for Charitable Nonprofit Excellence states that "Charitable nonprofits must be aware of and comply with Internal Revenue Code provisions (see e.g. I.R.C. section 170)" (VIII E 2). This is to make sure inaccurate information about gifts is not passed on to donors. A good source for these rules is IRS Publication 526 Charitable Contributions

No. Under Iowa law, a nonprofit corporation is only required to have one or more board members (Iowa Code 504.803), but the IRS, on the Form 1023 Application for Exemptions, wants to see at least three board members. The Iowa Principles and Practices for Charitable Nonprofit Excellence recommends at least five board members (V.B.3).

Yes. According to the Iowa Principles and Practices for Charitable Nonprofit Excellence an Iowa nonprofit corporation that expands its activities into other states should submit the required foreign corporation filings in those states. (II. D. 5.) Usually the foreign corporation filing requirements are spelled out on the Secretary of State website for the state in which the nonprofit has begun to operate. The required forms are available on those sites. Forms for the states bordering Iowa are available as listed below:

Illinois - Application for Authority to Conduct Affairs in Illinois (Form NFP113.15); $50 filing fee.

Minnesota - Select pdf for Certificate of Authority to Transact Business in MN; $50 filing fee.

Missouri - Foreign Nonprofit Corporation Application for Certificate of Authority to do Business in Missouri (Corp. 55A); $25 filing fee.

Nebraska - Application for Certificate of Authority to Transact Business (Non-Profit Corporations); $25 filing fee.

South Dakota - Go to South Dakota Secretary of State, Nonprofit Corporations website. Scroll to Foreign Nonprofit Corporations section and choose the Non-Stock Application for Certificate of Authority; $125 filing fee.

Wisconsin - Foreign Nonstock Corporation Certificate of Authority Application (Form 121); $100 filing fee.

Yes, it's called Tech Soup. The site is designed to assist nonprofits with their technology needs.

Application can be made to the U.S. internal Revenue Service for federal income tax exempt status using either IRS Form 1023 or Form 1023-EZ.

See Instructions for Form 1023.Applications for recognition of exemption on Form 1023 must be submitted online at www.pay.gov, which requires you to register for an account. (The IRS no longer accepts paper applications.)  For an overview of the Form 1023 electronic filing, see About Form 1023, Application for Recognition of Exemption. The required user fee for Form 1023 is $600. The fee must be paid when submitting the form and can be made directly from a bank account or by a credit or debit card. 

The IRS also has the Form 1023-EZ, a shorter version of the Form 1023. To see if your nonprofit is eligible to use the 1023-EZ, See Instructions for Form 1023-EZ. This document contains the Eligibility Worksheet. Also see About Form 1023EZ, Streamlined Application for Recognition of Exemption. The cost to file this form is $275 (gross annual receipts less than $50,000). 

Form 1023 requires a four-year projected budget. It can be helpful to review the Form 990s of similar organizations. For guidance on developing a budget it can be helpful to review the Form 990s of similar organizations. For example, if you are creating a nonprofit animal shelter, look at an Iowa animal shelter's 990 filings. Form 990s can be found on the Candid (formerly GuideStar) website.

Nonprofit corporations in Iowa are created under Iowa Code 504, the Revised Iowa Nonprofit Corporation Act ("RINCA") which became effective in Iowa on January 1, 2005 for new corporations. Nonprofit corporations are created by filing articles of incorporation signed by the incorporators with the Iowa Secretary of State at Business Services Division, Lucas Building, First Floor, Des Moines, Iowa 50319. The articles of incorporation should be accompanied by a filing fee of $20 with checks made payable to "Secretary of State." The articles of incorporation may also be filed online at the Secretary of State's website using a credit or debit card. The link to sign up for Fast Track Filing is https://filings.sos.iowa.gov/Account/Signup.The required provisions of the articles of incorporation are the corporate name, a registered office and registered agent, incorporators, members, and dissolution. To get tax exemption under 501(c)(3) there must also be in the articles of incorporation a purpose statement, limitations on political activity, and a prohibition on private inurement.

A nonprofit corporation is a legal entity that can engage in nonprofit activities in Iowa. In many ways it can function like a for-profit corporation. For instance it can purchase land, hire employees, have a bank account, borrow money, and have board meetings. But unlike for-profit corporations a nonprofit corporation cannot operate for profit and distribute earnings to investors as a for-profit does. Nonprofit corporations in Iowa are described in a statute in Iowa Code 504. The Iowa Secretary of State's office governs the creation and regulation of nonprofit corporations in Iowa. Management of liability through incorporation is one of the easier risk management techniques available to nonprofits. This incorporation is only one of a number of processes available to protect board members from liability described in Iowa Code 504, others being immunity, indemnification, and insurance.

The IRS will send you a determination letter. IRS Revenue Procedure 2009-4 states that a determination letter is "a written statement issued to a taxpayer by the Service’s EO Determinations or EP Determinations office that applies the principles and precedents previously announced to a specific set of facts." This means the IRS reviewed the facts on the nonprofit's Form 1023 Application for Exemption in light of the law and determined that it can be a 501(c)(3) exempt entity. You will use your organization's  determination letter for many purposes. For instance when approaching a funding agency that would potentially give your organization a grant, you will need the determination letter to establish your organization's 501(c)(3) status. Many funders will not even review a grant application if there is no determination letter accompanying it.

All nonprofit corporations organized within the State of Iowa or authorized to do business within the State of Iowa must file a Biennial Report with the Secretary of State between January 1 and April 1 of each odd-numbered year. Each corporation's registered agent will receive a Biennial Report notice in early January. The biennial report must be filed within sixty days of the due date. Reports may be filed by mail or online. Nonprofits may also create an account to use the Fast Track Filing option available on the Secretary of State website.

There is no fee for filing a Nonprofit Corporation Biennial Report.

In order to be considered tax exempt under IRC 501(c)(3) your organization's purpose must be one of the following: religious, charitable, scientific, testing for public safety, literary, educational, amateur sports, prevention of cruelty to children, prevention of cruelty to animals, or conservation and environmental activities. If your organization is going to be an Iowa Nonprofit Corporation, the purpose must also be lawful according to Iowa Code 504.301.

An outcome is the final component of any given program carried out by an organization. When a program’s inputs (resources dedicated to a particular program, including staff), activities (how the program utilizes the inputs) , and outputs (the direct products of the activities) are all taken into account, the result is an outcome— the effect the program had on the participants. After the activity, did the participants increase their skill in a particular area? Was their behavior modified? Did they accept a new perspective or obtain new knowledge? Many times, organizations keep thorough records about inputs, activities, and outputs, but they do not have a complete sense of what happens to participants after they receive their services.

Tax exemption under IRS code §501(c)(3) has two primary benefits: 1) the donor making a donation to the nonprofit gets a tax deduction, and 2) there is no income tax on related earned income. This is true for purposes of federal income tax and Iowa income tax. Other benefits include the ability to issue tax-exempt bonds for capital projects, qualification for tax-exempt retirement plans (403(b)), and special postal rates.

The Iowa Principles and Practices for Charitable Nonprofit Excellence says, "A charitable nonprofit organization can be organized in Iowa as a corporation, a trust, a limited liability company, or an unincorporated association. While partnerships and sole proprietorships are legal entities in Iowa, the Internal Revenue Service will not give 501(c)(3) status to such entities." (II.A.1.)

The board of directors is the group of individuals that manages the nonprofit. The board of directors serves the organization. It does not own it. Under Iowa Code 504.803, a nonprofit corporation can have a board of one director, but the IRS usually insists on at least three directors. The Iowa Principles and Practices for Charitable Nonprofit Excellence advises nonprofits to have a board of at least five directors. (V.B.3) When a nonprofit is a trust and not a corporation, the board is often called a board of trustees rather than a board of directors.

A mission statement sets forth your organization's purpose, vision (what it hopes to achieve), and values (the guiding ethical principles in pursuing the mission). It is a clear statement of what your nonprofit does, whom it serves, and its uniqueness when compared to similar organizations. The Iowa Principles and Practices for Charitable Nonprofit Excellence gives the following suggestions for what a mission statement should address:  "a. Why does the organization exist? b. What service does the organization provide? c. What are the geographical boundaries in which the organization will function? d. Who are the clients to be served? Why should the clients utilize the services of the organization? e. What differentiates the organization from those working in the same or allied fields? What is the organization’s niche? How do you position the organization in the community? f. Who are the key constituents both internal and external? Why should they associate themselves with the charitable nonprofit? In short, who are we? Why are we here?" (III, 5)

Every US and foreign charity that qualifies under Internal Revenue Service Code section 501(c)(3) as tax-exempt is a private foundation unless it demonstrates to the IRS that it falls into the public charity category. According to The Foundation Center, a private foundation is a nongovernmental, nonprofit organization having a principal fund managed by its own trustees or director.  Generally, a private foundation is a fund of private wealth established for charitable purposes. The principle function of most private foundations is to make grants to other nonprofit organizations, qualified individuals, and government entities. On the Form 1023 application for exemption Part X, you  work through factors to determine if the nonprofit can get public charity status. Generally, tax treatment for a private foundation is less favorable than for a public charity.

There are a number of ways that a 501(c)(3) moves from private foundation to public charity status. If the nonprofit is a church, school, or hospital, or tests for public safety, it will be a public charity.  The nonprofit can also get its funding or support primarily from the general public, receiving grants from individuals, government, and private foundations. If one third of the organization's support comes from these public sources, it passes the "public support test". There are a variety of such support tests. For more information about them, see page 32, Qualifying as Publicly Supported in IRS Publication 557 - Tax Exempt Status for Your Organization. On the Form 1023 application for exemption Part X, you work through factors to determine if the nonprofit can get public charity status. After receiving exemption, Form 990 filers will then use Schedule A to calculate that fiscal year's public support.

An Employer Identification Number, or EIN, is needed whether your nonprofit has employees or not. It is also referred to as a TIN, or Taxpayer ID Number. When a bank account is opened for a nonprofit, the bank uses the EIN as an identifying number for the account. The EIN is also required to obtain tax exempt status, as stated on the first page of Form 1023. If a nonprofit organization has employees, the EIN is used on such required filings as IRS Form 941 Employers Quarterly Return. There is no filing fee for the EIN application. You may apply for it online. To apply, see Apply for an Employer Identification Number (EIN) Online.

By engaging in outcomes measurement, an organization can better assess the effects its programs are having on people’s lives. The United Way of America’s Outcome Measurement Resource Network defines outcomes measurement as “The regular, systematic tracking of the extent to which program participants experience the benefits or changes intended.” Outcomes Measurement provides an answer to the question, “What is the impact on the recipients of the services we offer?” Outcomes measurement is a tool that can assist an organization in the pursuit of two fundamental goals: improving and refining program services and communicating the organization’s value to the community. Organizations that can make a strong, quantifiable showing that their programs are having a strong impact on people’s lives are, among other things, better able to recruit and retain talented staff, obtain competent volunteers, increase or retain funding, and be leaders in the community. The results of outcomes measurement can help an organization determine where improvement is needed, how budgets should be modified, and how long-range goals should be prioritized.

A strategy is a set of actions that enables an organization to function in an efficient manner in order to carry out its purpose. Strategic planning is a systematic approach to determining what actions will be included in the set. In Strategic Planning for Public and Nonprofit Organizations, John M. Bryson defines the phrase as “a disciplined effort to produce fundamental decisions and actions that shape and guide what an organization is, what it does, and why it does it.” Strategies can be divided into three categories: organizational, programmatic, and functional. Organizational strategies detail actions that promote organizational growth (community development plans, partnerships with for-profits, board recruitment, etc.). Programmatic strategies focus on actions that that will enhance and manage the organization’s programs and services (developing a program evaluation process, initiating new services, informing the public about offered services, etc.). Functional strategies outline actions geared towards managing and supporting the organizations (e.g., obtaining appropriate technology to keep financial records, developing employee evaluation processes, facility management, etc.). A complete strategic plan includes all three categories.

Form 1023 is used to file for recognition as a tax-exempt charity with the IRS. A shorter version of the form, the 1023-EZ, may be used if the nonprofit anticipates less than $50,000 in gross receipts in any of the next three years. The forms must be submitted online as the IRS no longer accepts paper applications. 

For the Form 1023, see:

• About Form 1023, Application for Recognition of Exemption
• Instructions for Form 1023

For the Form 1023-EZ, see:

• About Form 1023-EZ, Streamlined Application for Recognition of Exemption
• Instructions for Form 1023-EZ (includes eligibility worksheet)