Nonprofit Law/Changing my nonprofit to a foundation
From 2008-2011, I have been running a nonprofit working with inner city kids. From 2011-2014 we were inactive. Although we did have our 501c3 status and did filed all the forms, we did not running any programs or anything, thus not taking any donations. In 2015, we decided to become a foundation that helps find and grant funding for other nonprofit so that they can work with inner city kids. My question is for us to become a foundation would it be easier to shut down out old 501c3 and refile for a new foundation or can we still keep the old EIN and just amend the Article of incorporation and other necessary paperwork. What is easier in terms of paperwork as well in terms of cost. Thank you in advance.
The word "foundation" has no particular meaning in reference to exemption issues. There is, however, a term "private foundation". From what you wrote I am assuming that your organization received a determination letter from the IRS that it is exempt from federal income taxes and that letter had that your organization was not a private foudnation and your present status through a search on the IRS site at http://apps.irs.gov/app/eos/mainSearch.do?mainSearchChoice=pub78&dispatchMethod=
shows in the last column "PC" which stands for "Public Charity".
A quick summary of the differences between public charities and private foundations can be found at:
www.guidestar.org/news/features/foundations.jsp and you can see there that it is preferable for your organization to keep your public charity status if you can maintain it. You may be able to maintain that public charity status if you qualify under the "public support" test for public charities. See
. pdf on page 30 in the middle column under the heading "Private Foundations". There we see:
--- Start of excerpt ---
Every organization that qualifies for tax exemption as an organization described in section 501(c)(3) is a private foundation unless it falls into one of the categories specifically excluded from the definition of that term...In effect, the definition divides these organizations into two classes, namely private foundations and public charities. Public charities are discussed later.
Organizations that fall into the excluded categories are generally those that either have broad public support or actively function in a supporting relationship to those organizations.
--- End of excerpt ---
The public support test is described starting on page 32, right column, under the heading "Qualifying as Publicly Supported."
If you think that can not maintain your public charity status, you are not required to notify the IRS. http://goo.gl/gY8x7
- but, after some time they may notify your organization that it will be treated in the future as a private foundation. Even though you would not need to notify the IRS that you think that you are now not qualified as a private foundation you would need to notify them because you are changing your activities. http://goo.gl/qF1t7J
The states generally follow the IRS procedures but, this forum is only for federal exemption issues so I will only give you that hint. As for amending your articles of incorporation or bylaws, unless you put something weird into those documents, you would not need to amend them. If you want to hire me to read those documents and give you my comments, send me an email directly to my email address below and I will quote you my fees.
Attorney at Law
P.S. This response is intended to be a general statement of law, should not be relied upon as legal advice and does not create an attorney/client relationship.