5 Challenges Faced by Nonprofit Organizations

Nonprofit organizations serve a great purpose and make a difference in the community daily. In order to stay both active and effective, nonprofits have to attract supporters to their cause and then convert those supporters to become donors or members that will support their work.  

Although nonprofits serve a great purpose, they are faced with various challenges along the way. Thankfully, there is always a way to turn those challenges into opportunities. We’ve listed some of these challenges and provided you with some tips on how to turn them around and make it work for your organization:

Nonprofit Challenges

1) Retaining/Engaging Donors

Without donors, nonprofits cannot survive. The organization-to-supporter relationship is very important. Today’s donors do not want to think that all you want from them is their money. Rather than asking for money right away, find ways to engage conversations with supporters and give them an opportunity to get to know your organization and build an emotional attachment to your work and mission. These are some good ways to keep donors invested: 

• -Keep them engaged and let them know that they are part of the team. Let them know that they are an integral part to the organization. 
• -Let donors know where their money is going and what it is supporting. Give monthly or quarterly updates via email or newsletter. 

2) Lack of Resources

When finances are limited and resources are scarce, it is beneficial to form partnerships with other organizations that have the similar mission and goals. By forming and fostering these relationships, you can achieve more on a larger scale. Remember, there is strength in numbers. 

3) Adequate Funding

Acquiring the necessary funds to adequately operate your organization in its full potential may be a bit of a challenge for some groups. Organizations can solicit funding from foundations, corporations, grants, and philanthropic individuals. Reaching out to local businesses in the community along with community leaders for sponsorships or donations. 

4) Public Awareness

New non-profit groups or organizations that may not be well known in their community yet should put focus on increasing awareness about who they are and what they do. Implementing an online marketing campaign/strategy will allow for your organization to be promoted to a larger audience and can also draw the attention of potential funding sources. Utilizing social media platforms like Facebook, LinkedIn, Twitter, Instagram, and more, will also be very beneficial in reaching larger audiences. 

5) Printed Communication

The days of paper-based marketing and sales are slowly, but surely fading away. For many years, organizations depended heavily on direct mail serving as their main point of contact with current and potential donors. Although direct mail still brings in some money, it mainly targets just one age bracket, which is age 55 and over and makes it quite difficult to track who opened and read the mailer that was mailed. 

The best way to solve this problem is to move online. Instead of sending letters, send emails with an intriguing subject line and include the information that you’re trying to disseminate. Also, if your organization has a website, you can add a “Donate Now” button to your home page which will allow donors to give online. Having the capability to receive donations online can also encourage donors to set up automatic payments and donations towards your organization each month. Plus, millennials are more prone to make donations via text or online if they are contacted through that medium. 

How To Maintain Tax-Exempt Status

In order to remain as a tax-exempt organization or to receive tax deductible donations to sustain the operation of your organization, you must in good standing with the IRS. This status can be maintained by e-filing with ExpressTaxExempt. Within minutes you will be able to successfully e-file one of the forms including in our Form 990 Series or our latest release for political organizations, Form 1120-POL.

Feel free to contact our support team of e-file experts at 704.839.2321 if you have any questions or need help with your e-filing experience. We’re here to assist you Monday through Friday from 9 a.m. to 6 p.m. EST or feel free to reach us 24/7 via email at support@ExpressTaxExempt.com.

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REVOKED! Reinstating Your Tax Exempt Status

Last time we discussed what to do if you file your Form 990 series return late, and briefly touched upon what to do if you lose tax exempt status.

Now, we’re going to peel back the layers a bit more and get into the steps for reinstating revoked tax exempt status.

So You've Been Revoked

How do nonprofit organizations lose their tax exempt status? The easiest way is failing to file Form 990 for three consecutive years. That leads to you ending up on the Exempt Organization Select Check list published every month by the IRS.

The good news? You can search the EO Select Check list for your Employer Identification Number to find out if you’ve been revoked! The list is updated monthly, and features the name, EIN, organization type, last known address the organization provided to the IRS, effective date of revocation, and the date the organization was added to the list.

How to Get Reinstated

If an organization wants to get their tax exempt status reinstated, they must file a new application for exemption and pay the appropriate user fee.

The IRS then determines if the organization meets the requirements, and can issue a new determination letter.

The IRS will also include the reinstated organization in the next update of EO Select Check and indicate in other publications (like the Business Master File).

In most situations, the effective date of reinstated exemption is the date the current application was submitted, but organizations can request for a retroactive reinstatement.

Can You Get Retroactive Reinstatement?

But retroactive reinstatements have limited circumstances attached to them, and it is up to the organization to supply the IRS with the needed information.

To request reinstatement back to the date of automatic revocation, organizations need to attach a letter to the application for reinstatement explaining why they failed to file required returns for three consecutive years.

After that, the IRS will determine if your organization had a reasonable cause for not filing your return for three years.

Once you’re reinstated, you need to keep up to date on your tax exempt returns! When you e-file your Form 990 series return with ExpressTaxExempt, you can expect a secure, easy-to-use system designed to have you done in no time.

If you have any questions about e-filing, contact us by phone at 704.839.2321 or by email at Support@ExpressTaxExempt.com.

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How to Start a Nonprofit: The Road to 501(C)(3)

It’s human nature to want to help your fellow man. And maybe you’ve been fostering an idea of how you can help, but don’t know what to do. There are a few ways to approach this. One way is to jump right in and do it, without much of a plan. Your other option is to treat the whole process like you’re starting a business.

So take your idea for a nonprofit or tax exempt organization, and ask yourself—what are my next steps? What is my plan?

Ask Yourself, Is This Necessary?

Your first step is to explore the necessity for your nonprofit. Is this organization idea unique enough to have legs? Are there existing organizations that already cover this need? Do people really need this charitable service? How are needs being overlooked? Would this be better as a business instead of a nonprofit? Once you’ve covered your bases, you can move forward.

Next, you want to create the logistics of your nonprofit. This includes a mission statement, a business plan, and your governing board. These will help you communicate your organization's mission, plan the details of this venture, and create the basic roles within your team. Structuring your organization will give your nonprofit credibility, limit liability, and create organized documentation and policies which will make your IRS filing easier.

Apply for Nonprofit Status With Form 1023

Next, you need to file Form 1023 to get 501(c)(3) nonprofit status.

There are a few key requirements for an organization to be exempt from federal income tax under section 501(c)(3):

• First, the nonprofit organization must be organized as a corporation, trust, or an unincorporated association, with its organization document defining the organization's purpose(s), and the organization must also permanently dedicate its assets to exempt purposes.
• It must also be operated to further one or more of the exempt purposes stated in its organization document.

Organizations that are eligible to file Form 1023 for recognition of exemption under section 501(c)(3) of the Internal Revenue Code range from churches to schools and even hospitals.

After that, you simply need to keep organized, perform your charitable duties, and stay compliant!

Staying Compliant With Form 990

How do you stay compliant? Well, ExpressTaxExempt is the simplest solution for e-filing Form 990, Form 990-EZ, and Form 990-N (the e-Postcard). With our bulk uploading feature, multi-user accessibility, and the ability to share your return for review, we have the most bang for your nonprofit’s buck.

How do you e-file your Form 990? Watch this!




If you run into any problems e-filing your 990 series return, our friendly customer support team is ready to answer your questions! You can reach them by phone at 704.839.2321, or by live chat on our site.

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