Nonprofit Industry Organizations
Publications and News
Regulatory and Tax Information
Nonprofit Accounting Resources
Resources - General
Resources - Boards of Directors
Starting a Nonprofit Organization
Miscellaneous
NAICS Classifications

---

• FASB Codification section 958, Not-for-Profit Entities, covers topics generally. FASB Codification Topic 958-605-30 specifically covers recognition and measurement of contributions received.
• Accounting for Contributions Made and Received (SFAS No. 116)
• Financial Statements of Not-for-Profit Organizations (SFAS No. 117)
• Accounting for Certain Investments Held by Not-for-Profit Organizations (SFAS No. 124)
• Transfers of Assets to a Not-for-Profit Organization or Charitable Trust That Raises or Holds Contributions for Others (SFAS No. 136)
• Not-for-Profit Entities: Mergers and Acquisitions—Including an amendment of FASB Statement No. 142 (SFAS No. 164) - FASB Codification Topic 958-805 for business combinations and Topic 958-810 for consolidations

Step 1: Define your nonprofit purpose.

Step 2: Visit the State of Michigan Department of Labor and Economic Growth (DLEG) Domestic Nonprofit Corporations page for general requirements for forming a nonprofit organization in Michigan.

Step 3: File articles of incorporation. (For Michigan, see Form 502, Articles of Incorporation)

IRS Required provisions for articles of incorporation
Michigan requirements for articles of incorporation
IRS Sample Articles of Organization
IRS: State Nonprofit Incorporation Forms and Information
Michigan: Common Problems with filing Articles of Incorporation
Michigan DLEG Corporation Division publications
 

Step 4: Prepare corporate bylaws

IRS By-Laws Requirements
 

Step 5: Apply for a Federal Tax Identification Number (also known as an EIN Number.)

Step 6: File Michigan Attorney General Initial Solicitation Application/Registration, if necessary. A Michigan charity or a charity soliciting funds in Michigan should complete this form. This questionnaire is used by charities for determining whether a license to solicit is required.  This determination is made by the Attorney General and not the charity itself.

Step 7: File Michigan Attorney General Application for License to Solicit Donations, if required.

Step 8: File IRS Application for Recognition of Exemption (Form 1023 and Instructions), if desired. Recognition of exemption is required in order for donors to receive a charitable deduction for their gift.

Nonprofit Overview:: A nonprofit organization in Michigan generally starts with the formation of a nonprofit corporation.  If a nonprofit organization also wishes to receive tax deductible charitable contributions from others, IRS Form 1023, "Application for Recognition of Tax Exempt Status" should be prepared and approved by the IRS.

What's the difference between a nonprofit organization and a tax-exempt organization? An organization's nonprofit status is governed by state law. Its tax-exempt status is governed by federal law.

Are there different types of tax-exempt organizations?  Yes.  501(c)(3) organizations (charitable, religious, and educational organizations) comprise the most common type.  Others types include 501(c)(4) Civic leagues and social welfare organizations; 501(c)(5) labor/agricultural/horticultural organizations; 501(c)(6) business and professional leagues; 501(c)(7) social and recreational clubs; 501(c)(8) fraternal beneficiary societies; and 501(c)(19) veterans organizations.

What are the allowable purposes under which a 501(c)(3) entity may be formed?

• Charitable
• Educational
• Religious
• Scientific
• Literary
• Testing for public safety
• Fostering national or international (i.e., not local) amateur sports competition
• Preventing cruelty to children or animal

What IRS tests must an organization meet for 501(c)(3) status:

1. Organizational test:

• Limit its purposes to one or more of the exempt purposes listed in Code section 501(c)(3)
• Not engage in a nonexempt activity. In addition, assets of the organization must be permanently dedicated to an exempt purpose.

2. Operational test:

• Organization must show that it will engage primarily in activities that further its exempt purposes.

Most non-for-profit organizations are classified under Sector 81 (Other Services except Public Administration) of the 2007 North American Industry Classification System (NAICS) with most under Subsector 813 Religious, Grantmaking, Civic, Professional, and Similar Organizations.)

The NAICS description for this classification is:

Sector 81--Other Services (except Public Administration)

813 Religious, Grantmaking, Civic, Professional, and Similar Organizations

Industries in the Religious, Grantmaking, Civic, Professional, and Similar Organizations subsector group establishments that organize and promote religious activities; support various causes through grantmaking; advocate various social and political causes; and promote and defend the interests of their members.

The industry groups within the subsector are defined in terms of their activities, such as establishments that provide funding for specific causes or for a variety of charitable causes; establishments that advocate and actively promote causes and beliefs for the public good; and establishments that have an active membership structure to promote causes and represent the interests of their members. Establishments in this subsector may publish newsletters, books, and periodicals, for distribution to their membership.

See NAICS - Drill Down Chart for other classifications and definitions. The NAICS is maintained by the U.S. Census Bureau. The NAICS replaced the Standard Industrial Classification (SIC) system starting in 1997. Both SIC and NAICS classify establishments by their primary type of activity.