Create Your Invoice Letter Template for NPOs Effortlessly

Invoice letter template for NPOs

hello do you need help understanding what a 501c3 determination letter is i'm going to break it down in this video let's get started [Music] hey y'all this is tiffany with boss in a budget i help new and small nonprofits get up and running and also raise money for their new nonprofits if you need help you should be subscribed to this channel because i drop helpful videos all the time all right so today i want to do a really simple video to explain what a 501c3 determination letter is and i'm not afraid to talk about the simple topics or what may feel like basic topics because the non-profit world is a mystery to most people a lot of people may have worked for non-profits or may have engaged with nonprofits in some way but the details of running it and managing it most people really don't know so i never make assumptions about what people do and don't know that's why i like doing like 101 videos just so you can get the basic breakdown so you can be as prepared as possible when you are starting and running your nonprofit so in this video today i'm going to talk about a few things i'm going to talk about what is a determination letter i'm going to talk about the different components what are the things inside of the letter or what is listed on the letter i'm also going to talk about how to get copies of that letter if you ever lose the determination letter and i also want you to wait to the end because there are certain clues and there are certain ways to read this letter if you have questions about the type of organization you are especially if you're confused about whether you're public charity or private foundation there are definitely clues and places to look on the letter to help you understand what you are so let's dive right in what is a 501c3 determination letter it is the letter that you received from the irs to confirm that you have been approved right that your application for exemption has been approved right and i'm only talking about 501c3 status but also just want to acknowledge that there are different types of 501c but i'm just talking about 501c3 so that determination letter is basically confirming that your application was approved and it includes certain information that helps you understand how the irs has classified you for their records all right you get your determination letter through the mail the irs mainly communicates through u.s mail it can be completely frustrating and completely slow but if the irs has approved your status then you just have to wait for it in the mail and if your address is not correct or there's something missing you may risk more and more time before you actually get the letter because you have to communicate with the irs to send it to the right address so just a quick note when you are applying for taxes and status make sure your address is absolutely correct and very clear because they're going to be communicating with you through the mail so let's talk about the different components like what's listed on the 501c3 determination letter and also by the way when people ask you okay can i see your 501c3 letter because your grant funders are going to ask for that in particular that's the determination letter right it's the same thing so when you get this letter make sure you have an electronic copy and you keep it in your official records now i have a template right so i have a startup mini kit that has a template for like your organizational binder for all your important documents so if you need help with that if you need a template to create your own binder i linked that below and you can purchase it and you can download it and use it for yourself also included in that kit is a sample agenda for your very first board meeting and it's also a template for meeting minutes because you need to make sure that any decisions you make as a board are documented in your meeting minutes and so i created a template that you can use for your board meetings so again that startup mini kit is listed below in the description box so here are some of the things you're going to see on the determination letter you're going to see your name so the name of the organization you're going to see your organization's address you're going to see your ein number which essentially becomes your 501c3 number you're also going to see mention of your accounting period so when you apply for 501c3 taxes and status you list the end of your accounting period which is basically your fiscal year so if you put for example at the end of your year it's december 31st you're going to see that on this particular letter you're also going to see reference to your date of exemption so at what point people can start claiming their donations to your organization on their taxes so that's kind of your date of exemption you're also going to see a note about your public charity status you're going to see some numbers there that reference which piece in the irs code that your status corresponds with you're also going to see whether or not a 990 a 990 ez or a 990 in slash postcard is required so yes or no and all of that's going to be listed kind of at the top of the letter and then you're going to see a couple paragraphs below that just again affirm that your application has been approved and what your status is now the format of the letter may change from year to year and so i'm recording this video in 2022 so some of the things may change but i essentially try to just focus on the core items that you're probably going to always see in these letters and this is especially important because a lot of people get other people to file for exemption for them so if you get a lawyer or a service online to do it you're actually not looking at the application probably or if you do you don't really understand what you see so when you get the letter the things that you may not have noticed or understood in the application are going to show up and be reflected in this letter so you have to understand what you're reading and also to make sure that whoever filed your paperwork filed it correctly because one one thing that i've seen a lot is that people rely on services to file you know for the exemption and then they find out much later that a mistake was made so you can also use this letter to confirm to make sure that everything is okay with your actual application i also want to mention how you get copies of this document so for some reason if you may lose this document which you absolutely should try not to do so like i said as soon as you get this letter make an electronic copy and keep it safe in your records and also keep it in your organizational binder but for some reason you you lose the letter then you actually can go on the irs website and you can search for your determination letter on the website and you can actually download a pdf copy so i'm actually linking that below so you can search for yourself if you've lost it or you can just see how it works or if you can see if your determination letter is even up there yet okay your other option is to fill out a form which i'm also linking below with the irs and you can send that to the irs and they can also mail you a copy but obviously that's going to take a lot longer so if you want a pdf version you can actually go to the irs website and download it yourself here's a quick note like every time i think it's going to be a short video i keep thinking of other things and pointers to keep in mind right so i also want you to remember that this is all public information some people get really antsy about sharing their 501c3 number or sharing their letter because they feel like somebody's going to use it for malicious intent but the reality is this is public information anybody can go on the irs website and look this up right just try it for yourself if you know the ein or if you know the name because you can also search by name you could potentially find the determination letter for a lot of different organizations and people can download that and use that and so i i just recommend that you just not focus on that you're not worried about that you have to be diligent if someone's using you know your name and your 501c3 fraudulently you know there are some things you just can't avoid so you also want to pay attention to that but don't be so tight with it that you're like no nobody's going to get my letter why they asking for my letter why they're asking for my number the reality is you got to give it up you're going to have to for grant applications there are corporations who are going to want to verify that you actually have taxes and status and they want to see your letter so you just got to be open and free with this i just want to keep that in mind also that it's not necessarily like a private number or a private document like your social security card or something like that it's not it's public information so just keep that in mind so i wanted you to wait to the end of this video to share this really important tip because like i said before sometimes other people are filling out your documentation for you or you're doing it but you're not exactly sure what you're doing and you may make mistakes in the paperwork and you can actually use the letter to verify if everything went through okay all right so the main issue that a lot of people run into when they make mistakes with filing for 501c3 status is their determination whether or not they're a public charity or private foundation so a lot of people don't realize you are actually defaulted to be a private foundation you have to actually say that you're a public charity you actually have to declare that on the form by filling out certain answer options right otherwise the irs is going to automatically default you to a private foundation but this is the thing most people who operate as like direct service nonprofits or people who are doing like charity work in their nonprofits are actually designated as public charities so you have to make sure that you're filling out the right thing on the paperwork and you can check in the letter to see if you're actually a public charity or a private foundation ing to the irs so what i want you to do is read the actual paragraphs and it'll actually say in the paragraph it should be about the second paragraph but again i'm not going to say for sure because the format of the letter may shift from year to year but it'll actually say we have determined that you are a public charity so the letter will actually say that the other way you can identify whether or not you're accurately characterized as a public charity versus a private foundation is the type of 990 form that the letter indicates that you have to submit so there's also going to be a paragraph in there that says that you you are required to submit an annual form and it will reference the name of the form if the form it references says 990pf you are classified as a private foundation if the form referenced says 990 990ez and 990in or the 990 postcard then you are characterized as a public charity so those are two clues that you have to be aware of if you're confused or if you're not sure what kind of 501c3 nonprofit you're characterized as and if you need help understanding the difference between the two i did record a video on this and i'm linking it above it's called the number one mistake people make when applying for 501c3 status so make sure you check that out also if you need help with starting your non-profit make sure you visit me at .bostonabudget.com i have a bunch of resources there along with workbooks and toolboxes to help get you started thank you so much for watching this video and i will see you in the next one [Music] you