[When] Should we incorporate as a non-profit?

[TheBeege]

Copy/pasta from https://docs.google.com/document/d/1yTPI3A4MylMYZGjPZxXeaoYH2qDcTPjdrDP0tQZzG9k/edit

OUTCOME/GOAL for Nonprofit Status portion of 10/27/16 leadership meeting:

• Find out how many on our leadership team think this is a good idea and how many want to be significantly involved.
• Share our knowledge on the process of starting / running a nonprofit, based on research and anyone’s personal experience with nonprofits
• Decide what our next steps are, put them in our repo at github.com/learntocodela/leadership as actionable next tasks

Brain dump:

1. what does being a non-profit provide that we don't otherwise have?
   • Funding
   • Why do we need funding? What will we do with it?
     • Bootcamp idea needs funding! +
     • What else do we do with the $$$ ? see below! >>>
2. given that, do we want to do it?
3. what's involved in starting a non-profit?
   • Legalese, formation fees, mission statement, board of directors (oversight)
4. what's involved in continuously running a non-profit?
   • Metrics, success stories, accounting and finance management
5. who should own which responsibilities?
   • President, with oversight from board (I shared some of this with Liz, but I'm on mobile so it's not easy to hop back and find it to share)
     *I think we should actually break this down more
6. what does our timeline look like?
7. what do we need to do before we're ready / how will we know we're ready?
   • It's not hard to get non-profit status, just takes weeks to get certified. We just need to decide on type of non-profit status and do a "quick" consultation with a lawyer to confirm (just to be safe). Ultimately, I think we could do 501(C)(3) or 501(C)(4). The former is pretty generic and the most common type. The latter is almost exclusively for social work (including education and employment).
8. what are our actionable next steps?
   • Decide on what type of status we want and its pros/cons

Benefits:

• Raising money! …. As Lena suggested at our last leadership meeting, we should probably draft up a list of things we would use the money for if we had it.
  • Devil’s advocate: maybe we don’t need any money to be valuable to the community and to achieve whatever our mission statement ends up being?
  • Guest speakers
  • Venues
  • Hardware for IoT / embedded system projects
  • Services outside our skill pool - graphic design, education design, etc
  • Field trips (conferences, etc)
  • Slack upgrade
  • Servers for infrastructure classes
  • Website / domain costs
• Tools and services access
  • Google provides several services freely to registered non-profit organizations (https://www.google.com/nonprofits/)
  • Slack, others … (we could compile a list at some point)
• Legitimacy
  • Being a registered organization provides more confidence, making us more appealing to new members and to potential partners
  • Exemption from federal and/or state corporate income taxes (if that matters??)

Obstacles:
What's involved in starting
https://www.nolo.com/legal-encyclopedia/forming-nonprofit-corporation-california-36053.html
Detailed list at link. Summarization below

California requirements

• Choose the initial directors for your corporation
• Choose a name for your California nonprofit corporation
  • Business name search: http://kepler.sos.ca.gov/
• Prepare and file your nonprofit articles of incorporation
  • Articles of incorporation form: http://www.sos.ca.gov/business/be/forms.htm#corp
• File for tax exempt status
  • http://www.irs.gov/pub/irs-pdf/p557.pdf
• Prepare bylaws for your California nonprofit corporation
  • Sample: http://www.nolo.com/products/how-to-form-a-nonprofit-corporation-in-california-non.html
• Hold a meeting of your board of directors
  • Must record minutes
• Open a corporate bank account
• Set up a corporate records binder

Federal requirements

• File your Form 1023 federal tax exemption application
  • http://www.irs.gov/uac/Form-1023,-Application-for-Recognition-of-Exemption-Under-Section-501(c)(3)-of-the-Internal-Revenue-Code
  • Or http://www.irs.gov/uac/About-Form-1023EZ
• Obtain your California state tax exemptions
  *FTB 3500A, Submission of Exemption Request
  • http://www.ftb.ca.gov/
• Other state reporting and registration requirements

colin_b [4:08 PM] :
Setting up a 501(c)3 can be a fair amount of work, and there would need to be bi-laws, and a board, and regular board meetings, etc. Plus there’s a $400 filing fee with the IRS

thoughts

[colin-m-b]

As I mentioned in the meeting, I think the answer to when we should consider becoming an official non-profit is when money needs to spent. Writing grant proposals can be a fair amount of work, which is why there are professional grant writers. There are other benefits to being a non-profit, such as businesses letting you use their facilities as an in-kind donation, etc.

[TheBeege]

With Slack having archiving troubles, we could use funding to support Slack; however, I've also heard good things about Gitter. I think Slack is my largest concern.

Someone in L2C Seoul also had the idea of having certificates, which are very popular in Korea. Being a formal organization would add legitimacy to such a thing. While I'm sure it matters less for LA, it's still an interesting concept.

[armaneous]

Certifications are a long-term (several years) play. You need to establish legitimacy (non-profit status), credibility (success stories) and network (industry relations). None of these happen overnight and take at least 2-3 years to begin.

In regards to non-profit, that seems to be where we're heading. As far as when, I don't think we're ready just yet, but we're inching there. I think we're going to incur some real costs very soon, especially with the aforementioned Slack concern (we're losing a lot of valuable messages and Slack's pricing model isn't intended for our kind of org). Ultimately, I think this should be a goal to try and achieve by the end of Summer 2017.