Time for a Corporate Checkup
One of the hallmarks of American medicine is the checkup – the time to have a good look-see before anything is wrong. The goal is to avoid issues that can be avoided. We do it for ourselves, so why don’t we do the same for the nonprofit corporation that we love so dearly?
The Corporate Checkup is not all that difficult to accomplish. First, we see if we actually are recognized for who we think we are – then we check each of the parts that allow us to function. In the end, we can give ourselves a clean bill of health and tell our funders and our clients that we actually are who we say we are.
Step 1 – Are we legal? You first go to the State of Alaska web site that is dedicated to corporations and check your status. This will tell if you are still recognized as a legally operating nonprofit in Alaska. By accessing this site — https://myalaska.state.ak.us/business/ — you can determine if you have properly filed the papers and paid the fees to be recognized by the state. You look for four things:
Do we have the status “Corporation Active – Good Standing?” From the above address, search the corporation’s database by clicking on “Search for Entity.” Then type in your name and click “Search.” From the list of names provided, simply look first under “Status” to see if you are in “Good Standing.” If you are, then continue. If not, it is likely you have failed to file a Biennial Report for a prior period. Time to call the Department of Commerce, Division of Corporations (be sure to note your Alaska Entity # to talk to the Corporation’s Representative). The Division can be contacted by simply sending a query to firstname.lastname@example.org, or by calling 907-465-2550 in Juneau.
Did we pay our biennial fee and report changes? If you are in “Good Standing,” you can continue your checkup to see if a report is due. Now, simply click on your name and on the General Information Page. There you find all the web site information available to the state related to the your corporation. If your Biennial Report period has come up, or past, you will likely be able to apply on line. First, check to see if you are due to file a new report by looking on the line “Last Biennial Report Filed.” If that date is more than two years old, you are past time to file. To file, simply look to the left banner under “Biennial Report” and click on “File Online.” You will need a credit card but the system is interactive, with a good tutorial. Fill it out and you will be back in good standing.
Is our current registered agent the right person at the right address? By reviewing the information on the state’s web page you can also determine if the names of your officers and directors are current. Each director is listed on your General Information Page. If any are incorrect, you are required to inform the state. The form to do this can be found on line. It is simple and does not require a fee. Go to: http://www.commerce.state.ak.us/bsc/pub/08-637.pdf . Change your directors and officers as required by law.
Are our Articles of Incorporation properly filed? Your last step is to insure that the state has on file the last set of Articles of Incorporation for the corporation. If yours have never changed then you are good to go. Otherwise, simply click on “Filed Documents” and look for “Organizing Documents” which are the last Articles or Amended Articles the organization has filed with the state. Make sure these are your last Amended Articles. If so, you are good to go. If not, call the Corporation’s Section in Juneau and find out how to file the Amended Articles of Incorporation.”
Step 2 — After the completing Step 1, we are legal. Now let’s consider if we are operating legally. That will require a little of both state and federal review. Each is required and if you have ever filed with any foundation or responded to any donor’s accountant, you know this is vitally important. Again, there are several parts to this test:
Do we have an Employer Identification Number (EIN)? If you are even thinking of a checkup, you likely already have an EIN. But if you don’t, the Application for Employer Identification Number SS-4 can be found at http://www.irs.gov/pub/irs-pdf/fss4.pdf . It is a simple form and is usually approved by the IRS in a week or less. For the more adventurous, you can attempt to file online at the IRS web site at https://sa2.www4.irs.gov/modiein/individual/index.jsp . If your application is accepted, you will receive an immediate number.
Are we properly recognized as an exempt nonprofit entity by the IRS? Whether or not you have been approved as exempt by the IRS is, again hopefully, an historical question. You should already have a Letter of Determination stating your exempt status that you can provide to donors upon request. If you have not applied to the IRS you will have to file Form 1023 for 501(c)(3) Charitable Organization status, or Form 1024 for all other forms of exempt status. You will likely need a professional to assist you in this process and a call to The Foraker Group might be a good idea if this is your situation. If you are unsure of your status, you can once again approach the IRS web site and do an online search for your corporation at http://www.irs.gov/charities/article/0,,id=96136,00.html . IRS Publication 78 lists all recognized exempt entities.
Have we filed our annual Federal Form 990 with the IRS? Your Form 990 Return of Organization Exempt from Income Tax is available on the IRS web site http://www.irs.gov/formspubs/lists/0,,id=97817,00.html and there is a brand new form for 2008. This form must be filed each year for almost all nonprofits. We would suggest a discussion with your accountant to ensure you are in compliance with the law. The return is due each May 15 for that calendar year. You do not want to be late because there is a $25.00 per day penalty for late returns. Most major funders will require a copy of your last filed return. By applying for exempt status, you have promised the IRS that you will supply a copy of your Form 990 to any member of the public who requests one.
If we are fundraising, have we properly filed with the State of Alaska Department of Law? One of the most often missed requirements in fundraising is the application due to the Alaska Department of Law for solicitation of donations. This form must be filed each year by September 1 and its four pages ask many questions. You also are required to pay a $40 filing fee. This form can be found at: http://www.law.state.ak.us/pdf/consumer/charitable-org-reg-form-no-date.pdf.
Step 3 — We are legal, and we’re operating in a legal fashion as far as the outside world goes. Now comes the hardest part of any checkup — looking inside ourselves for any aches and pains. Do we have any? Are you sure that internal processes and procedures are in compliance with the law and the corporate governing documents? Here are just some of the questions you should explore:
- Do you have up-to-date bylaws and do they require you to operate the way you really are operating?
- Do you run the meetings the way your bylaws and corporate policies require?
- Do you even have corporate policies?
- Are all of your directors aware of and have ready access to your Articles of Incorporation, bylaws, and policies?
- Are your employees being treated in accord with thoughtfully developed employee policies?
- When you need professional over site, are you seeking out those skills?
A Corporate Checkup is something we should do every year. With each new year, there are new questions and new answers — both internally and externally. A Corporate Checkup is something that can be put on the calendar each year so we will know when it is time to see the doctor again to make sure we are well. When all these steps are completed, we can say that we have a clean bill of health. When a donor or funder asks for a document or our status with the state or with the IRS, we can confidently reply that we are “good to go!”