- Call a meeting of potential Friends and invite an experienced Friend or the State Library's Friends Liaison to speak on the role of Friends in supporting the library; the relationship among the library's staff, trustees, and Friends; and the activities that Friends might take on.
- Take a vote to form a Friends group, and appoint temporary officers: president, secretary, and treasurer. If you can also find a vice president, so much the better.
NOTE: Library staff and trustees can and should be non-voting members of the Friends, but should not be officers. That would be a conflict of interest, since Friends are meant to be an independent citizen advocacy and support group, advised but not directed by the library director and trustees. No law prevents interlocking boards or staff, but good sense and good practice do.
- The constitution (Articles of Agreement) is your organizing instrument; it requires certain standard language (boilerplate), without which it will not be approved by the state and/or the feds. Be sure to check your draft document against the IRS requirements; NH’s form is less thorough. If you incorporate successfully in NH but the Articles of Agreement don’t meet IRS standards, you’ll have to amend the document with the NH Secretary of State, with another fee. Before writing your constitution, assemble the following forms, which you will need to submit as organizational paperwork to various state and federal agencies. All fees quoted below are subject to change.
Your bylaws, which govern your operations, must accompany NH Form NHCT-1 and IRS Form 1023, but not NH Form NP-1.
The forms and their sources are:
- FORM NO. NP 1: ARTICLES OF AGREEMENT OF A NEW HAMPSHIRE NONPROFIT CORPORATION – This is the form by which you incorporate your Friends group; the IRS will not grant tax-exempt status to any unincorporated organization.
You must gather the names, mailing addresses, and signatures of 5 people to sign Form NP 1 as incorporators. (P.O. boxes are acceptable here.)
Remember: Be sure to include all the boilerplate required by both the state and the IRS before sending the Articles of Agreement to the NH Secretary of State; if you've omitted something that the feds want, you'll have to amend your Articles with the state, which will cost another $25. (Even a Friends group’s name change must be filed with the Secretary of State, for $25.) An amendment form is NP-3.
Before sending the Articles to the Secretary of State, you must also register them with your town or city clerk, for $5.
The Secretary of State will return your Articles of Agreement with a large, gold seal applied, or just stamped "FILED". After making several photocopies (also known as "conformed copies"), put the original in a safe place; replacing it would cost money. You'll need the photocopies to submit with other forms to the Register of Charitable Trusts and to the IRS, and to distribute to the Friends officers and anyone else interested.
Form No. NP 1 is available from:
Secretary of State
25 Capitol Street Floor 3
Concord NH 03301-6312
The fee is $25.
Under present law, your incorporated Friends will be required to fill a "return" during a calendar year which will be designated by the Secretary of State, and every five years thereafter. The Department of State will send the return forms to the Friends.
If your Friends group disbands, you must file a dissolution (form NP-5) with the Corporation Division of the Secretary of State’s office; there will be no fee.
- FORM NHCT-1: REGISTER OF CHARITABLE TRUSTS: APPLICATION FOR REGISTRATION – This is required of any NH non-profit organization which collects money.
You must have a board of directors comprised of at least 5 directors or trustees who are not members of the same immediate family and are not related by blood or marriage; the board can include the officers. Board members must give addresses where they can be reached in person, not P.O. boxes.
You must also have a conflict of interest policy; samples are included with the instructions for Form NHCT-1.
Form NHCT-1 is available from:
NH Department of Justice
Office of the Attorney General
Charitable Trusts Unit
33 Capitol Street
Concord NH 03301-6397
The fee is $25.
- APPLICATION TO SUSPEND ANNUAL REPORT FILING REQUIREMENT – This is recommended for any organization that does not want to file an annual report, which costs $75. You must submit an annual report for your first year in business, but you can request a waiver of the fee; that waiver (which is not the same as the "suspension of filing") is usually granted for small groups. To become exempt from filing future annual reports, your Friends group cannot have used a professional fundraiser within the last 3 years (unless you have a good explanation) and must meet certain other requirements while the suspension of filing is effective.
This form must be requested in writing from the Charitable Trust address in #2 above.
- Form SS-4: APPLICATION FOR EMPLOYER IDENTIFICATION NUMBER – Even though your Friends group will probably have no employees, you must have an EIN; it's the organizational equivalent of a Social Security number, and will be requested by the bank when you open an account. Under no circumstances should the Friends open an account under an individual’s name and number.
Form SS-4 -- which is easy to fill out --and its instructions can be obtained from any local SS office or from the IRS at:
NOTE: You can get your EIN by phone and use it immediately to open a bank account.
- First, complete your paper copy of Form SS-4; then call the Tele-TIN number for New Hampshire: 1-978-474-9717 (there is no toll-free number).
The person making the call must be authorized to sign the form (because your Friends group is a corporation, an authorized person will be the president, vice president, or other principal officer).
- The IRS representative will use your SS-4 information to establish an account and will give you your EIN over the phone.
- Write the number you are given on the upper right-hand corner of your original SS-4 and sign and date the form.
- Mail or fax the signed and dated SS-4 form WITHIN 24 HOURS to the Tele-TIN unit for NH (the IRS representative can give you the fax number):
IRS Service Center
Attn: Entity Control
Andover MA 05501
NOTE: Because telephone numbers may change without notice, call 1-800-829-1040 to verify the Tele-TIN number before you pay a long-distance charge to get your EIN by phone.
If you want to mail the SS-4 form, allow 4-5 weeks before you actually need the EIN. The address is the same as that above.
- PACKAGE 1023 – This includes FORM 1023: APPLICATION FOR RECOGNITION OF EXEMPTION and FORM 872-C: CONSENT FIXING PERIOD OF LIMITATION UPON ASSESSMENT OF TAX UNDER SECTION 4940 OF THE INTERNAL REVENUE CODE – Request the package; that way you won't have to remember both form numbers. Form 1023 is the application for 501(c)(3) status as a tax-exempt charitable organization. Filling it out is time-consuming but relatively easy, and does not usually require assistance from an accountant or an attorney.
Don't panic at the title of 872-C; it's only one page and is very easy to fill out. Form 872-C is required if you want your Friends group to be treated as a publicly supported organization during an advance ruling period and if you haven't completed a tax year of at least 8 months.
Package 1023 is available from the IRS at:
NOTE: Using a website, you'll have to order the forms individually instead of as a package.
- FORM 8718: USER FEE FOR EXEMPT ORGANIZATION DETERMINATION LETTER REQUEST – This is where you attach the check to pay for the determination letter you've requested on Form 1023.
If your group anticipates gross receipts averaging not more than $10,000 per year during its first 4 years, you will pay only $150; if you expect higher receipts, you'll pay $500.
Form 8718 is available from the IRS at:
- FORM 990 or FORM 990EZ: RETURN OF ORGANIZATION EXEMPT FROM INCOME TAX [or SHORT FORM….] – This is the annual report that a tax-exempt organization may be required to file with the IRS, similar to an individual's 1040 or 1040EZ.
Your Friends group will not have to file a Form 990 or 990EZ if annual gross receipts are normally less than $25,000. If you receive a Form 990 Package from the IRS and you are exempt from filing because of low income, you need only indicate this on the form and send it back so the IRS can update its records (instructions will accompany the form).
- PUBLICATION 557: TAX-EXEMPT STATUS FOR YOUR ORGANIZATION – This document guides you through the tax-exemption application process; it's a companion to Package 1023. It's not absolutely necessary, but it can be a handy source of answers (albeit in fine print) to questions you might have about tax-exempt status. It includes boilerplate language needed for your constitution, so don’t hesitate to copy what’s most appropriate for your group.
Publication 557 is available from the IRS at:
NOTE: At the IRS website(s), you can request that their forms and publications be mailed to you or you can download them to a disk or print them out. Please be aware that the instructions are much longer than the forms themselves, and will use a lot of paper and ink if you decide to print them yourself.
If you have any questions about the process of "becoming legal," or would like me to check your paperwork before you submit it to the state or to the IRS, please let me know. I’ll be happy to help; I’ve had more than twenty years’ experience working with Friends groups in New Hampshire.