Did you know nonprofits in Maine range from neighborhood churches to large hospitals, universities, and everything in between? If you have an idea that can benefit your community and local citizens, we’d love to help you get started. We’ve provided a step-by-step guide to file required forms with the state and build a solid foundation for your new nonprofit.
There are 10,231 active tax-exempt nonprofits in the Pine Tree State. If you’re ready to join this group of exceptional organizations, we’ve provided a step-by-step guide to walk you through the process. Starting a nonprofit in Maine can feel overwhelming at times, especially if you don’t know where to begin. Nonprofit founders are passionate about their cause, but many don’t have a strong business and fundraising background. That’s where Donorbox can help.
Starting a nonprofit is more than filing a few confusing forms. A substantial part of the process is laying a strong foundation to build upon. This includes your nonprofit’s board of directors, operation plans, and fundraising strategies. In this article, we’ll start you on the path to developing a solid plan and strategy for building a successful nonprofit.
The first step to forming a nonprofit is choosing a name. A name can be the easiest way to share your nonprofit’s mission with the public. If you’re struggling to come up with an exciting name, we’ve created a naming checklist to help.
Maine does not have many rules for naming your nonprofit. Still, names cannot be obscene, promote abusive or unlawful activity, falsely associate with public institutions, or violate any other naming provisions.
You can search with Maine’s Department of the Secretary of State to see if the name is available and fill out the application to reserve your name. After you apply, your name is reserved for 120 days and may not be renewed. Ensure you file your Articles of Incorporation within that time frame.
After the name, the next essential item is your nonprofit’s mission. The Internal Revenue Service (IRS) requires 501(c)(3) nonprofit organizations to benefit the public with one of the following purposes:
With this purpose, you have a focus, but now it’s time to create a unique mission statement for your nonprofit.
Since your nonprofit’s purpose statement must be the same on all state and federal applications, choosing a mission statement will make the process easier. Your mission statement also influences your organization’s marketing and culture. As you move to the next step, creating a business plan, keep your mission statement in mind.
While you’re filing the necessary paperwork to start a nonprofit, building a solid foundation and future fundraising is essential. A nonprofit business plan is one of the best ways to do this. A business plan helps you to:
Although some may consider business plans unnecessary and old-fashioned, this tool will make filing necessary state and federal paperwork easier and help you find critical startup funds.
The first section of your nonprofit business plan will lay out the organization’s programs and services. How will you fulfill your mission? What makes you different from other organizations with the same purpose? Answering these questions will have a significant impact on funders. Remember, people’s attention spans are limited, so it’s best to include images and infographics when explaining complicated ideas.
Your programs and services are critical, but you must also know your target market. Your marketing plan is where you should provide details on two types of markets: donors and beneficiaries. You’ll need information on their demographics, interests, and giving ability. Your marketing plan should include communication plans for potential donors, foundations, partners, etc.
The next section will help you create your organization’s bylaws, which are required when applying for tax exemption with the IRS. Your operational plan should include day-to-day activities, necessary legal requirements, and any insurance you may need. An organizational chart will help you provide details on the roles and responsibilities of your nonprofit board and staff.
The effect your nonprofit has on your community is its greatest appeal to funders. In the beginning, your organization’s impact is entirely in your mind. It’s vital to spend time on this section of your business plan and elaborate on how your organization can reach its goals.
Typically, business plan financials will include bank statements and reports. Since you don’t have any, you’ll need to research your competitors. Visit GuideStar and research similar nonprofits’ tax documents for examples of revenues and expenses. This information will give you a solid foundation for your organization’s budgets.
An Executive Summary is the first thing the funders read, but it should be the last thing you write. This section gives an overview of your business plan and describes your organization’s mission plan, target market, and how you’ll meet the needs of your community.
This section provides a space for additional documentation you may need, including:
Nonprofits must have at least one Incorporator to sign the Articles of Incorporation, but you may have more if you’d like.
Maine nonprofits must also have a minimum of three directors on their board. The Internal Revenue Service (IRS) also requires at least three board members but recommends enough members to run operations and fundraising effectively. The size of your board is not as important as its ability to govern. Your board of directors forms the leadership of your organization, so it’s critical to take your time to ensure this group is skilled and prepared to run the organization effectively. You can do this with detailed job descriptions, training, and monitoring each member’s involvement.
There is no residency or membership. The state also states that board director terms do not need to be uniform, and directors can hold their office until replacements are elected. Nonprofit boards in Maine must also have at least two directors on the executive committee; no other committees require board member participation.
The state recommends that nonprofit boards have a President, Secretary or Clerk, and Treasurer, and other roles the organization deems necessary. Board officer terms are one year, and the same person can hold two or more offices.
Nonprofits in Maine must have a registered agent to receive all legal notices for the organization. Your registered agent must be in Maine and open during regular business hours. Registered agents can be individuals or companies. If you’re unsure where to look for a registered agent for your nonprofit, Maine has provided a list of options.
Before filing your Articles of Incorporation, you must choose between a public benefit corporation or a mutual benefit corporation.
A public benefit corporation’s purpose is to benefit the public and must state this in its bylaws. This nonprofit type can file for tax exemption under 501(c)(3) with the Internal Revenue Service (IRS).
Any nonprofit that doesn’t fit the description of a public benefit corporation is a mutual benefit corporation. These organizations primarily benefit their members.
Nonprofits must file the articles of incorporation with Maine’s Secretary of State with Form MNPCA-6 and pay the $40 filing fee. You can expect the state to process your articles in 14 business days, but you can expedite the process to 24 hours for $50 or immediately for $100.
When mailing this fee, it’s essential to include a customer contact cover letter with the contact’s name, telephone number, or email address.
After filing your articles of incorporation, you must file for an employer identification number with the IRS. You can file Form SS-4 immediately online or by mail. Corporations will receive a certificate of acknowledgment from the secretary of state’s office.
Before filing for tax exemption with the IRS, you must hold your nonprofit’s first board meeting. This board meeting is an opportunity to elect your officers, assign board members to committees, and start onboarding and training. It’s also time to finalize and adopt the organization’s bylaws and conflict of interest policy and approve opening a bank account.
Your nonprofit bylaws are a roadmap for your board of directors. Nonprofit bylaws must include the following:
The IRS does not allow any board or staff member to benefit financially from an exempt nonprofit’s earnings. Your organization’s conflict of interest policy will provide rules to follow when individuals in leadership have conflicting priorities.
Nonprofits that benefit the public can apply with the IRS as 501(c)(3) organizations and file either Form 1023-EZ or Form 1023. Organizations that earn under $50,000 for the first three years can file Form 1023-EZ for $275. There is an eligibility worksheet to determine if your organization qualifies. All other 501(c)(3) nonprofits must file Form 1023 and pay $600. It can take up to six months to receive your determination letter from the IRS.
Nonprofits that primarily benefit their members may also qualify for some benefits from the IRS. These organizations must use Form 1024 and pay $600 to become 501(c)(4) organizations with the IRS.
Tax-exempt nonprofits with a letter of determination from the IRS are automatically exempt from paying state income taxes in Maine.
Maine does not provide a blanket sales tax exemption for tax-exempt nonprofits. Visit the Department of Administrative and Financial Services to see if you qualify and apply for sales and use tax exemptions.
Maine nonprofits must register with the State of Maine Professional & Financial Regulation before soliciting donations unless exempt. Exempt organizations include organizations that:
If you are not exempt, you must file a license application with the director and pay the fee at least 30 days before soliciting gifts. Parent organizations may file a consolidated license for all its affiliates and chapters.
Charitable licenses expire on November 30th or another date designated by the director and must be renewed before this date.
Nonprofits in Maine must register with the Gambling Control Unit before holding a raffle or other lottery game. Exempt raffles are those with prizes of $2,500 or less, or less than $10,001 for eligible organizations. Even if you are exempt from registering with the state, check with your local municipality before selling raffle tickets.
Maine nonprofits must file an annual report with the Secretary of State’s office between January 1st and June 1st of the year following the calendar year you filed your articles of incorporation. The state has specific requirements you must follow.
Nonprofits can also use annual reports to build trust with donors and solicit gifts from foundations. You can share your organization’s annual report on your website, social media platforms, and third-party websites like GuideStar.
Nonprofits must file annual reports every year by June 1st to remain in good standing with the state.
Starting a nonprofit in Maine can be exciting, meaningful, and exhausting. These steps can lay a solid foundation to fulfill your organization’s mission and make a meaningful difference in your community.
Remember, your nonprofit’s impact extends far beyond its formation. Donorbox offers a host of tips and resources to help you build a strong board, attract and manage volunteers, and raise funds.
Visit our website to learn more!
Kristine Ensor is a freelance writer with over a decade of experience working with local and international nonprofits. As a nonprofit professional she has specialized in fundraising, marketing, event planning, volunteer management, and board development.
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Kristine Ensor