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An ongoing series of informational entries

Amending the Articles of Incorporation

February 24, 2017

As a board we are trying to save as much money as possible on our administrative costs.  You can go to an attorney to have all of your paperwork created and filed for a few thousand dollars.   We would rather take that money and put it towards the shelter.  But....sometimes you just have to loosen up the purse strings and consult a professional.  


We prepared all of the 1023 paperwork, including a budget for the next three years, screen shots of our website and facebook pages, bylaws, and a narrative outlining everything we would do at the shelter.  Before submitting though, we sent the paperwork to a local CPA.  She is well versed in non-profits and has a few animal shelters as clients.  She agreed to look over our paperwork with a cost between $500 and $1000 depending on how much additional work she will have to do.  


Right away, she spotted that we did not include an Article of Dissolution in our Articles of Incorporation.  We included a dissolution clause in our bylaws, but overlooked the need for it in the Articles.  Articles of Incorporation are used for both non-profit and for-profit businesses.  When we filed for incorporation we filled out the online form and we were unaware that we needed to add this extra provision for future non-profit status.  So, for those of you who may refer to this blog when setting up an animal shelter - don't overlook adding Article VIII -Dissolution.    You'll be able to read the actual wording if you look us up under the Florida Sunbiz website.  All articles of incorporation and amendments are listed there for each business incorporated in Florida. 

Click on the Link: http://search.sunbiz.org/Inquiry/CorporationSearch/ByName


There is a form (cover letter) on the Florida Department of Corporations website - link: http://form.sunbiz.org/pdf/cr2e011.pdf   This will allow you to amend your Articles of Incorporation for a fee.  We paid $35 and it should take about a week to go into effect. Once that is corrected we can send in the 1023 form (pending that being the only issue the CPA finds.)   Let's hope that is it! 

Our Blog

An ongoing series of informational entries

Working as a Team - Your Board of Directors

February 15, 2017

Our group will hold our official first board meeting next week.  We have several people interested in serving on the board of directors and we are looking forward to adding them to our inner circle.  


It is important that your board of directors be made up of several people with differing experiences and interests.  If everyone on your board was a "cat person", where would that leave the dogs?   You need cat and dog enthusiasts, as well as people who are familiar with non-profit governance, financials and state regulations.  It also helps to have board members experienced in fundraising and social media.  


Our incoming board consists of people experienced with public and private shelters, as well as fostering.  We have a few board members who actively participate in trap/neuter/release programs.  On the business side, we have a few board members with extensive non-profit experience.   Together, we bring all of our individual talents, expertise and passion for saving dogs and cats to the table. This will help us achieve success in getting the shelter opened and operational within a few months.  

Our Blog

An ongoing series of informational entries

A day off from paperwork

February 9, 2017

We will have our third and final organizational meeting this evening.  The shelter we are building will be somewhere along the I-4 corridor between the cities of Lakeland and Tampa, Fl.  This area has a population of over 500,000 people and several animal rescue groups with foster programs, two county shelters, a Humane Society in Tampa and an SPCA in Lakeland.  The current shelters are consistently full and it is difficult, if not impossible, to find temporary or lifelong homes for many homeless or unwanted dogs and cats in a no-kill environment.  


Our group has been holding informational meetings in order to speak directly to supporters, future volunteers and board members.   It is a large geographical area so we split the meetings between Brandon, Lakeland, and tonight, Tampa.  


A big part of preparing to open an animal shelter is having a plan in place.  What do you want for housing the dogs and cats?  How will you handle intake and adoptions?  Where will you get funding from?  That is the work we are doing now, while waiting for our charitable paperwork to be processed.  


Yesterday we took a field trip to a shelter in a neighboring county.  They house the dogs and cats in small buildings painted with pastel colors.  Each building has a solar panel on top which powers the ceiling fan on the inside.  They are simple in design and appear to be easy to maintain and keep clean.   Great inspiration!

Our Blog

An ongoing series of informational entries

Conflict of Interest and Inurement

February 7, 2017

Why is it so complicated to form a charity?  Why do we have to send in huge amounts of paperwork such as our bylaws, our financials and a conflict of interest statement signed by all board members?   The answer is simple - to protect the public from scams and fake charities.   You can google fake charities and see an extensive list of groups that spend 97 cents of every dollar they receive on "administrative expenses"  such as salaries and 3 cents actually going to the purpose of the charity.  


When you are forming a board of directors and a charity such as an animal shelter you need to be aware of the prohibition against private inurement.   This basically means that you or anyone on your board of directors cannot personally benefit from the creation or services of the animal shelter.   This is one of the main reasons why you do not want to have the veterinarian that is your medical director on your board.   Medical expenses for the animals need to be paid to a separate party, no one on your board can be construed as an "employee". 


This concept also extends to services paid for by the charity.  An example:  you need a building constructed.  Someone on your board is a private contractor who does the construction for you at an agreed upon price.   There are several issues with this:  a board always needs to get at least 3 quotes from different companies for major expenditures.  Anyone on your board should be automatically excluded from submitting a quote.    Take it one step further - someone on your board has a relative (not an immediate family member) that does the work you need.   You may be safe with hiring this person if:  you get 3 quotes from different sources and the proposal from the "relative" is the best fit, and the board feels as a whole that there is no conflict of interest involved.  If there are any questions - absolutely do not proceed.  


A conflict of interest policy should be written into your bylaws, or be added as a document signed by every board member once a year.  The policy will state that the board members will not proceed with any financial transactions for the shelter where they or their immediate family members will profit.   Ignore the conflict of interest policies and you will probably lose your 501c3 tax exemption as well as the privilege to solicit and collect donations.  Without donations your shelter will probably close, and that is the last thing you want to happen.

Our Blog

An ongoing series of informational entries

Documents needed to register as a charity

February 6, 2017

Before you can solicit donations for start up costs and the purchase of a shelter property and facility you need to register as a charity in the state where you are collecting donations.   You will also need to file the Federal 1023 form at the same time.   Both processes require a great deal of similar paperwork. 


Be aware that you have may need to file as a charity in every state that your donations come from.  As of this time 41 states have paperwork requirements if you are going to get financial support from individuals or groups (such as a grant from a foundation) in their own respective states.  More on this in a later blog post. 


So you are sitting at your computer ready to fill out the online form to register as a charity.  What paperwork do you need to have to complete the filing?

1. Articles of incorporation 

2. Bylaws - signed by your initial board of directors 

      *your bylaws need to have a dissolution clause and a conflict of interest policy

3. Conflict of Interest document signed by all board members

4. Budget  (3 years in the future for newly formed charities)

      *But you are just starting out - how will you know what you will spend or bring in?  Well - you need to have a plan and an idea of what you think you will take in for donations (cash, services, donations in kind) and what you will spend on operations, fundraising, salaries (if applicable), etc., for at least 3 years in the future.  

Why do they need to know this?  Your fee for filing is based on what you anticipate bringing in.   Be realistic and be honest.  The fee is minimal if you say you'll only bring in a few thousand dollars.   But, if you know you will be purchasing a facility and will take in, through donations and memberships, a targeted amount, put that higher number down.  You only want to do this paperwork once - get it right the first time!   Next year, instead of submitting a budget you will send in the 990 form which lists all financial transactions completed in the prior year.   Suggestion - choose a treasurer for your board who is organized and keeps good records!

5. A narrative regarding your pending activities on a separate document.  You will explain everything you plan on doing from housing the animals, to adoptions, to education, to the spay/neuter clinic, and beyond.  


Want to see real examples of required paperwork to register a charity in Florida?  

Click on this link check a charity  - put in a known charity and you can see all the paperwork they submitted. 


Oh, and this is another yearly paperwork requirement, so mark your calendars with the due date so that you aren't subject to a civil penalty for missing a deadline next year.


Our Blog

An ongoing series of informational entries

Obtaining a FEIN

February 5, 2017

IRS-speak!   What is a FEIN?  It is the Federal Employer Identification Number; 

a 9 digit number used to identify a business.  Think about your Social Security number - basically this is the social security number for a business.  


Once you are approved as a corporation you can click on the link in the email from the state indicating that your articles of incorporation are filed.  This link will bring you to the IRS site that assigns the FEIN.  


The form is super simple - you just fill in the name of your corporation and name/address for the person who gets notices (basically letters from the IRS if you do something wrong).  


You will need this number for every form you file with your state (charity registration), with your financial documents (Form 990, 1023), and to open up a bank account.  Always, always, always make sure the number is correct on everything you do.  


Quick story:  I was the Chief Financial Officer for a professional association a few years ago.  I received one of those lovely letters from the IRS indicating that our association had not filed the 990 form (basically the financials required for tax exempt charities) for several years.  It gave us a short window to fix it, otherwise we would lose our exemption.  In researching what happened - our accountant has mistyped the FEIN number on the form, and each year pulled up the previous year form and just adjusted for the new figures.  This went on for over 8 years before the IRS caught up with us.  We were able to straighten this out but it took months of work!    Lesson:  Even if you have a professional prepare your statements - always double check that the FEIN was correctly entered.  Ultimately it is YOUR responsibility to file the 990 form correctly. 


So, if you read yesterday's blog entry I made a reference to making a mistake requesting the FEIN.  Yes I did!!  I entered the name of the corporation as:
Raining Cats and Dog Shelter and Sanctuary, Inc.   See the error?   DOG should be DOGS!!!!  I must not be the first person to do that; there is a tear off form at the bottom of the letter where you make corrections.  Corrections are made in writing and mailed to the IRS so they can update it in their system.  Another lesson:  do the important stuff after your first cup of coffee when the caffeine has kicked in!

Our Blog

An ongoing series of informational entries

Incorporation - This is when it starts to get complicated!

February 4, 2017

There are numerous self help guides on the internet for incorporation.  The biggest benefit of incorporating is that it protects you from personal liability if the shelter is sued.  Unless you specifically did something negligent that causes injury, you are personally protected.   The board of directors will need "Directors and Officers" insurance, but that is a topic for later.  This is just a brief overview of what we needed to provide to incorporate, so please do you own due diligence since all states have different requirements. 


To incorporate you need to provide your appropriate state agency "Articles of Incorporation".  In Florida we were able to file online and received approval within a few days.   It cost approximately $75.


*First article - what is the name of your shelter.  Tip - you need to include the "incorporated or inc." in the title.

*Second article - principle address and mailing address.

*Third article - specific purpose of the organization.  It is important that you list everything you will do (within the allowed number of characters) because the state will hold you to that purpose.  If you state you will shelter animals and in 5 years you decide to switch over to being just a clinic, there will be issues.   

This is what we wrote: 
Provide homes and care (general and medical) for unwanted and or abandoned cats and dogs until we are able to place them in new homes; promote and advance public education re: the need for spay/neuter. Provide life care if needed.

*Fourth article - state the manner in which directors are elected or appointed - this information will be included in the bylaws that you create.

*Fifth article - provide the name and address of your registered agent.  This will be the person who will receive all notices regarding the corporation.  It can be you if you prefer, or a third party such as an attorney.

*Sixth article - provide the name and address of the person who is your incorporator - this will be the name of your first president or organizer.

*Seventh and last article - list the names and addresses of your initial board members. In Florida we needed three people to incorporate. 


So, after you are incorporated, are you done?  NO!!!  In order to be recognized as an active incorporation you must file an annual report with the state you incorporate in.  That report needs to be filed between January 1 and May 1 of the following year, and every year after that.  


This is complicated, right?  And we haven't even gotten to the 501c3 filing yet!

But, if it was easy, everyone would be doing it.    In order to stay organized I am entering all dates for future filings into a planner book dedicated to the shelter.   The last thing you want to do is have to pay a civil penalty for missing a critical filing.  We want to keep our administrative costs to a minimum so that the animals that will be at our shelter get the most benefit. 


What will we go over tomorrow - getting n EIN.  This is the most simple step and you won't believe what I did!!!

Our Blog

An ongoing series of informational entries

Choosing a Name for your Shelter

February 3, 2017

There are numerous articles and suggestions that you can google to find a name for your shelter.  You do not want to limit yourself in the future so be careful about including your location in the title.  An example would be "Plant City Animal Shelter" - what if the perfect piece of land was donated to you in the future in a different town?  You would have tons and tons of paperwork to change your name; plus you would lose all of your former "name recognition" .   There would be questions - is it the same shelter?  same management?  


Once you come up with a few possible names you will want to google them.  Does some other business use the same or similar name?  Would you be able to set up a website with the same domain name?  If not, if you have to use initials - how would your future adopters find you?    If you are in Florida you want to also check under http://search.sunbiz.org/Inquiry/CorporationSearch/ByName


Start searching just the first part of your name.  Example - the name of our shelter is "Raining Cats and Dogs Shelter and Sanctuary".  We searched "raining" and found similar names for businesses in other parts of the state that would not affect our chosen name, or their business model.  


You also want a name that people will remember.  It helps if the name works well with a logo or theme.  When we start our memberships in the shelter we want our first membership gift to be memorable.  We are not going to do a t-shirt - our members will get umbrellas with our logo!

Our Blog

An ongoing series of informational entries

What is your first step in setting up a shelter?

February 2, 2017

An animal shelter is a complicated enterprise.   You want to have volunteers, and you want to be able to solicit donations for start-up costs.  Operating costs should be funded entirely from memberships - this doesn't always happen, but this is something to strive for.   To build the actual facility you want to have access to grants and company sponsorship.   To do all of this - you need to be a 501c3 charity.  


A 501c3 is a type of federally tax exempt organization that was organized and operates exclusively for exempt purposes, such as charity, education, religious, etc.  You can read the full description on the IRS website.   To obtain the 501c3 exemption you need to fill out form 1023.  But, we are getting ahead of ourselves!


Before you can even think about filing the 1023 form you need to:

1. choose a name

2. incorporate with the appropriate state agency

3. get assigned an EIN

4.  register as a charity (this is true for Florida - check your own state rules)


Our future shelter and sanctuary will be located in Florida so all of the information I share will be Florida specific.  Each state has its own rules so check with your state on required documents.    There are numerous resources available to help you set up your charity - for a price.  Shop around!  To save money we are trying to do as much as possible before we have to hire an attorney.  We are lucky - we have people involved with extensive non-profit experience.  If you don't know the first thing about articles of incorporation, bylaws, budgets, dissolution clauses - you may want to just spend the money and have the professionals file everything for you.  Just a word of caution - average quotes seem to be about $2500, plus the filing fees (which will be over $1000).  

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So you want to open a shelter for dogs and cats.......

February 1, 2017 

Why do you want to spend so much time and money on starting a shelter?  Can't you just connect with other groups?  Aren't there other shelters in the area - why not just volunteer there?    Adding another shelter is not going to solve the over-population problem in our area - wouldn't it be better to focus on legislation instead?  These are just a few of the questions I've been getting over the last few weeks.   My answer: I agree with all of your concerns but, I can no longer stand by and watch endless numbers of dogs and cats suffer needlessly.   


Starting a shelter will not solve the problems with over-population; it will not offer a home to every animal in need; it will not miraculously change the attitude of irresponsible pet owners.  What it will do is:  provide more opportunities for dogs and cats to find a home; enable us to focus on education for children to teach them the values of responsible pet ownership, and enable us to partner with local veterinarians to provide much needed affordable medical care.  


So where do you start?  What is the first step in starting an animal shelter?   This is something that many of us dream about doing but don't know where to start.   I invite you to come along with us on this journey to create a safe place for homeless cats and dogs.  We'll share all the details - good and bad, in the hopes that others will follow our lead and create safe havens for animals in your area.  


This is a huge, scary project, but in the words of Lao Tzu "A journey of a thousand miles starts with a single step."