IRS Form 1023: Upcoming Changes and Getting Stuck on The Narrative

I was in the process of drafting this post and got a nifty reminder from the IRS about Form  1023″s upcoming makeover.

One that I think alot of people are going to be excited about.

For those who haven”t heard, the IRS has begun developing a new interactive Form 1023.  Information boxes will pop up for each line that has to be filled out and each box will contain links to information on the IRS site and/or explanations for each question (pure genius). Though this has been in the pipelines for a while, a preview form will be available for public viewing September 23rd. And everyone  is encouraged to peruse the application and submit comments.

It”s ironic that this came to my attention again; I wanted to post about the trouble some organizations run into when filling out certain portions of the 1023; namely Part IV (*dun, dun, duuuuuunnnn*) Narrative Description of Activities.

I feel like this Section LITERALLY paralyzes applicants upon sight. And why wouldn”t it? You”re being asked to reduce the entire essence of your org, your baby into writing.

And let”s be honest, at this point most organizations are itching to get up and going and the last thing they want to do is fill out a twenty some odd paged application. Not only that, but what orgs plan to do, and how, is probably still ambiguous at this point. Which tends to reflect itself in the really broad and in-cohesive responses some organizations give.

But giving broad unthoughtful answers, or worse skimping through this section in a rush, is a huge mistake.  Especially since the narrative is really the meat and potatoes of the application.

 The key is to remember:

1. If you haven”t already thought through what the organization will do (and how it will do it) then this is as good a time as any.

2. There are questions about “proposed activities.” Here, copying and pasting your vision, or briefly stating that you plan to save ponies all over the world, isn”t going to cut it. Bearing in mind your mission, you gotta take a few steps back and think about how you plan to accomplish that mission step by step. And be specific. What”s the first thing you”re going to do? What specific programming is going to help you accomplish your vision and mission? What types of special events are you going to host? These are all things that need to be discussed.

3. Remember there”s nothing wrong with all your events being in the future provided you are detailed and specific. Include the who, what, when, where, why and most importantly the how. Organizations do themselves  a huge disservice when they answer the questions is this Section broadly. And without exception when organization”s have been broad  the agency has come back with questions and a request for clarifications, both of which take more time.

4. Be careful using the IRS” language. Many orgs copy and paste IRS language thinking its sufficient on its own. It”s not. So if you”re going to use the definition of a charitable organization be sure to tie that into your narrative and show why you qualify for exemption.

Other things you”ll want to do are:

1. Make sure this Section is in line with the rest of the application, namely the budget and any applicable schedules. Don”t contradict yourself.

2. Gloat. Attach all advertising materials, cite the website, include publicity releases, etc.

3. Avoid shooting yourself in the foot. As you paint your vision don”t start popping off about how you plan to merchandise and sell branded popcorn makers when your mission is to save puppies. Including too many unrelated activities could put your application in jeopardy.

4. Note the application asks for a narrative. Fight the urge to squeeze everything you have to say into those four or five lines. This is your time to say what you want, as much as you want.

5. Remember the application asks about funding and time allocation as well. Be specific about the types of grants, donations or contributions you”ll be going for (ex. A grant from so and so) and try to allocate an amount or percentage of these funds to each planned activity. Also be specific about how much time you plan to, or actually do, allocate to each activity.

Lastly, something that has always intrigued me is how good development folks are at using things like this in their strategy. I had someone recently remind me of how powerful this application can be. As a public document this is your first, and most influential piece, of propaganda so put your best face forward.

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