Nuestra Alianza de Willits (NAW) is a grassroots nonprofit organization with sixteen members on the board of directors; it serves the Latino population in and around Willits, CA as well as any other community members who care to join in our activities.
NAW was conceived during a Mendocino College English as a second language class in the year 2000 when the students thought wistfully about various programs and services they wished were available in the community. That night the teacher and students decided to form an organization to provide those services themselves; nobody else was going to do it.
Every student and the teacher wanted to be on the board, hence, the 16 members. Fortunately the Mexican board members come from a communal culture, so the large board comes to consensus very quickly. One thing agreed on was NAW’s mission statement:
Nuestra Alianza de Willits’ mission is to serve the community, making it a better, safer and healthier place to live. We are devoted to the well-being of the children in the community, to keep them safe, free of drugs, free of gang influences, and to assist them in attaining academic success. We are also committed to training our largely immigrant board of directors to have skills that will serve them well in their new home, the USA.
There was a very steep learning curve for the board members, none of whom had any previous experience with nonprofits. Members had to learn nonprofit vocabulary, words such as, fiscal, grant, budget, funding stream, bylaws and nonprofit. The teacher saw the organization as a way to continue to train her students with skills they could use in the USA as well as serving the Latino community.
The first year after attaining 501 (c) (3) status, NAW had a total budget of $37.00 and offered a scant few programs with the use of volunteers. Over the intervening seven years, the programs and services grew; we currently offer 17 programs, with several waiting to be developed, and have numerous part-time employees, three of whom work year round; others work either during the school year at the after school program or during summer at the summer program for children. Numerous presentations and services are offered by volunteers or people paid out of specifically funded grant monies. The current NAW budget is approximately $105,000, not counting in-kind.
Everyone has learned important skills. When NAW started, nobody except the teacher had computer skills; no one could even use email. Now members have learned to write and comply with grants -on computers- write curriculum, track and manipulate data, design art projects for children, teach dance to children, teach Mexican history, cooking, and sports; make presentations in front of community groups, understand acronyms in English contexts, and to have a voice in the larger community.
There is a special subgroup on NAW’s board: the young ones. Four of NAW’s board members are between 15 and 20 years old. They have developed very strong leadership skills and take on many projects by themselves to the delighted relief of the older members; the young ones often recruit their friends and siblings to help. They have technological skills that the rest of the board lacks. They organize and run three of NAW’s programs without any help from older board members, and they are key players in several other programs as well. Their newly acquired skills will make them recognized leaders in the broader community within a few years. They are the diverse leadership that is coming to the Willits community.
The first year NAW offered its summer program for children, we simply hoped no one would close us down and that NAW’s little program for children would be successful. Expectations were low. One day the sheriff came to see what NAW was doing; it was terrifying. But much to our surprise, he loved the program and offered to help and has, in fact, supported NAW ever since. The children in the program loved it too as did their parents. Overwhelmingly, this has been NAW’s experience: successful programs and support from the community at large. The once marginalized group now has a strong and much sought after voice, a place at the community table.
The NAW Board of Directors is almost entirely composed of immigrants from Mexico; in fact, most of them are from the same small town; the board knows what is needed in the Latino community and usually knows what to do to meet those needs. However, this grassroots strength can also be a weakness. Public service is not part of most board members’ culture; it is a new venture. In addition, occasionally the board lacks the skills or connections to get a job done. In order to address this weakness, approximately a year ago NAW formed an Advisory Board. It consists of influential, local people who advise and support NAW with their various areas of expertise. This Advisory Board has no vote; it cannot dictate policy or programs, but it can and does make things happen. Its support has strengthened the organization.
In addition to the support of the Advisory Board, NAW is a founding member of The Family Resource Network of Mendocino County whose mission is to nurture the collaborative efforts of Family Resource Centers within Mendocino County to provide strength-based services that embrace all cultures in response to our communities’ needs. There are 10 members of this network.
Vision & Values
Nuestra Alianza de Willits (NAW) is a grassroots nonprofit organization; it serves the Latino population in and around Willits, CA as well as any other community members who care to join in our activities.
NAW was conceived during a Mendocino College English as a second language class in the year 2000 when the students said they wanted various programs and services in the community, so they decided to form an organization to provide those services themselves.
There was a very steep learning curve for the board members, none of whom had any previous experience with nonprofits. Over the intervening nine years, after achieving nonprofit status, the programs and services grew; we currently offer 17 programs, with several waiting to be developed, and have numerous part-time employees, three of whom work year round; others work during specific programs. Numerous presentations and services are offered to fill the needs of the community throughout the year.
Jaime Del Aguila
We are a 501(c)(3)
Section 501(c)(3) is the portion of the US Internal Revenue Code that allows for federal tax exemption of nonprofit organizations, specifically those that are considered public charities, private foundations or private operating foundations. It is regulated and administered by the US Department of Treasury through the Internal Revenue Service. There are other 501(c) organizations, indicated by categories 501(c)(1) – 501(c)(28). This discussion will focus on 501(c)(3).
Entities that can seek 501(c)(3) determination from the IRS include corporations, trusts, community chests, LLCs, and unincorporated associations. The overwhelming majority of 501(c)(3) organizations are nonprofit corporations.
Provisions Unique to 501(c)(3)
One of the most distinct provisions unique to Section 501(c)(3) organizations as compared with other tax exempt entities is the tax deductibility of donations. 26 U.S.C. § 170, provides a deduction, for federal income tax purposes, for some donors who make charitable contributions to most types of 501(c)(3) organizations.
Other unique provisions tend to vary by state. Like federal law, most states allow for deductibility for state income tax purposes. Also, many states allow 501(c)(3) organizations to be exempt from sales tax on purchases, as well as exemption from property taxes. Special nonprofit, bulk rate postage discounts are available from the Post Office to qualifying organizations.
Types of 501(c)(3) Organizations
501(c)(3) organizations fall into one of three primary categories: public charities, private foundations, and private operating foundations.
A public charity is generally defined by the IRS as “not a private foundation”. It receives a substantial portion of its revenue from the general public or from government. In order to remain a public charity (and not a private foundation), a 501(c)(3) must obtain at least 1/3 of its donated revenue from a fairly broad base of public support. Public support can be from individuals, companies and/or other public charities. Donations to public charities can be tax deductible to the individual donor up to 50% of the donor’s income[2,3]. Corporate limits are generally 10%[2,3]. In addition, public charities must maintain a governing body that is mostly made up of unrelated individuals. Public charities are what most people recognize as those organizations with active programs. Examples include churches, benevolence organizations, animal welfare agencies, educational organizations, etc.
A private foundation is often referred to as a non-operating foundation, as in it typically does not have active programs. Revenue may come from a relatively small number of donors, even single donors. Private foundations are usually thought of as nonprofits which support the work of public charities through grants, though that is not always the case. Donations to private foundations can be tax deductible to the individual donor up to 30% of the donor’s income[2,3]. Governance of a private foundation can be much more closely held than in a public charity. A family foundation is an example of a private foundation.
The third category is the least common: private operating foundation. These organizations often maintain active programs similar to public charities, but may have attributes (such as close governance) similar to a foundation. As such, private operating foundations are often considered hybrids. Most of the earnings must go to the conduct of programs. Donation deductibility is similar to a public charity[2,3].
Restrictions on Activities
501(c)(3) organizations are highly regulated entities. Strict rules apply to both the activities and the governance of these organizations. No part of the activities or the net earnings can unfairly benefit any director, officer, or any private individual, and no officer or private individual can share in the distribution of any of the corporate assets in the event the organization shuts down.
Further, lobbying, propaganda or other legislative activity must be kept relatively insubstantial. Intervention in political campaigns or the endorsement/anti-endorsement of candidates for public office is strictly prohibited.
Obtaining 501(c)(3) Status
In order for a corporation or other qualifying entity to receive 501(c)(3) status, it must apply to the IRS for recognition by filing Form 1023 (or Form 1023-EZ), Application for Recognition of Tax Exemption. The application is a thorough examination of the organization’s structure, governance and programs.
Having 501(c)(3) status comes with compliance requirements, the most obvious of which is operating the organization within the IRS regulations. In addition, most organizations must file some version of Form 990 with the IRS each year. Additional compliance requirements exist at the state level.
- Under very limited circumstances, LLCs can legally seek status as a 501(c)(3), tax-exempt organization. A qualifying LLC must have its entire membership made up of other recognized 501(c)(3) organizations. LLCs with individual or non-tax-exempt entity members cannot apply for status. LLCs are NOT eligible to file Form 1023-EZ.
- Regulations specify which such deductions must be verified in order to be allowed.
- Other tax and income circumstances can affect the deductibility of contributions to public charities.
- Unrelated can mean by blood, marriage and/or business.
- Some lobbying, both direct and grassroots, is allowable, but should not represent more than 10-20% of the organization’s activities, nor consume any more than 10-20% of the resources of the organization. Nonprofits that engage in lobbying activity are discouraged from filing Form 1023-EZ and should file a complete Form 1023.