The Playbook on Tech Nonprofit Administration

Welcome to the boring, but necessary: tech nonprofit administration. From registering as a nonprofit, to paying your employees, to adhering to record-keeping requirements, nonprofit administration is a crucial part of your work running a tech nonprofit. As it’s the very lifeblood of your organization, we hope you come to love it (or at least like it!) after learning the ropes.

As we’ll note throughout this playbook, in many cases, there’s overlap between admin for tech nonprofits and for-profits. We’ve done our best to highlight what’s different for tech nonprofits, and have provided resources for deeper dives into each category. Plus, we put together this helpful worksheet to ensure you check all of the admin boxes. Ready to learn how to run a nonprofit? *Cracks knuckles*…let’s get started.

How to Register as a Nonprofit & 501c3

This section focuses on the process for registering as a nonprofit in the US. If you’re based outside the US, check online for resources on how to register as a nonprofit in your country.

So you’ve decided on becoming a nonprofit and are gearing up to officially register as a 501c3. Before we get into the how, let’s understand why being a registered nonprofit is important.

Holding 501c3 status designates you as a tax-exempt nonprofit, which has a few key benefits. Being a 501c3 organization exempts you from federal, state, property, and income taxes, saving you money. It’s also critical for grant and funding opportunities – your main access to capital as a tech nonprofit. With a 501c3 status, you’re eligible to apply to grants open only to nonprofits (which is most grants!). At this point, we hope you’re furiously scrolling to the nonprofit registration checklist below!

To become a registered 501c3, you’ll need to submit materials to both the state and federal government. Because there are so many guides and resources online to help you navigate this process, this checklist outlines the main steps to help you get started on this element of nonprofit administration. Plus, we’ve linked a few at the end of this section.

Additional resources

• Forming your Nonprofit in 8 Steps

• How to Form a Nonprofit Corporation: A 50 State Guide

• Basics of Nonprofit Formation Documents

• Applying for 501c3 Status with the IRS

• Nonprofit Bylaws Made Easy: Tips and Best Practices

Nonprofit Registration Checklist

State Requirements

• Ensure your organization’s name is not the same as the name of another corporation on file with your state’s corporations. You can usually check this through your state’s Secretary of State office.

• File your articles of incorporation, or your primary corporate document that brings your nonprofit corporation into existence. Most states have a nonprofit formation packet.

• Check if your state requires you to file for state tax exemption. In most states, as long as you file your articles of incorporation and obtain your 501c3 status, your state tax exemptions are automatically granted. But for a few states, you need to take additional steps like completing a separate application for state tax exemption or sending in a copy of the IRS determination letter that granted your federal exemption. You can find this information on your state’s tax agency website.

Federal Requirements

• Submit a 501c3 application to the IRS. Before applying, make sure you’ve assembled the required materials and completed these steps outlined on the IRS website. You’ll have to submit things like bylaws (see below) and a copy of your filed articles of incorporation along with your application.

• Next, complete Form 1023, the application to obtain 501c3 status as a nonprofit. Note that smaller nonprofits may be eligible to file Form 1023-EZ, a simpler application that can be completed online. Check if your organization is eligible by completing the eligibility worksheet.

HR for Nonprofits

We’ve already gone deep into two of the most important aspects of HR for tech nonprofits, hiring and building your board (see The Playbook on Nonprofit Boards). As for the admin side of HR, it looks a lot like HR for any organization – meaning there are endless resources online about payroll and benefits, promotions, reviews, and professional development. We’ve provided a jumping off point for many of these topics, as well as additional HR topics you should consider.

Compensation and Benefits

Your tech nonprofit’s mission and work will be what attracts top talent most. But the reality is, compensation and benefits play a significant role in whether a prospective employee decides that your organization is the right fit. On top of that, leading a tech nonprofit means that social justice should be a core value. Of course you want to treat your employees fairly and equitable compensation is a keystone in that endeavor.

It will probably take some time before you can even start thinking about bringing on other salaried employees beyond yourself. Once you do get to this point (yay!), there’s no one right way to approach compensation, and it looks different for every organization.

Compensation and Benefits Platforms for Small Businesses

To get you started on thinking about what’s important to you (and therefore your organization) in terms of compensation, here are some questions to ask yourself:

• What is a living wage in my organization’s location?

• How do I want salaries to stack up against those of colleagues in similar positions within the organization, in the sector, and in comparable sectors?

• Do I want to (or can I?) provide compensation that competes with for-profit companies to help attract top talent?

• How can I create an equitable compensation plan for employees?

• What do I want the relationship between compensation and performance to be?

Payroll

• Gusto

• Intuit QuickBooks Payroll

• Patriot Payroll

• Paychex Flex

Health Benefits

• Gusto

• Namely

• Trinet

• BambooHR

Retirement Savings

• Guideline

• Human Interest

Tools and Products for Collaboration

With the quick pace of working at a tech nonprofit, consistent communication is key. Both tech tools and non-tech collaboration strategies can help you streamline your communication to make your team efficient and well-aligned.

There are plenty of platforms out there that can foster team collaboration, and many have discounted pricing for nonprofits.

Beyond these tech tools, develop a consistent meeting cadence for your team. Weekly team check-ins and daily stand-ups can help align your team, and give everyone visibility into the different work and initiatives happening internally. At Fast Forward, we use our Monday hour-long check-ins to discuss each team member’s focuses for the week and address any roadblocks.

Additional HR Topics

Onboarding

• How to Build a New Employee Onboarding Process from Scratch

Promotions

• How You Promote People Can Make or Break Company Culture

Accounting for Nonprofits

Nonprofit accounting looks different from for-profit accounting, and is an incredibly important element of nonprofit administration. At times, it can be challenging to navigate – especially if you’re new to it. We suggest you get an accountant as soon as possible. Hiring an accountant familiar with the process for nonprofits will save you a huge amount of time, and is worth the investment. 

There are two major differences in accounting for nonprofits:

1. Nonprofits need to categorize their expenses into three buckets: Programming: the service(s) provided by your organization. If you have more than one program, each is accounted for separately. Fundraising: all fundraising activities including events and writing grant proposals, as well as sales and marketing activities. Management and Administration: all overhead costs of running your organization.
2. On the revenue side, you’ll need to manage restricted funding from donors. Your net assets are classified as either unrestricted or restricted. Restricted funding can only be used in the ways agreed upon by the donor, while unrestricted funds can be used for any purpose.

In some cases, nonprofits are required to keep different records from for-profits, and report transactions through different documents. The table below outlines the nonprofit replacements of for-profit concepts and documents.

R&D Tax Credit

As a tech nonprofit, you might be eligible for the R&D Tax Credit. Often used by tech startups, this incentive rewards companies for conducting research and development and innovating. Documentation of your R&D activities, which can include payroll records of your technical staff, serves as the basis of your R&D Tax Credit claim.

A company that is doing any of the following is eligible:

• Developing or designing new products or processes.

• Enhancing existing products or processes.

• Developing or improving upon existing prototypes and software.

Read more about the R&D Tax Credit here.

Bank Accounts

Our biggest piece of banking advice is to get a bank account as soon as you can. No one bank is best for nonprofits, but we recommend opening a business checking account with a bank you like working with, or one that is based near where you’re located.

Legal & Insurance

Legal

For any nonprofit, “legal” mainly refers to maintaining tax-exempt status. You do this through proper record-keeping that shows you’re complying with tax rules. An effective record-keeping system is key for maintaining your tax-exempt status, and involves documentation of everything from your assets and liabilities to your nonprofit’s activity records.

Nonprofits need to abide by certain limitations, like not contributing to political campaigns or not distributing profits to members, officers, or directors. While some of these limitations (linked below) may seem obvious, it doesn’t hurt to review them just in case.

As a nonprofit, you also have to comply with employment laws. These include wage laws, anti-discrimination laws, and other applicable laws like unemployment compensation and workers’ compensation. These laws can change, so make sure you do an employment law compliance check every now and then.

Additional Resources

• Basic Recordkeeping Tips for Nonprofit Organizations

• Protecting Tax-Exempt Status (including nonprofit limitations)

• US Department of Labor Employment Law Guide

Insurance

All businesses need insurance. This is true for nonprofits too. Insurance protects the executives and board from personal liability. Also, many funders, landlords, and vendors won’t work with you unless you have insurance. For these reasons, it’s a good idea to get general liability insurance and directors and officers insurance.

Additional Resources

• General liability insurance for nonprofits