How to Establish a Benefit Fund
- 1). Choose an appropriate name. Starting a benefit fund in some ways is similar to starting a business. Give your funding organization a name relevant to its cause, such as "California Association for the Gifted" or "The Fund For Animals." Establish a fund in honor of a relevant person; "The Brian Piccolo Cancer Research Fund" for instance. Choose a foundation name that suits your purpose and describes your cause.
- 2). Acquire an employer identification number. An important preliminary step in establishing a benefit fund is registering your foundation with the Internal Revenue Service and acquiring an EIN. You'll need this number to report your proceeds, claim tax-exemption and provide contributors with tax-deduction opportunities. Visit the IRS website and apply for an EIN online.
- 3). Write a business plan and a proposal letter. Benefit funds are essentially non-profit businesses and should be operated as such to achieve maximum success. Write a detailed business plan introducing all executive officers and outlining how you plan to operate the fund. Include all marketing and advertising information, fund allocation recipients and future projections. Draft a proposal letter for banks and potential associates.
- 4). Apply for tax exempt status. Visit the IRS website to obtain an application for recognition of exemption -- form 1023 -- to apply for 501(c)(3) status. You must provide articles of incorporation and a detailed summary of what your foundation is being established to achieve. Your business plan can serve as this documentation. Complete all applicable forms, assemble required documents, submit and await approval. Once approved, pay the corresponding filing fees to receive your exemption number.
- 5). Open a bank account in the foundation's name. Present your business plan and proposal letter to your banker to set up a bank account exclusive to your benefit fund organization. Present your business plan, proposal, EIN and 501(c)(3) documentation to your bank representative. Any executive officers of the foundation that have access to banking transactions must provide a Social Security number and two forms of state-issued identification to open the account.
- 6). Market your foundation and brand the name. Once your organization's incorporation, tax-exempt status and bank account are in place, begin collecting donations. Execute all advertising campaigns and marketing strategies outlined in your business plan to create public awareness of your cause and brand the foundation's name.
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