Authority to establish VA research corporations was first granted to
VA by Congress in 1988. Since then, more than 90 corporations have been
established under
38 U.S.C. 7361-7366.
During 2007, 82 of
these corporations administered $250 million dollars and over
5,000 research programs. In late 1999, Congress expanded their authority
to include both research and education, giving VA medical centers a
powerful new mechanism to support staff and patient education
activities.
| Advantages |
 |
1. Provide support for research and/or staff and patient education
and training at the medical center.
2. Ensure adherence to appropriate regulations and policies,
including conflict of interest, by involving approval by VA committees
and by providing VA oversight through the involvement of senior
medical center management.
3. Solicit, accept and administer non-VA federal and private sector
grants for research and education using corporation staff to manage
the activities.
4. Conduct staff and patient training tailored specifically for
facility needs to improve job performance or teach new skills.
| Examples
of possible education activities |
|
1. Pay for staff training in computers, new equipment and
techniques.
2. Sponsor patient education courses in diabetes and hypertension
management, smoking cessation, and weight loss.
3. Cover staff travel and registration expenses to attend
conferences.
4. Conduct educational seminars for VA and university staff
including CME.
5. Administer federal and non federal grants for fellowships.
| How
to establish a corporation |
|
Basic instructions for how to establish a nonprofit are provided
below.
A corporation must be incorporated in the
state where the affiliated VA medical center is located. After the corporation has been incorporated, it has fifteen
months to submit to the IRS an application for tax exempt status as a
501(c)(3) organization and up to four years to actually secure tax
exempt status. Consult a nonprofit accountant or VA regional counsel for
assistance.
| Basic
Information About How to Establish a VA Affiliated Nonprofit
Research Corporation |
|
Initial Steps:
1. Become familiar with the statute that authorizes the
VA-affiliated nonprofit research and education corporations,
38
U.S.C. 7361-7366. Before establishing a VA-affiliated
nonprofit research and education corporation (NPC), take the time to
become familiar with the authorizing statute.
2. Form an organizing committee. Future board members and the
person likely to be named executive director should be involved in
developing the NPC. Make sure that at least one person is willing to
assume responsibility for the initial paperwork.
The committee's first task should be a realistic assessment of
whether the VAMC's staff can generate sufficient public and private
funds to warrant the cost and effort required to establish and operate
an NPC. This assessment should include surveying staff for the
opportunities that they presently are passing up for lack of an
appropriate administrative mechanism, and their level of interest in
using a VA NPC to administer these funds vice other local
administrative mechanisms. The appeal of a low overhead rate—usually
25%—and top quality service are usually sufficient to generate
interest.
3. Write articles of incorporation and bylaws. Before drafting
these documents, contact the state agency that is responsible for
incorporation. This may be the secretary of state, department of
commerce, department of assessments and taxation, or the state
comptroller, etc. Request a packet of information that details the
state's incorporation process and contains the necessary forms. Also,
many states have an association of nonprofits. Go to the web site of
the National Council
of Nonprofit Associations to determine whether your state has
such an association. This organization will have detailed printed
advice about setting up a nonprofit in the state, and may offer
assistance in drafting articles of incorporation and bylaws. You may
also want to ask other NPCs to share their bylaws and articles for
you to review as samples. However:
Each state has specific and varying
requirements for corporate articles of incorporation and bylaws.
Drafts should be reviewed by a local attorney. Samples
provided by other NPCs may not be compliant with your state requirements.
4. Hold a planning session. The organizing committee should
meet for a planning session at least once prior to the
"organizational meeting" of the board, otherwise known as
the first official board meeting. The purpose of the planning session
is to review sample articles of incorporation and bylaws, and to make
preliminary decisions on issues that will shape the NPC.
5. Identify a source of start up funds. With the approval of
the original donor, General Post Funds designated for research and
education may be transferred to an NPC. Subject to donor restrictions,
these may be used to cover start up costs including state (about
$50.00) and federal tax exemption ($500) filing fees. Additional start
up costs will be incurred if a private attorney and/or accountant reviews articles of incorporation, bylaws and the tax exempt
application. Absent accessible General Post Funds, General Counsel has
determined that funds appropriated to the medical center and VA
attorneys may be used to establish an NPC.
6. Begin the search for an accountant and an attorney. Ask well
run nonprofits in the area to recommend accountants and attorneys who
specialize in nonprofit accounting and law. Be sure to find
professionals with substantial expertise in nonprofits. VA attorneys
with nonprofit experience may be a valuable resource. General Counsel
has agreed that VA attorneys will not charge NPCs for start up
assistance.
7. File for state incorporation. File the application with the
appropriate state office.
Subsequent Steps:
1. Obtain a Federal Employer Identification Number: Go to the
IRS web site at
and download Package 1023, Application for Recognition of Exemption.
This contains instructions and forms. It is also useful to obtain
Publication 557, Tax-Exempt Status for Your Organization. This
will help identify the correct classification within 501(c)(3) tax
exempt status. A nonprofit must submit an application for tax exempt
status within 15 months of being incorporated. A VA-affiliated
nonprofit must actually obtain tax exempt status within four years of
incorporation. A nonprofit may begin accepting grants and donations as
soon as it submits its application for tax exempt status.
4. Open bank accounts. All funds administered by an NPC must be
held in instruments backed by the full faith and credit of the US
government. This effectively limits the NPCs to instruments insured by
the Federal Deposit Insurance Corporation (FDIC) such as FDIC insured
banks and CDs, and Treasury bonds and notes which are backed by the US
government. Establish a local bank account to handle funds initially.
However, the corporation may quickly exceed the limit for
FDIC coverage. As the NPC grows, it is likely that it will need a
convenient way to handle larger sums of money while still ensuring
that funds are backed by the full faith and credit of the US
government. To date, only the Merrill Lynch Endowment
Management Account (designate the Insured Savings Account to
administer the funds) meets the necessary requirements.
5. Obtain insurance. All nonprofits are strongly encouraged to
obtain insurance coverage. These include directors and officers error
and omissions coverage, general liability and fidelity bond. D&O
should be the first priority. NAVREF offers a group insurance program
to facilitate access to reasonably priced risk management products. Click
here to go to information about the NAVREF program.
6. Obtain a Dunn and Bradstreet number (D&B D-U-N-S): Many grantors
require recipient organizations to have a D-U-N-S number. To apply, go to
http://www.dnb.com/US/duns_update/
Helpful Publications:
The following helpful publications are now available on the IRS Web site: http://www.irs.gov
IRS Publication 4420, Applying for 501(c)(3) Tax-Exempt Status
IRS Publication 4421, Compliance Guide for 501(c)(3) Tax-Exempt
Organizations
