Starting A Nonprofit Corporation Tips
Have you always dreamed of “bettering the world”? Do you have a pet cause you would like to do something about? Would you like to leave a legacy behind you? You might consider starting a “not for profit” organization.
Ordinary everyday people start not-for-profits all the time. This might sound like a complicated and involved process, and in many ways it is. There are a number of tax and legal obligations which need to be met, but most of the paperwork can be done by a non-professional.
Once you start the process, you’ll find there are all kinds of people and organizations which will be happy and able to help you. Most people want to contribute; they just need a leader with a vision. You can be that leader.
4 Steps to Starting Your Own Nonprofit Corporation
1. Describe your mission.
Not-for-profit organizations need to have a mission statement. This should be a short document which explains the reason your organization exists.
Your mission statement should define who your clients are, basically the people who will benefit from your organization. The statement should specify the benefits your organization’s clients will reap.
You should describe the guiding ethos of your not for profit, while describing you will portray your organization to the public.
Remember that this statement is selling your vision to your potential advisers and board members. This is the agreement on what they are to expect, along with what anyone willing to help should expect from your organization.
2. Organize a Board of Directors.
If you incorporate your organization, you will need a Board of Directors which will meet at least once per year. Even if you don’t incorporate, you will need an advisory panel. In either case, this group of people will be the one’s who contribute most to your dream.
Recruit people who bring assets to the not for profit. If you can recruit a lawyer, that would help a lot. Even if this lawyer doesn’t have experience in not-for-profit law, this person will probably be able to refer you to colleagues who do.
Other valuable members would be bankers, advertisers, corporate executives, teachers, clergy and politicians. Shoot high and try to bring in people with distinct backgrounds. You will need a half dozen people at least, so make up a list and start building your board.
Of course, the most important factor is to collect a group of people who believe in the mission of your organization.
3. Retain a lawyer.
There is a lot of paperwork in starting a not for profit. Each state and local jurisdiction has its own laws, so it is best to consult a lawyer early on. Most of the paperwork can be filled out by you, but a lawyer should advise every step of the way. It will save time and (charity) money in the long run.
Fairly early on, you’ll be writing a set of bylaws for your organization. Once again, you need a lawyer to help you do this.
These bylaws set up the legal structure of the not for profit. You can choose a federal incorporation, a state incorporation or a co-operative. Whichever you choose, you need a lawyer to consult with you on doing so.
You will need someone who knows not for profit law. The fundraising laws in each state are different, so you need someone with specific knowledge.
You will need both federal and state tax exemptions. If your organization owns local property, you will need a tax exemption from the city. You’ll need a mail permit and a solicitation license. If you hire employees, you need a federal employer number and unemployment insurance requests. So there is a lot of paperwork which goes into starting a not for profit organization.
Remember, there are ways to consult a lawyer without spending a lot of money. Many non profits can consult a Legal Aid lawyer who gives advice free of charge. Contact the local bar association for advice. If you have a lawyer donor, this person will probably give free advice, too.
4. Retain an accountant.
The tax laws for a not for profit can get spotty. The last thing you need is to file the wrong papers and end up paying taxes on fundraisers. And you want to make sure deadlines are not missed on important filings. So hire an accountant to look after these important tax questions.
You should consider hiring an insurance agent, too.
The Heritage Foundation
If you want to help the world in some way, but you don’t want to deal with all these headaches, there are other ways to start a not-for-profit. The Heritage Foundation helps local organizations.
You can work through the Heritage Foundation to handle all the tax and legal paperwork needed to start your organization. The trade off is that you must follow the bylaws of the foundation. You lose freedom, but you might find this allows you more time to handle the fundraising and benefit allocation of your organization.