Starting a Nonprofit Agency
There are many things to consider when determining whether or not starting a nonprofit will best meet your mission/goals. Here is a short list of issues to consider:
Issues
- Are there other groups in your area that are providing similar services or working with the same population(s)?
- Is there a group of individuals who are passionate about and ready to actively pursue the attainment of a common vision/mission? Will the workload be shared?
- Are there at least 3 individuals who are willing to be board members, with all the attendant legal responsibilities?
- Do you have a business plan for 1 year, 2, 3, 5, and 10 years? It’s easy to start an organization, but does your group know how to sustain it?
- Not all nonprofit agencies receive donations from individuals or grant funding from government or foundations. Outreach, effective delivery of service to the community, knowledge of funding sources and processes, etc. are all considered when potential donors, foundations, and government agencies contemplate making an investment in a project.
- Who will file the needed paperwork with the IRS and the State of California (if you’re in California)? How will funds be raised to pay for the legal filings? In very brief terms: starting a new nonprofit means creating a legal entity (i.e., corporation) and applying for tax-exempt status. The time it takes to begin and receive the final okay from the appropriate government entities varies.
There are a multitude of factors to consider. Above is a brief (by no means comprehensive) list of some issues to consider. Below are resources to help you address your group’s particular objectives in determining whether or not to start a new organization.
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Resources
“Do I really want to start a nonprofit?” Topic paper by BoardSource. Visit BoardSource.org and use the “keyword search” or call NSC for more information.
Get Ready, Get Set is a free 38-page downloadable booklet written as a project of the California Management Assistance Partnership (C-MAP), of which NSC is a partner. It addresses the question “Is creating a new nonprofit organization the best way to accomplish your objectives?”
Establishing a Nonprofit Organization,12 step tutorial from the Foundation Center.
How Do You Start a 501(c)(3) Nonprofit Organization? by Florence L. Green, California Association of Nonprofits (CAN). A general overview of the steps one must take in order to form a 501(c)(3) nonprofit corporation. There are a variety of other nonprofit structures, but this paper only deals with forming a 501(c)(3) corporation.
Office of the Attorney General, State of California Website of the California State Attorney General, the state official responsible for oversight of nonprofit organizations in California.
Internal Revenue Service - Charities & Non-Profits has tax exemption information to determine if an organization is eligible to apply for recognition of exemption from Federal income taxation under 501 (a) of the IRS Code.
“How to Form a Nonprofit Corporation in California” by Attorney Anthony Mancuso. Published by Nolo Press with new editions printed frequently. The book comes with a computer disc, which means all Federal and State forms are easily accessed. Nolo Press is “the most prominent U.S. publisher of self-help legal aids" according to Time Magazine.
Nonprofit Support Center workshops NSC presents a variety of workshops, peer affinity groups, and funder panels of interest to nonprofit program, governance, and management personnel.
Nonprofit Support Center Resource Library includes books on starting and running nonprofit organizations, plus a multitude of books on all types of topics concerning the effective management and governance of nonprofit agencies.
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Fiscal Sponsorship
Fiscal Sponsorship One alternative to starting a new nonprofit organization, fiscal sponsorship (a.k.a. umbrella) is a legitimate means to meet a need in a community. A group does not need to go through the paperwork or expense with the IRS and State Attorney General’s Office to incorporate and receive a tax-exempt status.
There are similar issues to starting a nonprofit that need to be addressed when deciding on whether or not a project should be fiscally sponsored in order to meet the project’s objectives.
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Resources to Learn More About Fiscal Sponsorship
Compass Point Nonprofit Genie website which has a variety of FAQs, including answers to questions about fiscal sponsorship.
“Fiscal Sponsorship” Topic paper by BoardSource. Visit BoardSource.org and use the “keyword search” or call NSC for more information.
“Fiscal Sponsorship: 6 Ways to do it Right” book by Gregory L. Colvin of Silk, Adler & Colvin. Published in 1993 by Study Center Press. Book available through the NSC Library.
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