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Starting a Nonprofit Charity
Starting a charitable nonprofit can take you down many paths but each
journey begins with a mission. A mission is simply a clear statement of the
scope and dimension of your nonprofit. Why does your nonprofit need to
exist? Who will it serve? What will it actually do? Where will you operate?
The answers to these questions should help formulate a clear mission
Now that you know your mission, what are the technical issues of starting a
nonprofit? First you must determine if your mission requires establishing a
nonprofit corporation. If you intend on raising funds in the form of tax
deductible contributions, the organization must serve some charitable,
religious, educational, scientific or literary purpose beneficial to the
public interest. This will allow the organization to seek tax exempt status
from the IRS acquiring the designation of being a 501c3 charitable
The designation "501c3" refers to the section of US Tax Code that deals with
tax exempt organizations. Tax-exempt organizations do not pay federal
corporate income taxes. Not all state regulations are equal in regards to
tax status of nonprofits so be certain to check with your state government.
Being designated as a tax-exempt nonprofit also can qualify the organization
for lower postal rates and for government and private grants. The negative
part of incorporating is increased paperwork, record keeping and reporting
Incorporating as a nonprofit is very similar to incorporating as a
for-profit. Each nonprofit corporation must file articles of incorporation
specifically stating the purpose of the organization. Each must establish
by-laws and consider regulations and operational requirements. As each state
has independent regulations regarding incorporation, it is wise to consult
an attorney. While this may not be necessary to complete the paper work, the
advice of an attorney can speed the process and reduce potential conflicts
that will delay or deny your ability to proceed. Many books are available
that provide state-specific information regarding incorporating as a
nonprofit. Check your local book store or online book resource.
Do you need a staff? Can you pay a staff? Can you retain volunteers? Someone
has to do the work. Workers are needed for two general responsibilities,
administrative and service. Administrative workers run the corporation
including raising funds, managing budgets and handling all business
operations. Service workers are responsible for the mission of the
organization and for accomplishing the purpose for which the nonprofit was
formed. In small nonprofits, one staff member may do it all. This is where
volunteers become critical to the success of the nonprofit.
Do you have a budget? From where will funding come? Nonprofits can earn
income through program and service fees, but raising funds is usually an
essential activity. Fundraising is simply the result of matching a
compelling cause or need with a philanthropically minded individual,
organization or company. Philanthropy is a massive industry in the United
States with over $212 billion donated in 2001 according to Giving USA. The
key to successful fundraising is asking. It may seem simplistic but most
people fear talking about or asking for money. Do not wait for donors to
come to you. Ask and you shall receive.
If, however, you do not receive enough funding to provide for all of your
operational and service needs, consider partnering with a similar
organization. A trend in the nonprofit industry is sharing resources that
are common to many nonprofits. This could take the form of sharing office
space, administrative tasks, fundraising and other work that a small
nonprofit may need but not to the extent of requiring a full-time employee.
You may be able to partner with an organization that could use the services
you provide within the scope of their larger mission. Research your local
nonprofit community to determine if a similar organization exists and if
your services would be complementary to their mission.
Starting a nonprofit begins with a dream, grows with hope and succeeds with
hard but rewarding work. If you are up to the challenge, someone or
something needs your commitment, concern and passion.