Posted on 06/17/2011 9:50:58 PM PDT by null and void
Darling Daughter is interested in founding a non-profit and has asked her ever resourceful, infinitely wise and all knowing father for guidance.
Help.
Does anyone know of a good source for information, perhaps a textbook, guide or recipe for success? What are the practical considerations, workable models, things to avoid, tax and regulatory requirements, etc.
Assume we're starting from a point of near total ignorance...
It is probably more complicated than you might think. She should start with a business plan that covers everything. There are many examples on the internet. Next she will need to form a board of directors to oversee and audit the non-profit so it keeps to its mission. Then she will have to get a tax attorney to help file the paperwork with the IRS. You then must wait to see if the IRS approves the company as a non-profit.
Yeah, non-profits make money by growing. This allows more indirect costs for overhead even though you are technically not turning a profit.
I am certain it is!
And that is only the beginning. I hope she is good at jumping through hoops.
If you want to be a successful non-profit you need government grants, especially in the arts. Have her advocate Marxism, or denigrate treasured American traditions. Her organization will thrive.
I have a little sign somewhere around here that says:
This is a non-profit organization.
It wasn’t meant to be, but....
That is why many non-profits fail. It is good to learn a lot before getting off on the wrong foot.
I have both non-profit and for-profit companies. The for profit was incorporated in a couple of hours and the non-profit took 6 months.
You will need to file with the Secretary of State’s office in your state to establish the non-profit. This will give you the authority to raise money. You will need a small start-up board. As you grow you will want IRS 501(c)3 status so people can write off their donations.
The first thing I would do is find out if there is a center for non-profit management in your community. These types of organizations are common in large metropolitan areas. Failing that you may want to talk to someone at the local United Way.
Finally you are going to need to talk to an attorney who specializes in non-profit work who can help you with advice and the paper work involved.
Also, make sure your daughter is committed to this. Non-profits are easy to start and very hard to dismantle.
Hope this helps.
I know it’s fairly easy to set up a charitble 501(c)(3). There’s a good section on it at IRS.gov. You might need a lawyer to set it up for you.
I think the most successful non-profits work with other non-profits and avoid dealing with govt money altogether. Essentially a foundation raises money from donations and endowments and then distributes it to non-profits to use for specific needs. That is kind of simplistic, but it’s the general model that many non-profits follow.
Interesting...
nolo.com is a good resource for self-help on many legal actions.
They have a section for nonprofits:
http://www.nolo.com/legal-encyclopedia/nonprofits/
Yes, you are correct. Most metro areas have a primary foundation to serve the smaller area non-profits. Be aware that this foundation money for communities comes from people like George Soros, for example. Of course there are many other foundations, such as health insurance company foundations, medical foundations, historical foundations, etc. Just be careful and don’t sell out to the beast. There are good conservative non-profits, too. Just need to find them. There are many resources on the internet to get non-profits connected.
1. Hire a CPA and talk it through
2. Talk it through with a CPA
3. Your CPA will probably decline to give you help, because he doesn’t want to subjecct his practice to subjective law suits by government.
4. Hire a new CPA and talk it through.
5. Your new CPA will probably decline to give you help.
6. Hire another new CPA.
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You will find that very few qualified professionals will be willing to add their signature to filings by a not-for-profit venture, unless a wad of denero is flashed in their face.
In Zer0land, it just doesn’t make sense for a professional to sign on to a long term documentary business plan, only to see it nullified as the socialist agenda decides that your non-profit is against the tide.
Sorry, but this is the truth!
I set one up about two years ago, and the out-of-pocket legal expense was about $3500. Our attorney told us that if we'd just wanted to set up a for-profit business she could have had us out of her office in two hours and for a couple hundred bucks. But a non-profit start-up can be a substantial effort.
Establishing a Board of Directors, getting all the legal paperwork completed, reviewed, and signed (extensive), business licenses (area-dependant), inspections(possible) and other set-up costs can be painful.
Will you have physical assets/property? If so, part of the paperwork you'll need at set up is to designate what non-profit(s) you donate all that value to should your non-profit fold.
Will you have actual paid employees/staff? Will you be doing billing? Do you need a facility? Parking? Phone, Internet, cable, web site?
If you don't mind me asking, what kind of non-profit are you talking about?
This is one of the major sites for Foundations and non-profits:
http://foundationcenter.org/
I hope you have a strong stomach. Much liberalism here. But still useful.
LOL!
I looked it up. There are over 1.5 million non-profit businesses in the US. So there are a lot of CPAs who do accept this work. Money is money.
I’m no expert, but maybe these will help.
http://foundationcenter.org/getstarted/tutorials/establish/
http://grants.library.wisc.edu/organizations/nonprofitstartup.html
http://documentpreparationagency.org/
I just recommend you do not give specific information about the project on FR because there are people who will immediately look up your personal information as their playground.
This is a common misunderstanding of the term non profit(NP). NP simply means income tax is waived because the mission serves a purpose that the government has determined qualifies for such treatment.
In fact, any NP that doesn't make some profit and put some money in a rainy day fund will likely go bankrupt in short order. That does not mean that they have to have an enormous profit margin though.
Her first step should be to search the Internet and get some background-there is lots of how to info there. She should also get a group of interested people together to form a steering committee which will be helpful.
A NP has to file Articles of Incorporation with the state. Specifics of requirements vary by state as to requirements for incorporation as well as more specifics of organization. They will have to have a Board of Directors, Corporate Bylaws, a Mission Statement, and a conflict of interest policy. They have to obtain a 501c3 status with the IRS.
The Directors will need to have a liability insurance policy to protect them against lawsuits in addition to whatever property and casualty insurance is needed, if they are renting or buying a building. The bylaws should also have an indemnity clause.
While templates for much of this can be found on line, it would be a good thing to have a lawyer review the documents.
It is a fairly involved process, but certainly doable. If you have non-profits in your area, they will often talk to you and give you the benefit of the lessons they may have learned.
Tell her don’t get discouraged before she starts. The business plan was kind of fun and kept me focused. You hire attorneys and CPAs to handle all the paperwork for you to limit yur stress level. The hardest part for me was getting the last person on the board.
Another things she needs to do before she gets too far along is to see if there are competing non-profits in her area. It makes no sense to start one if there is already one (or more) in the area already doing the exact same thing.
I say good for you! I’m working with a group right now trying to get the non-prof status. We already have the articles of incorporation, board of directors, by-laws, etc. It’s just a matter of the 1023(?)....if that’s correct...not sure I have the right form #. We already have so much to do and so many requests for help, it’s crazy! I’m loving helping getting it up and running.
The filing fee is around $400 with the IRS, but there is additonal paperwork to do as far as the IRS is concerned, like I said form 1023(?)...not quite sure as to form #. I agree it’s best to check with a CPA or lawyer. Some will do the work pro bono.
Non-profits must adhere to the whims of the government. A friend’s organization regrets going NP for that very reason. Unless absolutely necessary it’s probably not a good idea.
In many areas there are non-profit legal aide firms. They could probably help. My daughter used to work at one, they matched non-profit clients, like your daughter, with lawyers needing to fulfill their pro-bono requirements, and sometimes they helped directly
You don’t say where you are located.Try searching on “legal aide” and your location.
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Ignore most of the advice here and follow Kirkwood’s.
The library in SF has everything you need. Been there 20+ times. How to books on every subject.
If you have a community college in your area, there may be a course available to help her learn the basics. These types of classes can also be a good source of contacts with local lawyers, accountants, and other professionals - starting with the teacher. Community colleges tend to be pragmatic in their course offerings and to employ local professionals to teach a few courses in their field. I’ve found them to be a good source of nuts and bolts information as opposed to highly theoretical treatment by faculty members who never organized anything. Classmates also may be useful contacts or at least provide one another moral support.
Get a lawyer who does this on a routine basis. Quite often atty and CPA fees can be donated in-kind if you are running a non-profit that has community support, as also can be office space, certain utilities, etc.
A lawyer is there to file all the documents needed with the appropriate agencies, especially the IRS.
You will need a business plan, board of directors, Articles of incorporation, Mission statement, policy and procedure manual, personnel manual, book keeper, CPA, Officers, and more, depending upon your local laws and regs.
Only a serious effort will succeed---you're going have to wade in to the point of full immersion and become an expert. It's not the casual avocation portrayed by popular literature.
Actually, the IRS instructions are explicit enough that I set up the 501(c)3 status all by myself, and I have no legal education...just a college degree.
Someone else mentioned that non-profits are easy to set up and very hard to dismantle. I can attest to the verity of that statement...
An arts incubator.
El Gato ~ You don’t say where you are located.
She's in Oregon.
And for the rest of you as well, thanks! FReepers are awsome!
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