Do you have a bleeding heart? Are you looking to do something about it - like perhaps start your own non-profit organization? Before you do, there’s a lot you need to know about starting one. Lawline’s latest batch of non-profit law programs are useful for attorneys who are working with non-profits or even for people who want to understand the laws surrounding the launch and maintenance of their own charitable organization. For quick reference, however, here are six tips for starting your own non-profit - whatever the great cause may be:
- Determine if a non-profit is even the correct type of entity for you. Generally speaking, 501(c)(3) organizations under the Internal Revenue Code are public charities that must be organized and operated exclusively for exempt purposes. Therefore, they come with their own specific set of rules. Check out this informative article on the pros and cons of becoming a 501(c)(3).
- If it is, you should consider incorporating your organization. Why? Grant Space says:
Remember, while incorporation registers your non-profit, it does not make it 501(c)(3) exempt. So, don’t forget to…
- Having a formal structure lends credibility;
- The corporate structure limits liability of officers and directors; and
- The IRS requires organizing documents and governance policies and procedures that are generally associated with corporations.
- File for 501(c)(3) status with the Internal Revenue Service (IRS). By doing so, you’ll be setting up your tax-exempt status. The associated fees are dependent on expected average annual gross receipts. It can take 3-12 months for the IRS to return its decision, depending on how many questions the IRS has about your application, so you’ll want to file as soon as you decide to launch your organization as a non-profit.
- Understand the state regulations you may be subject to. Federal laws are only one part of launching your non-profit. Make sure you’re following all the rules and are aware of all of the applicable parameters before you begin. Reach out to your state association of non-profit organizations to get started!
- Prepare yourself for the ongoing compliance requirements. Maintaining 501(c)(3) status requires quite a bit of work. Check out the IRS’s recommendations to get the ball rolling. There are quarterly and annual reporting and filing requirements, fundraising disclosures, and re-registrations… oh my!
- Create a business plan. Why? All businesses need one, and a non-profit is no different. Having a business plan in place can alleviate some of the challenges that many non-profits encounter. It should include the organizational structure, financial and operational plans, market analysis, and marketing plans, among other important items.
Here’s a handy-dandy infographic that might be helpful in your quest to make the world a better place, and as always, check out Lawline for more on best practices and legal issues in the non-profit world.