March 28, 2016 | Read Time: 4 minutes
On Becoming a Leader is a biweekly advice column in which Allison Fine, an author, consultant, and expert on nonprofit leadership and strategy, answers your questions about nonprofit careers and leadership. Have a question? Ask Ms. Fine using this form.
Q: What do I need to start my own nonprofit organization? — Elvis
A: I am going to give you the technical answer to this question, Elvis, and then my opinion.
Here’s the technical answer. Here are the specific steps for starting a nonprofit organization, according to the Foundation Center:
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File the certificate of incorporation.
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Select individuals to serve on the board of directors.
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Develop vision and mission statements.
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Establish bylaws and board policies.
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Obtain an employer identification number (EIN).
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Open a bank account and establish check-signing procedures.
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File for federal tax exemption.
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Follow state and local nonprofit regulations.
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Find office space and obtain office equipment.
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Recruit staff and prepare a personnel manual.
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Establish a payroll system and procure necessary insurance coverage.
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Develop an overall fundraising plan.
You have to incorporate your nonprofit in the state in which you are headquartered. You apply for tax-exempt status, though, through the IRS by filling out form 1023.
That’s it, not very difficult if you have the patience — or a friend who is a lawyer — to fill out the forms, and a few hundred bucks. Wait a few weeks (or months in the case of the IRS) and if your effort meets the requirements (e.g., having a public purpose) then you will likely be approved.
(Note: I did this when I formed Innovation Network, Inc., in the early 1990s. And I called the IRS representative, Ms. D. Phears, every day for two months to encourage the approval of our tax-exempt status. That poor woman! They approved us, perhaps so I’d stop calling, and the network is still in business today.)
But this is an advice column, Elvis, and here’s my advice: DON’T DO IT!
To start something brand-new, my advice is to find an organization that will house your effort as a project while you launch it.
I know it is a very romantic idea to address a new cause, to want to make the world a better place and fix something. However, it may not be necessary to start an entire organization to accomplish what you want to do. It’s also really easy to confuse a program — that is, one service or advocacy effort — with an organization that needs a governing board, probably several programs, and various administrative functions like bookkeeping, legal support, and human resources.
Adina Lichtman, the founder of Knock, Knock Give a Sock, provides a great example of the benefits of starting a program instead of creating an organization. Rather than ask for dollars, she asks for socks to be donated and distributed by college students around the country. It is simply a volunteer effort. When I asked her last year why she hadn’t incorporated, she answered, “Because it is a very simple effort and I don’t want to make it any more complicated. And either it will live when I’m done running it or its time will have passed.” Adina is an extraordinary 22-year-old woman; watch her tell her story.
Raising money and managing all of the operational functions of an entire organization is daunting. It can really wear a person out. And it may seem like a no-brainer to raise money for something that seems so important and of such great need to you, but unless someone with really deep pockets and unending interest is underwriting your efforts, it is enormously difficult to keep raising money for operations year after year.
To start something brand-new, Elvis, my advice is to find an organization that will house your effort as a project while you launch it. That might be a local foundation or a larger organization that is interested in your issue and wants to nurture your effort (not own it). Be careful to find an organization with a cooperative culture, not a competitive one. This means you can use their tax-exempt status and perhaps their administrative support (like accounting, although you may have to pay them a small fee), and work with people who can help you think things through, and help you make a difference and reach your goals.
