We are in the midst of the season of giving. This is a special time each year when we reach out to those around us with love and compassion. Even though this season only lasts for a few weeks each year, many of us make it a point to reach out year-round in an effort to help fulfill a need in the world around us.
This is part of our humanity—virtually every human being is moved by someone or something in need. Some may reach out through donations of food, clothing, money or time, but others take that extra step and devote their lives to a worthy cause. For some, this may mean starting their own charitable nonprofit organization.
According to the National Center for Charitable Statistics, there are presently more than 1.5 million charitable organizations registered in the United States. That’s a lot of helping hands, and specific guidelines have been set up to ensure that nonprofits are formed legally and also afforded protection under the law.
Nonprofits may enjoy tax-free status on all governmental levels so money that comes into the organization may be put back into the business. They also have the right to solicit public donations and governmental and private grants, some of which are earmarked specifically for nonprofits. Laws also provide limited liability protection from creditors, thereby excusing volunteers from personal liability. Such laws make it appealing to start a nonprofit, but be prepared—there’s lots of paperwork, some substantial fees to pay and you have to play by the rules.
So, where do you start if you want to create your own nonprofit organization?
Have a Dream
A nonprofit organization begins with a dream. The strength of your dream or “calling” is usually what will ensure that you have the perseverance needed to make sure your organization survives and thrives.
“My dream is to be an animal rehabber,” says Michelle Whitfield of the Animis Foundation. “But starting and maintaining a nonprofit requires more than just a dream… it requires dedication and very hard work. In addition to feeding baby squirrels and birds, I’ve had to learn how to write grants, fundraise, seek out committed volunteers and become knowledgeable about all the laws regarding running a nonprofit. It takes a dream to start a nonprofit, but it takes a true passion for your work to keep one going.”
The Animis Foundation is a 220-acre animal rescue and rehabilitation center located in Ocala. The foundation is presently caring for approximately 500 domestic and wild animals.
Whitfield’s passion for helping animals in need has led her to take grant-writing classes, sit at fundraising booths for hours on end and seek out volunteers in every way possible. So, consider yourself forewarned by someone who’s been there—there will be lots of hard work involved.
Funding Your Dream
Probably the most important part of starting and running a nonprofit is the ability to fund the organization’s needs. Unless you intend to fund the organization yourself or have a few benevolent donors who will stick with you for the long term, you will need to be able to effectively raise funds from the general public.
“The Animis Foundation started out as a private nonprofit organization that was organized, funded and run by my parents,” says Whitfield. “My husband, Mark, and I are now in the process of changing Animis from a private foundation to a public nonprofit. This will allow us to solicit funds from the public, and it also gives us a greater degree of transparency.”
According to Whitfield, fundraising isn’t as simple as it might first seem. If you plan to apply for government or private grants, then you need the services of someone who is experienced in grant writing, which can be quite detailed and tedious. No matter how large your coffers, you will also need the services of an accountant to keep track of cash flow and to offer their services come tax time. And then there’s good old-fashioned public fundraising.
“For some causes, fundraising might be easier than for others,” Whitfield says. “For example, a nonprofit that deals with the needs of children might find it easier to garner support than one that has what might be deemed a less important need. But, on the whole, fundraising is hard, especially in tough economic times. Anyone who starts a nonprofit today needs to be prepared to spend a lot of time soliciting funds, because it seems like people are holding tightly to their money. Funds are definitely limited, and fundraising will take up a lot of your time and effort.”
She points out that if someone is planning to start a nonprofit, they need to make sure first that they won’t be in competition with a similar organization in their area. Although competition may be good in the private business sector, it is not good in the nonprofit sector. Competition for funds and volunteers can end up hurting two organizations whose intent is to fulfill the same need and, in turn, end up making things worse for the very ones they intend to help. If you do find a nonprofit with goals similar to yours, consider donating your time and money to them instead of starting another organization that will conflict with theirs.
Sometimes, fundraising comes in the form of saving money, and a huge savings comes in filing for 501(c)(3) tax-exempt status with the IRS. Approved charitable nonprofits are not required to pay income tax on any funds raised, and these tax savings can then be used to fund organizational activities. There is a variable fee required.
Filing for tax-exempt status requires filling out Form 1023 and filing it with the IRS. You can do this yourself, or, if you’re lucky, a CPA or attorney might fill out and file your tax-exempt package pro bono. Once your status is approved, you can file it with the Florida Department of Revenue and attain state corporate tax exemption.
A good volunteer base is just as important as funding. Organizers of nonprofits need help to provide help. When it comes to a nonprofit’s success, it truly does take a village.
According to Whitfield, finding volunteers isn’t nearly as important as finding committed volunteers.
“We used to put out a call for volunteers and have 30 people show up for an orientation,” she says. “Out of that 30, maybe one would stay, and we found out that it just wasn’t the proper use of our time. So now, we ask for volunteers on our Facebook page. A website is expensive and requires maintenance, so we opted for a Facebook page, and it works for us. Now, we ask for volunteers online and go from there. The key to volunteers is finding ones who are as dedicated to your cause as you are—and that isn’t an easy thing to do. And once you find them, hold onto them.”
Committed volunteers can provide help in many ways. Accountants, attorneys, business owners, etc. are just as important to your nonprofit as the volunteer who takes out the garbage and vice versa.
It’s also important to have a designated space for your nonprofit. An organization run from home can quickly grow into disorganization of your living space.
Plan ahead and check with local businesses who might offer up office space or meeting rooms. A designated office is a great boon to an organization. Check with your cable company, local utility provider, area government, etc.; many of them will gladly provide space for board meetings
and could have office space they will donate.
“If you do decide to start a nonprofit, be prepared to work hard. Dreams don’t always easily come true,” says Whitfield. “Fundraising, getting dedicated volunteers, finding the right space, lining up specialists, like attorneys, accountants and such, takes time and effort. But, if you will always keep your eyes on your dream and realize that you are helping make a difference in the world, then you will make it through. Take the time to step back and take a look at the [people] or things you’re helping, and find strength in knowing that your dream really is coming true every day.”
Steps In Forming A Nonprofit
- Choose a name.
- Form a board of directors.
- File nonprofit articles of incorporation with the state (less than $100 filing fee).
- File for 501(c)(3) tax-exempt status with the IRS (state fee ranging from $275 to $850).
- File for an Employer Identification Number (EIN).
- Draft bylaws.
- Prepare a nonprofit conflict of interest policy.
- Meet and obtain all necessary licenses to function.