Starting a Non-profit (Maybe)

Seidkona

I have an idea for a NPO that I think would provide a decent service to at least my local community.

I'm not really going to get into the idea or anything here because this is not about shilling for cash it's about asking people who've done this before to tell me their experiences.

I want to know what pitfalls people have run into, what worked and didn't work in funding models, how did you approach it and how would you have done it differently? Should I even do this? Do you regret doing it or alternatively was it the greatest thing you ever did?

Any advice would really be appreciated.

bowen

What kind of business experience do you have?

Do you have any starting capital?

NPOs are pretty much exactly like other businesses, just taxed differently.

Seidkona

bowen wrote: »

What kind of business experience do you have?

Do you have any starting capital?

NPOs are pretty much exactly like other businesses, just taxed differently.

Well I am in a fairly decent position in my current company and have some management experience.

I also would have to start a fundraising drive to attempt this because I have no startup capital to speak of.

Psykoma

Do you have the funds to keep yourself alive in the (years?) it would likely take before you can draw a salary?

Seidkona

I would most likely have to run the place at night along side my current job. It would really be a labor of love.

TychoCelchuuu

Do you have a lot of friends/acquaintances/contacts in the local community, especially among the rich people and the activist/involved people? Do you have a lot of contacts in whatever portion of the community you want to help via the nonprofit? Success in these kinds of ventures depends as much on who you can get to help you as it does on anything else, and it's much easier to get people who know and trust you to support your new project. You don't want to show up as a stranger asking for help, if you can avoid it.

Seidkona

TychoCelchuuu wrote: »

Do you have a lot of friends/acquaintances/contacts in the local community, especially among the rich people and the activist/involved people? Do you have a lot of contacts in whatever portion of the community you want to help via the nonprofit? Success in these kinds of ventures depends as much on who you can get to help you as it does on anything else, and it's much easier to get people who know and trust you to support your new project. You don't want to show up as a stranger asking for help, if you can avoid it.

Those are some great points.

I do have some having worked in a different sector that would overlap so there is that but it might not be enough to really make a go of it and I think some hard analysis of my connections is a great idea.

Djeet

Never started a non-profit, but am an officer in my kids' PTA and that's a non-profit (I have to do a lot of the accounting and tax stuff). Every meeting has a significant portion dedicated to "what are we going to do to raise funds". While we rely heavily on volunteer participation, pretty much everything requires money, so you'll need to figure out how to fund. And you'll need to do so in keeping with whatever rules govern your type of non-profit. For example, while we can take money from local businesses, they have to be gifts, and not some kind of quid-pro-quo where they give us money and we advertise for them.

bowen

Also knowing if your connections would support your NPO.

It wouldn't hurt to put feelers out. "Hi this is Entaru, I'm looking to start an organization to (xyz) and was wondering if you might be interested in sponsoring or donating in the near future. I'm trying to get a feel for how people in our community would feel about helping out with (xyz)."

Jot all this stuff down, and come back to it later. Keep in mind 50% of them will most likely talk the talk but will never actually give you money or donate time, so account for that.

hsu

bowen wrote: »

Keep in mind 50% 95% of them will most likely talk the talk but will never actually give you money or donate time, so account for that.

Fixed that for you....

wrong_button

As mentioned, it's a business, and with it come the attendant financial issues. If you can find someone with appropriate accounting/financial background that shares your passion in this (read: will work for free), it won't hurt. If it will qualify as a tax-exempt entity in the US you'll have to have the appropriate business "form," which isn't form like paperwork, but organizational form like a corp/association/trust. Easier to establish some of that upfront if you'll be requesting US 501c3 status. I'm not sure about other localities, but I'd wager there's similar guidelines if you're outside the US.

Edit: since what you're starting is essentially a small business, you might want to see if you have a local SCORE chapter. That might help you through the early planning stages.

Edit: I think Geth is volunteering to help.

spool32

I have done this. To start a not-for-profit corporation, you will need two friends. Board of directors must be at minimum President, VP, and Treasurer, and they can't be the same person.

You will have to file incorporation documents with your state government office and pay a franchise tax. This may be reduced or waived depending on your state's laws. You will need to have a set of bylaws, a name, and fill out all the relevant paperwork. Filing for federal non-profit status is more complicated and requires that you fit into one of the 501(c) categories. It's possible to learn all this and do it with a few days of thorough searching, and your state tax assessor's office will also be able to help you out if you call and ask.

In particular 501(c)(3) status is hard to meet. My corp was a 501(c)(7) social club.

If you are not doing the following, you can't be a 501(c)(3) corp:

charitable, religious, educational, scientific, literary, testing for public safety, fostering national or international amateur sports competition, and preventing cruelty to children or animals. The term charitable is used in its generally accepted legal sense and includes relief of the poor, the distressed, or the underprivileged; advancement of religion; advancement of education or science; erecting or maintaining public buildings, monuments, or works; lessening the burdens of government; lessening neighborhood tensions; eliminating prejudice and discrimination; defending human and civil rights secured by law; and combating community deterioration and juvenile delinquency.

If you have more questions as you get deeper into the process, feel free to PM me or my wife belasco32. She did all the actual filing and has set up three or four businesses at this point.

Lail

Alternatively, if you want to help others, you could volunteer at an already existing NPO. While trying to start something new of your own is very noble, it will also likely be a huge time committment and very tough to do for someone with a full time job. Try searching for NPO's in your area and see if any are related to your interests and looking for help!

Pacificstar

Also consider if there already exists a national/state NPO organization that already serves the needs you're trying to address. It could be a LOT easier to begin a local chapter of an existing NPO than to start a brand new organization.

Seidkona

I really thank everyone for taking the time to respond it's given me a lot to think about and digest.

JihadJesus

bowen wrote: »

What kind of business experience do you have?

Do you have any starting capital?

NPOs are pretty much exactly like other businesses, just taxed differently.

Structurally this is true. Mechanically, not so much, since the core activities of NPOs don't tend to generate much if any revenue depending on their mission. I'd amend that to 'pretty much like other businesses, just taxed differently and with a much harder time raising capital'.

For most business startups you can leverage your future earnings to raise capital. You can't do that in the nonprofit world, because there is no hypothetical future profit to borrow against. That means your only capital comes from just straight up asking individuals (and at the beginning it will be individuals) for cash while smiling nicely.