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Do You Need To
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You've been running your volunteer management association for a few years now. You put out a periodic newsletter, sponsor some training seminars, maybe even put on an annual conference. Sooner or later the question comes up: should we formalize our operation and become a legal nonprofit organization? Incorporating as a formal nonprofit entity is a big step for an association. Whether you want to pursue it will depend in large part on your organization's goals, and plans for the future. And, as it entails a fair amount of effort, especially at the beginning, you will need a good deal of time and human resources to make it work. |
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Should you take the big step? Your group should discuss the pros and cons. Advantages A "Going Concern" — Formalizing your operation makes it a "going concern;" one that can continue beyond the efforts of the current participants. Limited Liability — The individuals who participate in the organization are generally shielded from personal liability for the association's operations. Recruiting of New Participants — A formal operation can more readily recruit and integrate new participants. Delegation — As a nonprofit organization, you will be in a much better situation to clearly define roles and duties, and divide up the workload. Formal organizations are usually better able to recruit and quickly integrate volunteers. Prestige — A formal operation communicates professionalism. Being a nonprofit shows your group is serious about its cause, and is dedicated to advancing it.
Work — Setting up and maintaining a formal nonprofit organization is a lot of work, especially at the start. You will need a group of dedicated individuals to make it work smoothly. Cost — Although not extraordinary, there are some initial start up costs involved with incorporating. Organization — To successfully set up your organization, and maintain it, you will need to be organized, especially in the areas of finances and record keeping. Bureaucracy — Setting up and operating a formal enterprise means dealing with the government, often on several levels. In this regard, patience is definitely an asset.
Do Some Initial Planning — In almost all circumstances, setting up a nonprofit will involve developing articles of incorporation, by-laws, and similar documents. These are the "blueprints" of your operation, the guide to what you do and how you do it. Now is an opportune time to sit down and decide who and what your organization is. What are your goals? Who are you constituents? What is your mission? Appoint someone as a scribe to write down the results of a brainstorming session on these questions. Boil the results down to a mission statement for your organization. Also, think about who will do what. Though formal assignments aren't necessary, it's very helpful if you have some idea of who wants to keep the financial records, who can do research, and who can make phone calls. Research — Knowledge is all-important in this game. You have to know what legal and financial requirements you will have to meet, and what kinds of records you will have to produce to be granted formal status. Take plenty of time to research this information. There are a number of on-line resources to help you get started. Nonprofit Charitable
Organizations Starting A Nonprofit
Organization CharityChannel The Nonprofit Resource
Center Find A Sponsor — Often, you become a nonprofit without actually becoming one yourself though by associating with an already established organization. Perhaps there is a local "umbrella" organization (United Way, Chamber of Commerce, etc.) or nearby university who would be interested in sponsoring your association. Ask Around — As a professional in the nonprofit world, you already have access to a lot of knowledge: your employer, colleagues, and other nonprofits. Contact board members, executive directors, or particularly involved volunteers from area nonprofits. Find out what they had to do and what steps they had to complete to gain formal nonprofit status. Worldwide organizations like United Way International (http://www.unitedwayinternational.org) can also help. While they are primarily in the business of assisting existing organizations, you can often make contacts through them with people and associations who have successfully navigated the set up process. Enlist Government Help — In many cases, all the answers you need are sitting in the collective repositories of the local, regional, and national government. The tricky part is finding them. Start by going down to your local library (or log on via the Internet) and check their catalog of government publications. You will likely find some pamphlets or booklets on how to set up a nonprofit enterprise. Don't overlook small business guides, either. Although these are geared toward for-profit operations, they contain good advice on record keeping, organization, and how to deal with institutions like banks and tax authorities. It also helps to take the direct approach. Check the local telephone directory or library to see if there is a state/province/ or other regional government authority which licenses or incorporates businesses and nonprofit organizations. In the United States, your state's Secretary of State is the place to start. Call or write and ask for any information they have on the subject of starting a non-profit. If you have trouble navigating the bureaucracy, contact your state representative, local government council member. Tell him or her what you are trying to do, and ask for their help. Remember, they work for you! Get Legal Advice — In most instances, you can set up your nonprofit operation without a lawyer. But it can helpful, given the myriad of requirements that often must be met, to have some guidance at the outset. It usually isn't inexpensive, but it is money well spent. A word about lawyers: like many professions, there are generalists and specialists in the legal field. It's important to seek out an attorney who specializes in nonprofit law. Most attorney's or bar associations maintain legal referral services. These services will refer you to an appropriate attorney based on your needs. Since time is money when meeting with an attorney, it's important to be organized. Write down all of the questions or topics you want to discuss. And, as with dealing with government agencies, don't be shy about asking what you want! These "first steps" should give you the information you need to make the decision as to whether you want to make the plunge into the world of nonprofit operation. And should you decide to, you will now have a roadmap to follow in navigating the process.
How to Form a Nonprofit Corporation (How to Form Your Own Nonprofit Corporation, 4th Ed) by Anthony Mancusco (1998) Nolo Press; ISBN: 0873374517 A Legal Guide to Starting and Managing a Nonprofit Organization, 2nd Edition by Bruce Hopkins (1993) John Wiley & Sons; ISBN: 0471585068
CharityVillage http://www.charityvillage.com/ Alliance for Nonprofit Management http://www.allianceonline.org Nonprofit Virtual Library http://www.lib.msu.edu/harris23/grants/znonprof.htm MIT Enterprise Forum http://www.mitforumcambridge.org/ James Tedford |
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