by Dallas McGlinn
Do you have a dream of running your own nonprofit? Perhaps it’s a pipe dream that you think cannot happen. But it can! If you have a vision or a dream, you should give it a try. Sometimes our only regret is not trying. Here are a few steps you can take to nudge you in the right direction.
1. Establish Your Vision and your Mission
A nonprofit isn’t worth much if you don’t have a vision for what you want to achieve. Your vision doesn’t have to be cast in stone, it can and probably will change as time goes on. But you should know what you want to accomplish. The March of Dimes’ first mission was to cure polio. If they would have stuck with that mission, they would no longer be relevant, because there are now effective vaccines for polio (thanks to the March of Dimes!). Now their mission is to prevent birth defects. Your mission can change for a number of reasons. You might start off with one small program, but you may end up creating additional programs as your nonprofit grows. One of the nonprofits we have spotlighted, Bethel Colony, started their program with a few men and one old house. Now they house over 100 men and 40 women, and they are still growing. Or, once you start working with a population, you may realize that other services are needed rather than the ones you had in mind. There is nothing wrong with change, but you should always start off with a direction and a plan. A great book to read about carrying out your vision is Visioneering, by Andy Stanley. For information about how to write a Mission Statement, look under Helpful Links below.
If you have a mission and vision that can be carried out by one person, then you may be the only “employee” of your nonprofit. I’ve seen a number of nonprofits started and run by one person; I’ve seen others run by two friends who share the same vision. Other nonprofits may call for a larger team. If your vision is to change the community on a large scale, you will need a team to help with accounting, setting up websites and other media, grant-writing, etc. Maybe you will start off as a one-person nonprofit but others will join you later. Give some thought about how many people it will take to carry out your vision.
For your nonprofit to be truly successful, however, you will not want to be the Lone Ranger. Even if you never hire another person, you will always want to leave the door open for volunteers to step up and assist. You also want to network with other nonprofits and nonprofit support organizations so you can get help when you need it. Two organizations you can join are listed below in the links section. There are many more.
3. Board Membership
Every nonprofit should have a Board of Directors, especially if you do any fundraising. A Board of a nonprofit exists to provide oversite to the Executive Director. They help to set policy and they also help with fundraising events. Be very careful whom you select to be on your board. For my first nonprofit, I chose some great people, but they were all related to each other, so I was voted down more often than not. For the second nonprofit I started, I went to the other extreme and selected board members who would approve anything I did and were “hands off.” Neither of those were good ideas. A board should consist of a good mix of people from different types of backgrounds. You may want to ask someone with accounting expertise or with marketing expertise. You also will want people who have some kind of expertise in the field where you want to serve. Most people will be honored to be on the board of a nonprofit. If you apply for nonprofit status with the IRS, you will need to prove to them that you have Board oversight. If you want to learn more about what a Board’s responsibilities are, or if you want to find some board members for your nonprofit, I provided some helpful links below.
Now, let’s get down to the Legal part of setting up a nonprofit. I am not an attorney, but I have set up a few corporations in my day, including Gathering Magazine and two other nonprofits. It’s not too difficult, but if you would like to have someone walk you through the process, email us.
1. Setting up Your Corporation
You must set up a corporation in order to open a checking account, and also to achieve 501(c)(3) (nonprofit) status with the Internal Revenue Service. Setting up a corporation isn’t difficult, here are the steps:
a. Choose a name for your nonprofit.
Pretty easy, but you will need to go to the website of the Secretary of State to check for name availability. You will not be able to choose a name that is already taken, so most common names will probably not be available. Use the search engine and try out some names. You will have the option to “reserve” a name for a fee, but I don’t think that is necessary if you are going to complete your paperwork to set up the nonprofit right away (see Step C).
b. Get a Tax ID number.
You will need this before you set up a corporation. Very easy and free, just go to www.IRS.gov. The link is below.
c. Fill Out the Application to Set Up Your Corporation
Chose the link provided below to complete your Articles of Incorporation, which when completed and filed, will register your nonprofit with the Secretary of State’s office. There are different types of corporations to choose from, choose “nonprofit.” Currently the cost to file the paperwork is $75, and you can fill out the application entirely online. You will receive a confirmation by email, and voila, your corporation exists.
2. Draft your Nonprofit’s By-Laws
If you are going to have a Board of Directors, and if you are going to apply for 501(c)(3) status with the IRS (so you won’t have to pay taxes as a nonprofit), you will need to have written by-laws. I’ve attached some samples of by-laws below. Most by-laws are boilerplate and don’t need much amendment, except to plug in the name of your corporation. However, you may have some special circumstances or guidelines that you will want to add. For instance, I’m currently serving on the board of a nonprofit that has special requirements about church membership. The IRS offers a template for you to use and that link is also provided below.
3. Filing for Nonprofit Status with the IRS (501(c)(3))
The IRS has a great website; it’s more helpful than people realize. They have a step by step guide that helps you complete each answer on the form. The cost is $400 if you will have less than $10,000 in annual receipts/$850 for more than $10,000. If you raise less than $5,000 per year, some people say that you do not need nonprofit status. Some organizations will also only receive “in-kind” donations, such as used clothing, coats, etc. However, if you are going to ask for grants or for donations from grocery stores or corporations, they will want proof that you have nonprofit status. If someone provides you with a donation, it will only be tax deductible to them if you have nonprofit status.
4. Web Presence
It is necessary for just about everyone to have a web presence these days, with a website, a Facebook page and a Twitter account at the very least. You will have to get a domain name. This is not difficult, there are many companies that do this. GoDaddy is one example, but there are many others, they are called “web hosts.” The cost should be less than $200 for three years of hosting and for the purchase of your domain name (i.e., www.yournonprofit.org). Other web services, such as WordPress, make it very easy for a novice to set up and maintain a website. In addition, you will need a Facebook page, and you will want to post information on a regular basis so people will be reminded that your nonprofit exists and how you are making a difference. If you need help or more details about any of these services, email us.
APPLY FOR A TAX ID NUMBER FROM THE IRS: http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Apply-for-an-Employer-Identification-Number-(EIN)-Online
SECRETARY OF STATE WEBSITE FOR NONPROFIT ARTICLES OF INCORPORATION (once this application is completed and filed, your nonprofit will be registered with the Louisiana Secretary of State’s office): http://www.sos.la.gov/BusinessServices/StartABusiness/FileOriginalDocuments/Pages/default.aspx
SECRETARY OF STATE WEBSITE FOR NAME AVAILABILITY http://www.sos.la.gov/BusinessServices/SearchForLouisianaBusinessFilings/Pages/default.aspx
IRS LINK TO APPLY FOR NONPROFIT STATUS. http://www.stayexempt.irs.gov/StartingOut/InteractiveForm1023Application.aspx
ORGANIZATIONS THAT ASSIST NONPROFITS:
LOUISIANA ASSOCIATION OF NONPROFIT ORGANIZATIONS (LANO): www.lano.org
UNIFIED NONPROFITS: Meets Monday mornings at 9AM at the Goodwill Center on Tulane at Jeff Davis. Check out their Facebook page at “Unified Nonprofits of Greater New Orleans.”
INFORMATION ABOUT NONPROFIT BOARDS OF DIRECTORS
Junior Achievement of New Orleans Get on Board Program: https://www.jlno.org/?nd=getonboard
National Council of Nonprofits: http://www.councilofnonprofits.org/resources/resources-topic/boards-governance/roles-and-responsibilities-nonprofit-boards
INFORMATION ABOUT AND SAMPLES OF BYLAWS:
TEMPLATE PROVIDED BY THE IRS: http://form1023.org/how-to-draft-nonprofit-bylaws-with-examples
HOW TO WRITE A VISION AND/OR MISSION STATEMENT: http://www.nonprofithub.org/featured/nonprofit-mission-statements-good-and-bad-examples/