Starting a nonprofit, Part 1

By Cynthia Sexton

Many Americans are involved with nonprofit organizations as volunteers – 29 percent in 2005, according to the National Center for Charitable Statistics.

About 70,000 new organizations are started each year.

Many of those are small, with few resources available to hire accountants or lawyers to create the documents required to obtain nonprofit status with the Internal Revenue Service.

What is the process for starting a small nonprofit organization, and what resources are available to help get started?

The first step when considering starting a nonprofit is to confirm that there is a real need to organize.

The process of obtaining nonprofit status is long — at least a year — and time-intensive.

Check with local nonprofits in your community that have goals similar to yours to see if another organization already is addressing the need you have identified.

If you are a school group, for example, you may be able to use the umbrella of a school, school system or other school group that already has obtained tax-exempt status.

You also might be able to start a local chapter of a national organization working in your area of interest.

After exhausting all possibilities, thoughtfully establish a board of directors.

Some states require only one board member, but if you want to have a stable, effective organization, you should work toward a group of at least five committed individuals.

A group with diverse backgrounds – including nonprofit experience, financial and legal expertise, and organizational skills — is required to start and maintain a successful nonprofit corporation.

Experts suggest that board members should be committed to attend meetings, hold directed discussions and perform the jobs assigned to them.

Other stories in series:

Starting a nonprofit Part 2
Starting a nonprofit Part 3

Cynthia Sexton is finance director of the A.J. Fletcher Foundation, which publishes the Philanthropy Journal.

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