Getting Started

So, you want to start a non-profit organization, but you don’t know where to start. There are a lot of terms thrown around like non-profit, 501(c)(3), charity, and plenty more, but what does that actually mean? This guide will break down the differences between the types of non-profit businesses, the forms that need to be filed, and how taxes come into play, so you feel ready to start helping those in need.

What is a Non-Profit Organization?

A non-profit, or not-for-profit, organization is a business or corporation you are forming that’s purpose is not financial gain. New York State allows you to classify as a charitable organization or a non-charitable organization. Typically, you will form a charity if you plan on offering services such as education, literary, cultural support, or some other charitable activity. Non-charitable corporations are still considered not-for-profit, but the focus will be on activities that are more civic, political, or social.

Examples of Non-Profits

Some examples of non-for-profit organizations you may have heard of are:

• Meals on Wheels
• The Breast Cancer Research Foundation
• The American Red Cross
• Student Sponsor Partners

People ask all the time questions like “Is the YMCA a non-profit organization? Is a credit union a non-profit organization? Is goodwill a non-profit organization?” The short answer to all these questions is yes. All these entities are structured as not-for-profit in one way or another. To many people, this seems counterintuitive. These are very successful organizations that employ tons of people. The difference between these and for-profit corporations like Microsoft or Apple is the purpose is to provide some type of benefit, not to make money.

Where Do You Start?

The Business Plan

Just like forming any other business, you need a business plan. Start off by asking yourself these questions:

1. Who is my target market?
2. What is the goal of my organization?
3. Where should this organization be to be successful?
4. When do I anticipate being up and running?
5. Why am I starting a non-profit?

Knowing the answers to these questions inside and out will help ensure that you are prepared for this major decision. The most successful organizations are the ones driven by passion and structured by preparation.

Funding

The next step is finding funding. You are starting a non-profit organization, but you still need cash flow to make your dream a reality. There are so many different funding options available. One thing that you may find when starting a non-profit is that you can find investors with the similar passions as you. Having 501(c)(3) status gives you access to grants and other sources of funding not available to traditional businesses. You can also entice investors by offering creative solutions that lead to tax breaks for donors.

Finding a Lawyer

Why do you need a lawyer? Dealing with a lawyer can sometimes feel intimidating. Finding a lawyer who can help empower you and guide you through the entire process is an invaluable resource to any new business. Having the right lawyer is an asset and should aid you in feeling comfortable every step of the way.

When forming and organizing your non-profit, your lawyer will help you handle all of the filing required by the state. This includes creating the corporation, choosing a name, and contacting the IRS to get your 501(c)(3) tax status. In addition to that, your lawyer will draft your bylaws and shareholder agreement to ensure that your corporation is structured in a way that makes the functionality of your business clear and concise. This will help you as a business owner fully understand your rights and obligations.

Once the organization is formed, your lawyer can also help you get things up and running. You will need to hire employees and enter contracts. You can click here to read a helpful guide explaining the ins and outs of contracts. Your lawyer will help you determine whether it makes sense to hire W-2 employees or independent contractors and will also help get the employment contracts drafted. As your non-profit grows, your lawyer can help you analyze and negotiate contracts before you enter them. Your lawyer will also be able to advise you on your filing requirements with the state and the IRS to guarantee there are no hiccups. Running a non-profit is difficult enough, having someone by your side to handle things on the backend can save you a lot of time and money.

Conclusion

Starting a non-profit organization is a dream for many people. It is a dream that allows you to do greater good for those around you. We hope this guide has been a helpful resource in understanding the steps necessary to getting your non-profit up and running. At Tarshus Law, we have years of experience forming non-profits from start to finish and would love to be a resource to you and help empower you to fulfill your dreams. If you are interested in speaking with our firm and scheduling a consultation, please click here and we would be happy to help you.