COMMON CONSIDERATIONS AND MISUNDERSTANDINGS IN STARTING A NON-PROFIT: DOES YOUR NON-PROFIT ALREADY EXIST?
The prospect of starting your own not-profit can be both exciting and overwhelming. When I am approached by someone seeking to start a non-profit, I have noticed a consistent theme in the questions asked and common misconceptions regarding the process in becoming a non-profit. To address these threshold questions, I am writing a series of blogs with practical considerations and thoughts to assist those seeking to start a non-profit.
My first question to those seeking to start a non-profit is a non-legal consideration: Does your non-profit already exist? There has been an explosion in applications for 501(c)(3) exempt status in recent years and there already exists a wide range of non-profit niches and specialties. The proliferation of non-profits has in some instances caused limited fundraising resources to be stretched thinner and thinner, and can cause certain sectors to essentially be cannibalized.
Moreover, with the considerable cost, effort and time typically expended in simply being approved for exempt status (more on that in the next blog), it is highly advisable to seek out other similar non-profits and see if your efforts could be best used in teaming up with an existing organization to do your good works. You might find another great organization exists that you can contribute to either personally or through a supporting organization that coalesces nicely with your mission and objectives.
I realize that at first blush, this advice sounds like I am trying to talk non-profit attorney’s like myself out of a job with prospective startups. However, his recommendation is not to deter anyone from starting a non-profit, as there are a variety of reasons to start a non-profit even in an area where organizations exist. For example, your proposed organization may have an identical or very similar purpose, but you do not agree with how funds are allocated in other organizations, or you may seek a different hierarchical structure for management. Likewise, you may believe that your organization is more adept at fundraising and can better service the needs for your exempt purpose. You also may simply desire to have greater control over your organization than if you teamed up with an existing organization.
Nonetheless, seeking out similar organizations for discussion can pay dividends in many ways. First, if you determine that you would rather assist an existing organization, this can save a great deal of time and expense (typically in the thousands of dollars). Second, even if you start your own organization, you are likely to be more educated on the area you intend to service and to learn how you can make your organization stand out. Finally, you can make alliances and partnerships with those organizations that benefits everyone as a whole while advancing a common purpose. For these reasons, I believe going through this initial research process helps new non-profits immensely.
In my next blog, I will cover the initial hurdles that a non-profit faces and realistic expectations for the organizers of the non-profit.
Eric Taylor is the transactional manager and senior associate at Taylor Law Offices. He has extensive experience in non-profit setups and has assisted numerous non-profits of all varieties and types successfully obtain 501(c)(3) tax-exempt status and handle day-to-day operations and corporate governance. Eric volunteers his time with the Non-profit and Business Startups Legal Clinic hosted at the Boise Public Library and was a member of the Low Income Taxpayer Clinic at the University of Idaho College of Law before joining Taylor Law Offices. Eric also serves on the board of directors for non-profits in the Treasure Valley.