Nonprofit organizations, also known as not-for-profits, charitable, philanthropic, or tax-exempt organizations, are a distinct subset of the business community with a primary objective of supporting or actively engaging in activities of either public or private interest.  These organizations may not distribute profits to its members, and do not form with the intent of having a competitive, commercial business.

Nonprofit organizations come in many forms, and are organized for many purposes such as to raise funds for disease research or management, provide educational opportunities to those who may otherwise not have them, create protection for and interest in a community cause, or other philanthropic endeavor.

If you are interested in setting up a charitable organization, consider the following questions:

• Why do you want your non-for-profit organization to exist? Write a brief mission statement to focus in on what is truly important to you.  This also will be necessary when applying for a corporate or tax-exempt status.
• What are or will be the financial resources of the organization?  Are you prepared to provide funds?  Do you know other people who want to help?  Do you have investors in mind?
• What is the scale of your mission? Are you focusing on a specific cause in a specific geographical area, such as a neighborhood or small town, or are you interested in tackling bigger problems over an area as large as a city?  Or do you have an even broader – perhaps even global – vision for your not-for-profit organization?
• Do you want to incorporate your nonprofit organization so it exists as its own separate legal entity? This is a good idea if you wish to limit your own liability, set up bank accounts in the organization’s name, or see that it continues its mission after you leave.
• Do you want your nonprofit to be a 501(c)3 taxed exempt entity? This will allow you to receive tax-deductible contributions from donors.  In this case, your organization must be a corporation, community chest, fund, or foundation. Making this decision from the beginning will make starting up much smoother.
• Do you plan on overseeing the organization or hiring an experienced non-profit manager?  Will you need to hire employees? If so, ensuring that you and your investors have adequate financial resources can save you a great deal of anguish in the future.

Once you’ve determined the size, scale, and purpose of your organization, consider the following checklist to guide you through the process of forming your nonprofit:

• Draft a mission statement and stick to it! Have colleagues, associates, and potential board members review it to offer strategic planning advice.
• If you plan to incorporate as a nonprofit, begin recruiting board members; if you don’t plan on incorporating, consider organizing an informal advisory board, to keep your organization on track.
• Hire a lawyer to advise you on the best legal designation for your nonprofit such as a private trust, corporation, partnership, community chest, fund, or foundation. A lawyer can also draft the necessary documents to incorporate your organization, such as articles of incorporation and by-laws, apply for tax-exempt status for your organization, review personnel policies, and ensure your organization complies with local, state, and federal laws.
• Begin seeking out a support network of other professionals that any new business needs: accountants, bankers, insurance agents, etc. If you have friends or colleagues that are engaged in these professions, and they are willing, consider asking them to be board members.  Members of our firm serve various not-for-profit organizations including Special Music by Special People, which offers music education and performance opportunities for people with special needs; The USS McCaffery Association, a US Navy veterans’ organization; Prayas, Inc., which funds anti-poverty projects in India; and Beginning With You, a non-profit organization with the goal of creating sustainable projects to improve the quality of life for vulnerable children internationally.

Taking the proper steps first, planning as much as possible, and getting valuable critiques and advice can make starting a nonprofit a lot easier than you might think. Contact attorneys Joseph P. McCaffery & Associates today to turn your dream of creating a nonprofit organization to pursue your cause into a reality.