How to Set Up a Non-Profit Organization – 3 Keys to Success

Are you setting up a non-profit organization? Don’t ignore the specific, technical steps you must take to set up a new non profit organization. Although they will vary depending on your location, here are some guidelines for American non profit organizations.

501-c-3 or Fiscal Sponsorship?

Most independent non profits are incorporated under the IRS 501-c-3 code which allows organizations serving a public social need to operate on a tax-exempt basis and to receive tax deductible donations and grants to fund their operations. The 501-c-3 application, although costing under $1,000 to process, can be a bit daunting.

To get up and running quickly, many non profits begin as fiscally sponsored projects operating under the umbrella of a 501-c-3 fiscal sponsor with the stated purpose of serving the public through organizations like yours. The fiscal sponsor will let you collect tax exempt donations by taking a processing fee, often a percentage of the funding dollars raised. They will also offer a shorter application process and administrative support for your organization as it gets up and running. With this start up support, you will be in a better position to apply for your own 501-c-3 status at a later date.

Board of Directors

The appointed board of directors have the authority and responsibility to run the non profit, usually by selecting and advising the non profit’s executive director. As they can be held legally liable for the activities of the non profit, it is in their best interest to run the organization safely and legally to avoid risk. Some states require only a minimum of one director, who can be the executive director of the organization, while others require at least three. In any event, building a devoted and responsible board over time can insure that the fundraising and management capacity of your non profit continues to develop.

Corporate Bylaws

Most non profits are required to create official bylaws. This document details the rules that govern your organization at the board level, such as how meetings are run and how decisions are made. There is no need to create this kind of document from scratch, as templates are readily available and generally refer to the famous Robert’s Rules of Order as the method for running meetings.

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