Before You Start a Nonprofit
Nonprofits are Together SC’s heart and soul. We love them. We serve them. And we want them to be vital, healthy and successful, which is why we want to make sure people who are interested in entering the nonprofit universe know what they’re getting into. Nonprofits are not for everyone–they require enormous resources of time, talent and treasure. And often, duplication of services in a community can dilute the resources and impact of existing nonprofits, putting their viability, and those they serve, at risk.
So, before you jump into the nonprofit arena, please consider these suggestions:
The video below was recorded May 4, 2016, and details the general thoughts and questions a potential nonprofit incorporator should ask themselves before they file paperwork.
FIVE ALTERNATIVES TO STARTING A NONPROFIT
- Make a list of nonprofits serving a similar or related mission and already active in your area. Consider volunteering, even for a day, to understand their work. Perhaps you can achieve your personal vision by joining their efforts as a board member or even applying to work as staff.
- Identify the three nonprofits most compatible with your ideas and meet them to explore creating a special project or initiative – and negotiate your involvement.
- Explore the national organizations working in the area of your interest and see if a local chapter is needed in your geographic area.
- If your effort will be quite local and small, consider forming an unincorporated association or club – have meetings and activities but skip the reporting requirements (an option for groups with an annual budget of under $25,000).
- If you are considering creation of a group to finance activities or needs of others (scholarships, family emergency funds for a specific population, etc.), explore creating a donor-advised fund sponsored by a community foundation or other organization.
STARTING A NEW NONPROFIT
- Clarify in writing your mission, exactly whom you will serve and the greater community benefit to be achieved.
- Find out what other groups are already doing in related areas. Work with them if you possibly can rather than creating a new organization.
You may find it difficult to garner support or raise funds if you duplicate or significantly overlap the goals or services of existing organizations.
- Establish a board of directors of at least 5-7 people.
- Be sure each board member understands the legal and financial responsibilities of a nonprofit board member.
- Before You Start a Nonprofit - Together SC Presentation
- How to Start a Nonprofit – National Council of Nonprofits
- The South Carolina State Library maintains an extensive collection of publications designed to help nonprofit organizations locate grant funding from corporate foundations and government entities.
Reviewing bylaws of several existing organizations may be helpful, but remember that organizations’ structures and purposes vary. What may be appropriate for one organization might not be for yours.
- Go to IRS website, or call: 800-829-3676 to get it by mail or go to your local IRS office.
- Call the IRS 877-829-5500, 800-829-3676 or 800-829-1040 for Form 1023 and the packet that goes with it. You can also get the forms on the IRS’s website. The process takes 3-24 months. It is recommended that a lawyer and/or CPA who are knowledgeable about nonprofit tax law review your bylaws and application for tax-exemption before final submission. You might ask established nonprofits in your area for their recommendations or call Together SC for referrals.
- Call the S.C. Department of Revenue at 803-898 5788 to request application #ST387 and to get more information. You can also get the forms on the Internet at http://www.sctax.org.
- You can file a registration statement online or submit it by mail. It costs $50 annually to register to solicit contributions. Registered charities must also file an annual financial report with the Secretary of State within four and one-half months of the close of fiscal year. Some organizations may qualify to file an annual application for registration exemption. Although this form must be filed each year, organizations qualifying for a registration exemption do not have to pay a registration fee or file an annual financial report.