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Pay it Forward: Starting the Nonprofit of Your Dreams
Published on Jun 5, 2013
Read 'Pay it Forward: Starting the Nonprofit of Your Dreams' at 'Time to Start Up,' the small business blog by BizFilings.
The fastest-growing part of the U.S. economy is the nonprofit sector – over the past ten years, the number of nonprofit businesses has grown by 25% to 1.6 million, and they now account for 5.4% of gross domestic product, and 10% of jobs. Baby Boomers and Millennials are increasingly seeking ‘careers with meaning,’ looking to give back to their communities by incorporating a company that serves a true purpose.
A charity, instead of a business?
Simply put, a nonprofit is a company or organization incorporated for purposes other than making a profit. There are several advantages to forming a nonprofit – in addition to achieving a ‘career with meaning’ – as opposed to a for profit company. A nonprofit organization – with a charity structure – is not for everyone. If you’re trying to determine whether not for profit incorporation is for you, consider these key benefits:
Limited liability protection: Directors and officers are typically not personally responsible for the nonprofit’s debts and liabilities.
Tax-exempt status: Nonprofits can apply for both federal and state tax-exempt status.
Access to grants: Some nonprofits are eligible to receive public and private grants, making it easier to get operating capital.
Tax-deductible donations: With 501(c)(3) nonprofits, donations made by individuals to the nonprofit corporation are tax-deductible.
Organization credibility: Nonprofit corporations are often viewed as ‘more legitimate,’ because the organization has taken steps to formalize the nonprofit with the state.
How to get started:
Whether you’re currently unemployed or looking to leave your job in the corporate world, take your skill set and apply it to a nonprofit. What should you take into consideration when forming a nonprofit?
Determine what it is you want to do with your life: How can you apply your aspirations to a not for profit organization? This is supposed to be the nonprofit of your dreams, after all!
Write a mission statement: Set goals and define your organization’s purpose.
Establish the organization’s framework: Forming a not for profit incorporation is similar to forming a for-profit corporation, but there are certainly some distinctions to keep in mind.
How will you raise funds for the organization?: The IRS and the state will need to see your financial plans when you register a company, and there are several fundraising options to choose from – paid members, individual or corporate donations, grants, fundraising events, and so on.
Budgeting: Determine the life cycle of your nonprofit. How many hired employees and unpaid volunteers will the organization support? How much will you get paid – and how often?
As always, when incorporating a company , and particularly in the case of starting a nonprofit organization, it’s critical that you make the most effective use of resources, provide real solutions, and connect with and care for the community at large.