Should I Create Another Nonprofit?
Before you engage in “the process”, you should explore whether the creation of the nonprofit is what you really want to do? That requires a basic understanding of what is a nonprofit as well as an honest review of why you want to start the nonprofit organization and what you perceive as the benefits of doing so both for yourself and for the cause or issue you want to address.
An excellent resource in this regard is Get Ready Get Set: What You Need to Know Before Starting a Nonprofit C-MAP (California Management Assistance Partnership).
In addition, Texas C-Bar (www.texascbar.org) has compiled an excellent set of resources available to both individuals and lawyers interested in starting ands managing a nonprofit organizations. Under their Pre-Incorporation section you will find:
- Choosing the Right Corporate Structure– This document discusses various factors to consider when choosing between an unincorporated association and incorporation.
- Comparison Chart of Nonprofit Corporations vs. Associations– This chart displays certain differences between nonprofit corporations and nonprofit unincorporated associations.
- The Basics of 501(c)(3), 501(c)(4), and 501(c)(6) Tax-Exempt Status – Section 501 of the IRS Code exempts certain types of organizations from taxation. Section 501(c) describes the different types of organizations that are eligible to tax-exempt status and the requirements they must meet to gain that status
- Chart of the Benefits and Drawbacks of 501(c)(3), 501(c)(4), and 501(c)(6) Status
Based on the hundreds of conversations I have had with individuals interested in starting a nonprofit, be aware that it is not a family business. Once created, legal control of the entity rests with the Board of Directors. While initially that group may be comprised of individuals well known to you, over time (if not immediately), a good deal of the organization’s credibility will rely upon the diversity of your Board and it its perceived ability to govern – not just do as the founder wishes!
So, if your intent is to create an entity that you can control, or which will be a source of revenue to you, you might reconsider creating a nonprofit organization and create a for-profit entity.