The Basics of Forming a Nonprofit

Nonprofit Management All-in-One For Dummies

To ensure the success of your nonprofit organization, you need to start with a solid foundation. Take a look at the following fundamentals checklist so your nonprofit is set up properly and legal issues are covered right from the beginning.

Clearly define your mission and its scope: Every nonprofit has a mission. Make sure your nonprofit's mission is clearly defined and concisely written. It should reflect the shared goals of everyone involved in establishing the organization.
Put together a business plan and system: The organization should identify the sources and uses of its funds. It should also figure out whether it can be viable in the long run.
Adopt a set of bylaws: Bylaws serve as the constitution of your organization. You might start by using standard forms, but do make sure that issues of major importance to your organization are clearly addressed.
Recruit a board: Nonprofit organizations are run by boards of directors or trustees. Recruiting the right board can mean the difference between success and failure of a nonprofit's mission.
Hold an organizational meeting and define duties and responsibilities: This step is important to do early on because it allows you to make sure that formalities are dealt with before the organization becomes engrossed in fulfilling its mission.
File for tax-exempt status with the IRS: Tax-exempt status is not automatic; it must be awarded by the IRS. Your organization must file the necessary paperwork and qualify under the law for exempt status.
Register with your state: State requirements vary, but most require you to follow a certain registration process so that the states can track which nonprofits exist within their borders. Most states also require a separate registration process if funds will be solicited within their borders.
Get staff and volunteers in place: If your organization has day-to-day operations to perform, it's important to figure out who will do the actual work. More importantly, you have to figure out who will supervise operations and be held accountable.

About This Article

About the book author:

Jill Gilbert Welytok, JD, CPA, LLM, practices in the areas of corporate law, nonprofit law, and intellectual property. She is the founder of Absolute Technology Law Group, LLC (www.abtechlaw.com). She went to law school at DePaul University in Chicago, where she was on the Law Review, and picked up a Masters Degree in Computer Science from Marquette University in Wisconsin where she now lives. Ms. Welytok also has an LLM in Taxation from DePaul. She was formerly a tax consultant with the predecessor firm to Ernst & Young. She frequently speaks on nonprofit, corporate governance–taxation issues and will probably come to speak to your company or organization if you invite her. You may e-mail her with questions you have about Sarbanes-Oxley at [email protected].

Daniel S. Welytok, JD, LLM, is a partner in the business practice group of Whyte Hirschboeck Dudek S.C., where he concentrates in the areas of taxation and business law. Dan advises clients on strategic planning, federal and state tax issues, transactional matters, and employee benefits. He represents clients before the IRS and state taxing authorities concerning audits, tax controversies, and offers in compromise. He has served in various leadership roles in the American Bar Association and as Great Lakes Area liaison with the IRS. He can be reached at [email protected].

US Senator Chuck Grassley currently serves as the president pro tempore emeritus of the United States Senate. He is the senior US senator from Iowa and has held the seat since 1981. Grassley has chaired both the Senate Finance Committee and the Senate Judiciary Committee.