Are you considering starting a non-profit organization and contribute for the upliftment of the deprived sections of our society? It is a noble thought and one that must be supported from all quarters. However, starting a non-profit organization is a proper legal process in which you have to completer all the requirements required by the law. You also have to get your non-profit insured from a reputable Church Insurance Company to receive fair and reasonable compensation in case of any financial loss occurring due to many reasons.
There are few technical steps which you have to take in the direction of setting up a new non-profit organization. Although these steps may vary depending on your location, but here are some general guidelines for American non-profit organizations.
501-c-3 or Fiscal Sponsorship?
Most independent non-profit organizations fall under IRS 501-c-3 code which allows non-profit organizations serving the interests of the deprived sections of the society to continue their operations on tax-exempt basis. They stand to receive tax deductible donations and grants to finance their public welfare operations. The application to this process costs around $1000 and can be a bit daunting.
To begin their operations quickly, many non-profit organizations begin by operating under the umbrella of a IRS 501-c-3 fiscal sponsor with the pre-determined purpose of public service through organization like yours. The fiscal sponsor will charge a processing fee in lieu of allowing you to collect tax-exempt donations. The processing fee is often a percentage of the funds raised. You will also be provided the facility of shorter application process and administrative support for your non-profit organization as it gets up and running.
Board of Directors
The appointed board of directors are responsible for running non-profit`s activities. They have the authority to select and advise the non-profit`s executive director. They are also responsible for buying a suitable non-profit insurance coverage from a reputable Church Insurance Carrier. Board of directors are legally liable for all activities carried out by the non-profit, so it is in the best interest of non-profit to follow law and not perform any illegal or unsafe activities. The rules of appointing a board of directors vary with the state. Some states require a minimum of one director, while some states at least three directors. A devoted and responsible board will ensure that your non-profit organization continues to receive funds for carrying out its activities smoothly.
Even though non-profits have nothing to do with earning profits and turnovers, most of them are required to create official bylaws. This document lays down the rules that govern your organization, such as how meetings are to be organized and how decisions are to be made. Templates are readily available, which means that you don`t need to create this kind of document from the scratch.
Coming to conclusion, you can set up non-profit organization if you follow the rules laid down by the law as no commercial or non-commercial entity can run its business without obtaining the permission of the law.