Want to start a not-for-profit?

At the Staten Island NFP Association we are often contacted by individuals with an interest in starting not-for-profit organizations.  While starting a not-for-profit can be a great way to make a significant impact on your local community, it also involves a great deal of work and is very much like starting a small business.

In short, there are two primary issues to think about when considering starting a not-for-profit.  First are the legal and “paperwork” issues, which, while confusing and complicated, can be managed with some attention and effort.  More important than the legal steps you need to follow, however, is the important question of how the organization that you propose to start will affect true change in our local community.  Without a coherent answer of why your organization is important to the community and why it deserves the support of companies, foundations and individuals, your work to start a not-for-profit will likely run into trouble before it even gets started.

Before engaging in any work to start a not-for-profit you will need to do some research into what organizations, if any, are already engaged in providing the kinds of services you intend to provide and how your organization will differ from those that already exist.  For example, if you intend to start a youth basketball league you would need to identify what other leagues exist on Staten Island, and would need to determine what kind of community impact your league will have that the existing leagues do not.    Track records of successful service go a long way in the not-for-profit world, so garnering support and funding for an organization that replicates the work of another, more well-known group will be challenging.

Once you are clear about how your mission to serve the local community will lead to specific community impact, you can begin the process of creating your organization. The first step in this process will be to assemble a Board of Directors comprised of individuals who believe in your mission and who will both support your organization and recruit others to do the same.  Your Board of Directors needs to include at least three people, but should include more (5, 7 or 9 is probably a good number) who are not directly related to each other through family or close business relationships.

After you have compiled your Board you can write your articles of incorporation.  This document is the legal “blueprint” of your organization, noting the circumstances of your organization’s creation. A great resource with lots of information about writing the articles of incorporation can be found at the Citizen Media Law Project.   When your articles of incorporation are complete you will submit them to the New York State Department of State to create a corporation.

This is also a good time to write your organization’s bylaws.  While you are not required to send the bylaws to the IRS or Charities Bureau, they do play an important role in your not-for-profit’s operations.  Bylaws are the rules and procedures for how a nonprofit corporation will operate and be governed. Although there are no set criteria for bylaw content, they typically set forth internal rules and procedures for the nonprofit corporation, touching on such issues as responsibilities of nonprofit corporate officers and directors, the size of the board of directors and the manner and term of their election, how and when board meetings will be held, and who may call meetings, how the board of directors will function.

Following your incorporation you will complete both the IRS Form 1023 and the New York State CHAR 410 form; these documents, respectively, secure not-for-profit status for your organization at the federal and state level.  A fine resource to use at this stage of the process is the website www.form1023help.org, which explains this somewhat complicated document in detail. 

After filing the Form 1023 and CHAR 410 form, you will wait to receive a letter that either approves your 501(c)(3) status (a so-called “determination letter”) or asks for further clarification.  In either case, your receipt of the determination letter noting approval of 501(c)(3) status is your final step in creating a not-for-profit organization.

This explanation is, of course, very basic and does not replace the advice of a qualified accounting or legal professional. We suggest that you consult your own professional when embarking on this process.