Statistics show that there are 1.5 million non-profit organizations (NPO’s) in the United States. Those not for profit organizations pay 8.11% of the salaries in the USA, and that’s a number to be reckoned with.

If you enjoy doing philanthropic work and have found a group of likeminded people, maybe it is time to think about starting a non-profit organization.

Starting a non-profit is, in many ways, just like starting a business. Not only is leadership required but an understanding of the workings of business planning, tax law, marketing and financing are very important as well. Here are some things you should think about before you set up an NPO.

What is Your Mission?
Defining your mission is critical; what is the purpose of the NPO and what needs it addresses – should be understood and agreed upon by all the members. It doesn’t mean that the mission statement has to stay the same for years to come. The mission can change and evolve with time, but you have to have a common ground to start with.

Who else is doing it?
Understanding what goes on in your area of interest, who is doing what and how, is also important. There is a lot of information on the internet to get you started. Some sites will list the questions you need to ask yourself before you start.

Make a Business Plan
You cannot approach donors if you don’t have a business plan, just like with a for-profit business. To get government funding you will need a business plan, and it will help you to recruit volunteers.

Board of Directors
Start by selecting members that can function as experts in areas you need help. People who can invest some time to get it started. If they were members of a Board in the past, you can learn from their expertise. Make sure there is no conflict of interests between board members, or between any of them and you. Some states require that you appoint directors before filing.

Incorporate the NPO and Register it
It is a similar process to registering a regular corporation but with the added paperwork of applying for tax-exempt status with the IRS and the State you operate in. Tax exempt status 501(c)(3) outweighs the added work.

Incorporation options
Another form of incorporation that is becoming more widespread is the L3C (Low profit, Limited, Liability Company). This form combines the legal advantages of an LLC with some financial benefit of NPO. As of now only 5 states recognize this kind of corporation.

Government Grants
Check what kinds of government grants are available. You can see some resources on the federal government’s site for SBA.

Start Fundraising
Look for a way to diversify your fundraising efforts, so you won’t get hit when one donor goes through rough times, or when seasonal changes affect the donors.

Over 8% of people in the American workforce are getting their salaries from a non-profit organization. Maybe it is time to turn your philanthropy work into an NPO and get rewarded for your efforts.

Author Bio: Peter Holtz, CPA specializes in providing accounting and tax services to small business owners and professional practices in Stockton, CA. For more information, go here: http://www.financialperformancecenter.com

Category: Advice
Keywords: accounting advice, tax advice, CPA services