Catalyst Center for Nonprofit Management provides a challenge for those of you thinking of forming an NPO to provide a structure to carry out your passion: Should You Start a Nonprofit Organization?
The article surveys the costs and says think carefully before diving in to start a 501c3.
Why?
There are substantial upfront costs involved. Incorporation costs. The 1023 application to the IRS requires a lot of info and will take you a lot of time, assuming you are detail oriented & patient enough to do it yourself. If you aren’t, professional assistance will be expensive. In California, you will have to get an exemption from the Franchise Tax Board and register with the Attorney General.
The ongoing costs for donor receipting, accounting, and meeting a host of regulatory requirements are substantial. Board minutes must be in writing and approved at the next meeting. Annual filings with IRS, FTB, and AG. Biannual filing with Secretary of State (due in the month your organization was incorporated). About three tons of paperwork for filings with multiple agencies if you hire staff. (If you don’t know what the range of employment paperwork is, that might be a warning to you.)
What to do instead?
Consider partnering with a like-minded organization. Be a department inside their organization.
The article suggests a fiscal sponsorship arrangement. Check out the article for more details.
Pursue your passion. Don’t let paperwork stop you. Please, please change the world.
First, count the cost. Start by reading the article linked above.
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