Launching a nonprofit gives you the ability to use your business talent, education and experience to make a difference in the world. By the same token, however, it is important to understand that the process of nonprofit setup/formation requires more than just filing paperwork – you also need legal guidance from experienced professionals who specialize in this area.
What Is a Nonprofit?
Nonprofits are organizations that provide services that would otherwise go unaddressed due to a lack of resources or know-how. They typically exist to fulfill philanthropic, scholastic, spiritual, scholarly, literary, or other social objectives, and often fill gaps left by government programs that are unable to meet all needs within a specific community or region.
These types of organizations bring people together who share common values and are committed to common goals, and are funded by:
- Donations from individuals
- Donations from businesses
- Grants from foundations and government agencies
Types of Nonprofits
Some of the most common types of nonprofits are as follows:
- 501(c)(3) entities, which are exempt from taxation
- Religious organizations
- Organizations that donate to other charities
- Mutual benefit associations that supply benefits to members, such as health coverage
- Cooperatives where resources are shared amongst participants for collective gain
- Industry alliances representing sector interests and labor unions
The Advantages of Nonprofits
Nonprofits offer several benefits in comparison to traditional business entities, such as:
- Limited liability protection for their directors and officers
- Access to special funding sources
- The ability to receive tax deductions on donations
- Exemption from certain taxes
- Greater flexibility in how they operate
- More freedom when it comes to lobbying activities
- Less paperwork than traditional businesses
- Access to pools of volunteers who can help carry out the organization’s mission
The Benefits of Forming a Nonprofit
Establishing a nonprofit organization can be an incredibly fulfilling endeavor from both a personal and professional standpoint. But that is not all. Additional benefits include:
- Tax Exemptions. For true nonprofits, income is not taxable. Plus, donors who contribute money or goods to your nonprofit can claim it as a deduction on their tax returns.
- Grants & Donations. Nonprofits have direct access to government grants and private foundations.
- Legal Protections. If something goes wrong, you cannot be held personally liable for any damages resulting from the mistake. Only the assets owned by the nonprofit itself would be affected.
How to Form a Nonprofit: A Step-by-Step Breakdown
Forming a nonprofit organization requires quite a bit of planning. The first step involves researching the following:
- Existing nonprofits to determine what services they provide
- Identifying potential sources of funding
- Assessing community needs that your organization could address
- Creating a business plan for your organization
Next, you’ll need to choose a name and craft a mission statement:
- Your name should reflect the type of work you do, while being unique enough that it stands out from similar organizations
- Crafting a targeted mission statement will help facilitate sound decision-making within the organization so that resources are allocated efficiently and effectively
From here, you will need to consider things like incorporating your organization and/or applying for tax-exempt status with the IRS. This process typically requires filing articles of incorporation, along with paying applicable processing fees. You may also want to apply for 501(c)(3) tax-exempt status through IRS Form 1023. Once granted, donors will be able to deduct contributions directly back into their taxes each year.
Depending on the jurisdiction, incorporating a nonprofit may require that you submit Articles of Incorporation to the Secretary of State’s office, apply for a tax EIN number, and obtain applicable permits or licenses.
Next, you will need to select a Board of Directors who will oversee the operations of your nonprofit. The board should include individuals with diverse backgrounds who have expertise in areas such as:
- Program development
Try to recruit board members who truly believe in your mission, so that their beliefs and perspectives are in alignment with your overarching vision for the organization as a whole.
Once these initial steps have been taken, it is important to open a bank account that will be used specifically by the nonprofit. And depending on the type of work you will be doing, you may also need to obtain insurance coverage as well, which will help to protect assets owned or controlled by the nonprofit from potential liabilities that may arise due to external events outside of their control.
Why You Need an Attorney
When forming a new nonprofit, it is important to have a Port St. Lucie business attorney on your side who can help you navigate the legal requirements associated with setting up a nonprofit so that you remain in compliance with all governing laws and regulations. They can also provide advice on how to structure your new entity for maximum effectiveness and efficiency from a tax liability standpoint.
Attorney’s well-versed in setting up nonprofits can assist with drafting documents such as:
- Operating agreements
- Articles of Incorporation
- Charitable solicitation registration forms
- Tax exemption applications
In addition, they can advise you on other matters related to running a successful nonprofit including:
- Selecting the most appropriate nonprofit structure for your organization
- Insights on tax or liability matters
- Grant proposals, as well as advice on how to apply for funding from private foundations and government entities
- Fundraising activities
- Volunteer management policies
- Guidance regarding potential liability issues or conflicts of interest amongst board members or staff
- Compliance with state-specific laws governing nonprofits operating in a specific jurisdiction including registration requirements, employee benefits, corporate governance, charitable solicitation rules, lobbying restrictions, and intellectual property rights protection measures
How to Choose the Right Port St. Lucie Business Attorney for Setting Up a Nonprofit
Choosing the right attorney for setting up a nonprofit organization is a decision that should not be taken lightly. When researching your options, look for someone who:
- Has experience in nonprofit law and understands the specific needs and goals of your organization.
- Possesses a thorough understanding of IRS rules for tax-exempt standing, donations, and fundraising operations.
- Is familiar with applicable state and federal laws about nonprofits. This includes filing requirements, disclosure statements, recordkeeping obligations, liability issues, corporate governance matters, and licensing procedures.
- Understand your organization’s needs.
- Is available and responsive. Be sure to work with a Port St. Lucie business attorney who will actually be available when needed, especially during times when quick decisions must be made or unexpected problems arise.
- Can explain complex legal concepts in plain language that everyone understands.
- Is transparent, and willing to provide regular progress updates.
- Has a straightforward billing structure. After all, you need to be able to afford to retain their services.
We Are Here to Help You Launch Your Nonprofit
Your desire to start a nonprofit is noble, and we would love to help you on your journey.
Hiring an attorney who specializes in nonprofit formation will ensure you start things off on the right foot and remain compliant with all applicable laws and regulations. With proper guidance from one of our Port St. Lucie business attorney’s, you will be able to focus more of your time and energy on making your vision for your nonprofit come true.
Contact us today to schedule your complimentary consultation.