We receive many inquiries every year about how to take a great idea and turn it into a functioning nonprofit organization. Starting a nonprofit takes time,
commitment, research and dedication of a group of individuals passionate about meeting a specific need in the community.
Watch CalNonprofits “How to Start a Nonprofit” Webinar HERE.
What is A Nonprofit?
A non-profit organization is an entity that operates for the benefit of a particular cause or community, rather than for the purpose of generating profit for its owners or shareholders. Non-profit organizations may include charities, educational institutions, and advocacy groups, among others. These organizations rely on donations and grants to support their activities and are often exempt from certain taxes.
What Makes an Organization a Nonprofit?
-The organization exists for some benefit to the public.
– No person owns shares of the corporation or interests in its property,
nonprofits are “owned” by the community.
– The property and any income of the corporation are not distributed to any
“owners”, but instead are recycled into the corporation’s public benefit
mission and activities.
Revenue Sources for Nonprofits:
-Revenue can be generated from a variety of sources: donations,
fundraisers, earned revenue from services and products, grants or
borrowed funds. It’s important to consider a healthy mix of revenue sources when you’re planning to start a new nonprofit.
-Nonprofits in California are regulated by the Attorney General’s office and
the Internal Revenue Services.
Reasons Not to Start a Nonprofit:
-You have a limited time special project that will benefit your community
(this might be a good time to add a fiscal sponsor).
-You would like to help someone in need (a sick friend or relative). Another
options could be to work with a local bank to start an account that people
can donate to.
-You think a lot of grant money will be available (only about 10% of grant
proposals are ever funded. Most successful nonprofits have diverse
sources of revenue.
-You have a service or product you want to provide below cost or donate,
but want a tax deduction. Instead, consider volunteering or donating to a
tax-exempt organization.
-You feel your current work is not meaningful. Consider working for an
existing nonprofit or for-profit with a sense of your mission.
-You have important knowledge and perspectives to share. Consider writing
a book, public speaking or joining a nonprofit board instead.
-You want to do things your own way and not be fettered by rules and
bureaucratic procedures. Nonprofits are accountable to donors, boards of
directors, the IRS, Attorney General and the community at large. There are
rules and policies that need to be followed to provide services in
nonprofits.
Things to Consider Before Starting a Nonprofit:
– Is there an organization already doing similar work in the community?
– What unmet need will be addressed through your work?
– How do you know this is the right way to go about meeting that need?
– See the following pages regarding questions to consider before starting a
nonprofit.