Alex Levin

Nonprofits: The Legal Requirements of Starting Your Own

posted by
Alex Levin,
Marketing Specialist and Writer
Lance Surety
Bond Associates, Inc.

Even in times of a weakened economy, the rate of nonprofit startups continues to grow. Currently there are over one million nonprofit organizations in the U.S.; their expansion has grown at twice the rate of for-profit organizations. Despite this rapid growth, many nonprofit organizations struggle to even open their doors.

A lack of research, understanding of legal requirements, and funding elements all play into the demise of a business before it begins. To ensure you’re prepared to open your doors, consider the following areas before you outline your business plan.

1) Know what’s out there.

Before starting any business, owners should be educated in regards to their competitors. The same is true for the nonprofit world — knowing what organizations are available and their services can be one of the easiest indicators of your success rate. As the amount of nonprofits grows exponentially, often times there are several organizations that currently fill the needs many start-up nonprofits are looking to provide. Understanding the nonprofits that currently exist in your market will help you determine how to set yourself apart from the pack and create a need for others to join in with your cause.

After performing this introductory competitor analysis, some find they would be more successful if they form a private business to help fulfill their charitable goals. New classes of businesses known as Benefit Corporations were established to serve just this purpose. They are companies whose goal is to “create a material positive impact on society and the environment.” Although time consuming, this preliminary research may be the most critical aspect to understanding the current demand for your services, and forecasting your success.