how to start a nonprofit

Fighting for a cause

posted by
Dick Erwin

I recently completed a nonprofit internship, and it was a very difficult and challenging experience. My internship took place at Fairbanks Youth Advocates in Fairbanks, Alaska. I was in Alaska for the summer as an AmeriCorps Summer Crew Leader. After a successful summer, I was asked to stay and help open an emergency youth shelter as the Emergency Youth Shelter Coordinator.

My first day on the job was to familiarize myself with the organization by learning about their history and development. For the next few days I became familiar with runaway and homeless youth issues. The next big challenge was researching how to open an emergency youth shelter. There weren’t many options in Alaska, so I had to expand my search. I looked up shelters all over the U.S. and Canada. I looked to many of my nonprofit leadership and management classes at ASU for insight.

Ask a Nonprofit Specialist: How do I fill out form 1023?

posted by
Anne Byrne,
ASU Lodestar Center

Question: I am starting a nonprofit organization, and I need to secure our 501(c)3 status. I don’t know how to fill Form 1023, the Application for Recognition of Exemption, from the IRS. Do I need an attorney to complete it? Can you help?

Questions about the application for 501(c)3 status or form 1023 are by far the most common I get in my role as a professional-in-residence at the ASU Lodestar Center. The instructions from the IRS are almost 40 pages and the form itself is 26 pages, so it is no wonder the task may feel overwhelming! Fortunately, there are resources available, and a clear perspective will help focus your efforts.

To Start or Not to Start?

posted by
Anne Byrne,
ASU Lodestar Center

The most frequent question posed on the ASU Lodestar Center's "Ask the Nonprofit Specialists" service is about how to start a nonprofit organization. Recent research by Civic Ventures suggests that there is strong interest and intention among "boomers" (individuals in their 40s, 50s, and 60s) to create jobs for themselves and others as entrepreneurs, making a positive social impact. More than 12 million aspiring entrepreneurs want to be "encore entrepreneurs," by starting a nonprofit or socially oriented business. There is also a growing trend of new nonprofits run by college students. According to Crain's New York Business, "The flood of 'postmillennials' creating their own nonprofits stems from two trends, experts say: a generational desire to do something meaningful and the quest for individualism."

"In a sea of bad economic news, it's heartening that millions of people with experience want to take matters in their own hands and launch their own ventures to meet social needs in their communities," said Marc Freedman, founder and CEO of Civic Ventures.

Mark Rosenman, in a blog post titled, "Calling All Boomers: Don't Start More Nonprofits," disagrees with the idea of creating new nonprofits, instead suggesting that "baby boomers shift their social commitment from an ill-advised and self-centered ambition to start a plethora of new enterprises and instead work together, and with others, to build the social, political and economic movement required today."

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.

How to Start a Nonprofit Organization: Questions to Ask Yourself Before You Make the Leap

posted by
Robert Duea,
Professional in Residence
ASU Lodestar Center
Pat Lewis,
Senior Professional
in Residence
ASU Lodestar Center

So, you're thinking about starting a nonprofit organization. You have a fantastic idea, but are you ready? Do you have everything you need before you begin? Is starting a nonprofit the right path for you?

Before you begin your nonprofit journey, you should ask yourself two very important questions. So, let's dive in, and see if you're ready!

1. "Why do I want to start a nonprofit organization rather than a for-profit organization?"

Both types of organization could be the right choice for you. After all, both are businesses, and both can help you provide the service you want to share. So, what is the difference? There are a number of similarities and differences. Here are few:

  • Nonprofit organizations are concerned primarily with social good; for-profits focus on profitability.
  • Nonprofit organizations must adhere to a rule of non-distribution whereby profits, or any excess at the end of the fiscal year, must be re-invested in the organization and its programs and may not be distributed to individuals; for-profits exist to distribute profit to owners and shareholders.
  • Nonprofit organizations comprise paid staff and volunteers; for-profits typically only have paid staff members.
  • Nonprofit organizations are governed by a board of directors; for-profits are governed by the owner(s) and, if a corporation, also a board of directors.
  • Nonprofit organizations are granted federal exemptions of certain taxes; for-profits are taxable.

These are a few of the key differences that can help you make the right choice for your organization. So, let's say you've chosen the nonprofit route. The next question you should ask yourself is: