Non profit organization advice needed please?

[mikehende]

Hello all, I am new here and don't know if my endeavour belongs here? Myself and a small group of people who have been doing charity fundraising for 3 years now wish to declare ourselves as a non profit organization but this cost is very expensive if we have to pay someone to do it so I am here to ask please if we would be able to get any questions answered on this site if we were to attempt filing the C Corp and 501c3 forms on our own? Thanks.

[vangogh]

I'm not the right person to answer, but there are some people here who could probably help and point you in the right direction. I mostly wanted to respond to keep your thread current.

I can understand the cost being prohibitive. I don't know how complicated the forms are for filing and if you might be better hiring someone though. Feel free to ask any questions you have. Like I said a few people here can probably answer some of them. Not me, but some people here.

[mikehende]

Thanks but I think we would need to consult with someone who specifically knows about non profit organizations to be 100% sure we will be doing things within the law. As one example, regarding the structure of the org. what's necessary? I would have liked just one person to fulfill all required official positions [Chairman, director, trustee e.t.c] but since I figure that cannot be done, can anyone tell me please:

1] What's the LEAST amount of members I would need for this?

2] Can any one member hold more than one position?

3] Which positions are a must?

Thanks.

[lucas.bowser]

There isn't a single right answer anyone her would be able to give you. You have two entities that you have to please. First is your state board that oversees incorporation. The second is the IRS. Each state has different rules about who can occupy officer positions within a corporation. Some states a single person can hold all officer positions, some no more than two positions and in some no more than one position. The requirements can also vary by state in terms of what officer positions you must have and how many. The IRS tends to stay out of this particular piece of the puzzle.

Then there is your board of directors. State requirements can vary here as well. The IRS, however, likes to see three independent board members. Ultimately, they will be the arbiter of how many you actually need, but three is a good starting number.

That said, have you considered LegalZoom? They have a non-profit package that seems to be pretty reasonable. It won't be as tailored as if you had an attorney do it from scratch for you, but should at least get you up and running and legal. It looks like you can get everything done from A-Z for ~$1000. To me that's a pretty small price for getting it right.

Legal Zoom Non-Profit Packages (http://www.legalzoom.com/non-profits/non-profits-packages.html)

[mikehende]

Well yes but for us, it means a lot of money to put out of our own pockets for this. Thanks for the info, we will still try to see if we can get legal help maybe from a volunteer local lawyer or so and do the filing ourselves and pay the fees from our pockets.

[lucas.bowser]

I understand what you're saying, and pro-bono is certainly an option. One thing you might consider to entice the lawyer is offering them a seat on the board of directors. I'm not sure if that type of quid pro quo would be legal or not, but I would guess the lawyer could tell you that when you make the offer in exchange for the legal work. Many lawyers like to build their civic resume, especially if they have any political aspirations, and being on the board of directors for a charitable organization certainly counts.

Out of curiosity, what type of charitable fundraising are you doing, i.e. what's your cause? Or are you a more of general fundraising org? Have list, will travel.

[mikehende]

Ok, I'll keep that in mind to ask the lawyer, if we ever should get one, the pro-bono orgs I have contacted did not produce any results so far. Here is a link tour new site, should explain what we are about and out intentions;

Charity Fundraising (http://silent-angels.net/index.html)

[lucas.bowser]

OK. I see why it would be a little burdensome to bear the costs out of the current donations now that I have a feel for your current operation. Is there a reason that you are looking to do this on your own instead of running it through an existing exempt group like a church? It would seem to me that you could go through a church and get all of the benefits that you are looking for from your filing and you should be able to fulfill your basic mission as set out by your website. Not saying you have to go this way, but it is one idea. If you decide that's not for you, I am attaching a couple of links I found about filing for non-profit status.

Here's an IRS resource that may help.

New Organizations - Stayexempt.org (http://www.stayexempt.org/NewOrganizations.aspx)

And one about forming a non-profit in New York

Forming a Nonprofit Corporation in New York | Citizen Media Law Project (http://www.citmedialaw.org/legal-guide/forming-nonprofit-corporation-new-york)

Good luck. Hope you find someone that can help you get everything filed.

[mikehende]

Those are great links, better than those I have found [thanks]. What I am going to is to post an ad on craigslist for non profit legal advice help and also take your advice and offer a membership to anyone who can help, hopefully we might get a paralegal or similar to help with this.

Yes, it's almost impossible to try to get only $10 out of the public, most of the money we raise come out of our own pockets and within our circles of friends and families, we are tired of the begging we have to do and verbal abuse we have to take when asking someone from the public to donate anything. This is the reason why we have decided to try declaring a non profit org to try to get corporate sponsors or seek people online who may want to offer to help.

I live next door to a church and the Pastor is a very good and long time friend of mine but I never thought of asking him to do anything through his Church mainly because his charity work is different to ours, for example, he collects donations of all types and sends overseas so he's doing things on a more global scale while we for 3 years now have been helping mainly local people, I am not sure if I should approach him when we would not be able to support both his and our cause? Also, I simply don't understand how we can carry on our work through his church? How would that work, would we be able to still carry our own name and do things our way? What about monetary donations we should receive, would it have to be made out to the church, if yes, then what happens, the church simply hands it over to us and they do the paperwork themselves?

[lucas.bowser]

The role your organization is filling is sort of like an "undercover deacon". Deacons within a church are set up to make sure that the needs of the church community are met, especially those of widows, orphans, disabled, etc... My church has a deacons fund, which is used to help people in the local and church community who are struggling for one reason or another. Ours is a public gift in that a requests was made specifically by someone (the actual person or a friend who knows of the need) and the person being helped usually knows where the money is coming from. Sometimes it needs to be that way in order to be practical. Like a close friend of mine needed repairs done to their car so they could get to and from work. They didn't have the money to do it, so the church stepped in and took care of it. That would be tougher to do secretly, though not impossible.

As far as approaching the minister, i would just tell him what you want to do and see if he is interested in extending his ministry this way. It's possible that they are already doing this in some capacity that you are not aware of. In order to maintain the tax exemption aspect of the donations, they would have to write the check to the church, but funneling it to your organization should not be a problem. There is a fundraising concept that 501c3s have to respect called "Designated Giving". This means if a check comes with markings indicating it is for your "Silent Angels" fund, it must be used in that capacity or they risk invalidating their non-profit status.

Given your goal of corporate sponsorship, you may want to consider an organizing fund drive that will allow you to file independently. Many businesses tend to avoid any religious affiliations (though not all.), so you would still mainly be working through individuals or directly with small business owners in the community to receive donations if you go the church route. I know the allure of pro-bono is strong for your group because of your current fund limitations, but I just want you to understand where they will start and stop. Pro-bono work will probably only cover filling out the forms, drafting articles of incorporation and the legal advice. It will not typically cover your filing fees. I would say you will probably have $500 - $600 in filing fees for registering as a non-profit group, and maybe more (I don't know what the slate of incorporation fees are in New York.) $400 of this will be the IRS filing fee. Just want you to be aware of this as you are moving forward.

[mikehende]

The problem we may have with the church is mainly obligation in any way, our members come from different religions, the Church is Pentecostal, I am Presbyterian, my wife and kids are Catholic, my Aunt is Baptist, my main co-founder is Hindu and another is Muslim and it goes on and on so we all already have our own religious institutions therefore cannot commit in any way to his so I am putting myself in his shoes, what benefit would his church have to be affiliated with us? Might only be more work for them to get donations in our name and they have to account for it? I will still run the idea by the Pastor to hear what he says, get back to you on this and we appreciate the info/advice you're giving us!

Meantime, I have posted the ad for legal help/advice with us putting out the funds for filing fees to cover both angles.

[lucas.bowser]

That will be a problem since you are crossing the Christianity boundary. You can often deal with different denominations through the creation of an ecumenical working group, but crossing religions is usually a tougher sell to the congregation who the church board and pastor are typically accountable to. So you will probably need to be a separate organization.

I would go back to the fundraising drive idea from my last post and talk about it a little more. The problem you have right now are your members are of limited means, so they want every dollar given to go towards the people being helped. And that just makes sense. No one wants to see their money being spent on the administrivia of the charity. But you are also running into issues with people not wanting to donate to your cause because you are not an official charity, which in turn limits the amount of work you can do. At some point you're going to need to make this happen.

Based on what I now know, I would talk to small business owners about becoming founding patrons. You should structure the commitment as so they understand exactly how the money will be used, and the commitment should come in two tranches. The first will be used to cover the incorporation fees and 501c3 filing fees. Once you have incorporated and received a decision on your 501c3 designation, you can then have them remit the second portion of their commitment, which will be the building of your initial charity fund. I would limit the # of patrons to 10 or less, and make the commitment something with some meat to it. You need to do something special to recognize them, with the understanding that there will always be a special place in your charity's history for them. Maybe a Founding Patron's section on your web site as an idea.

Before you do this though, you probably need to put together a "business plan" of sorts. It's not like a typical business plan in that your profit goal is social rather than monetary. Bplans.com has couple of plans for reference that might be helpful as a starting point, though I would in no way consider it throrough. I'm attaching a link to one for a food bank, since it is probably the closest to what you are when choosing from their examples. Nonprofit Food Bank Sample Business Plan - Executive Summary - Bplans (http://www.bplans.com/nonprofit_food_bank_business_plan/executive_summary_fc.php) I would call it your Organization Plan rather than a business plan. This will indicate a certain level of seriousness with the business owners you are talking to. It will also help you to clearly communicate you goals, how you plan to achieve them and how they fit into your plan.

[mikehende]

The problem you have right now are your members are of limited means, so they want every dollar given to go towards the people being helped. And that just makes sense. No one wants to see their money being spent on the administrivia of the charity. But you are also running into issues with people not wanting to donate to your cause because you are not an official charity, which in turn limits the amount of work you can do. At some point you're going to need to make this happen.

Our situation could not be stated any better! We have tried "purposely" patronizing a few local businesses who had promised to help thinking "one hand washes the other" but this backfired, whenever we approached them for the promised help, every excuse in the book comes out. Last week we collected $200 and clothing and food stuff between ourselves which was supposed to go to a family in Alabama who had lost their home to a tornado but was told at last minute that it was a scam so we pulled back, we then decided to give the same donations to a local family here of 14 people who are facing eviction and having some serious tragedies. We will be handing everything over to them in 2 weeks giving us more time to accumulate more for them.

I am now thinking that we put that family's situation on our site showing how we were able to help them and in order to help others like them we need help. Then we put out the word of our situation just as you've stated above and tell people exactly where the money is going that we're making a one time collection to form a non profit org which will result in us getting corporate sponsorship to help other in the future, I think they should be happy with this because it will mean we will never bother them again for any donations, what do you think?

[lucas.bowser]

I guess I didn't get that you were trying to sole-source your funding through corporations. Your charity will be difficult to run on corporate funding alone. It needs to be part of a balanced fund-raising portfolio. Businesses may donate to get it going initially, but they will only continue to donate when it is something the community cares about, and those votes come with $$$ from individuals, not businesses. If businesses know they are the only ones donating, they tend to stop because they see that work as unimportant to the community that does business with them. Think about the various charitable organizations you have come across in your life. How many of them are 100%, or even 50% corporate funded? The main charity I can think of that does a lot of corporate fundraising is the United Way, but even their funding is comprised of individual donations that the companies match, which brings their total as close to the 50/50 mark as I have seen. I am of course excluding business foundations from this like Ronald McDonald House, where the primary annual donor is the initiator of the charity.

So what does the 501c3 designation mean to you? It allows you to reach beyond your immediate friends, family and acquaintances for donations. The designation carries a certain bit of credibility behind it that you are currently lacking. By and large, the US is a credentialed society. We want to see the seal of approval and the stamp of validity. 501c3 gives you that designation and allows strangers to give you more credence than you would otherwise get as private individuals. It lets them know that at least on the surface, the government considers you a valid charity to donate to. It also allows you to do cold-calling by exempting you from the national (and most local) do-not-call registries.

It also changes your fund-raising cost dynamics and corporate fund-raising avenues available to you beyond direct donations. For example, based on your web site, you appear to do food events as fund-raisers (BBQ perhaps...) After receiving the 501c3 designation, your supplies would probably be sales tax exempt, lowering the cost of putting on the event. Certain suppliers offer different pricing to non-profits vs for-profits or individuals because they recognize the greater good being done. One place I lived, the local grocery chain offered a % of receipts to local charities if they collected and brought the receipts from their patrons in. A program like this allows the people you know to make a donation just by buying the things they already needed/wanted.

No matter what you do, your charity will probably need to have to have a individual component to it's fundraising, otherwise it becomes a little too impersonal and people lose their sense of attachement.

[mikehende]

Man, I am sure learning a hell of a whole lot here! [Thanks!] To clarify, my group will still do our monthly thing which will raise $200 or so each month, we are committed to that, what I was hinting at was asking the "friends and relatives" about the one time donation for the legal costs so yes, our group will still be giving whatever little we can each month to people or families in need so this won't be an issue but what we need the corporate sponsorship for is to simply "do much more" than what our group is capable of and hopefully too we can stop begging the friends, relatives and Joe public for help on a monthly basis. From what you've written when a would be sponsor should see what our group are putting out of our pockets on a monthly basis but how little it is then maybe it will motivate them to help?

To sum up, our group itself will continue to do as we have been doing but we want to stop having to keep on begging others.

[lucas.bowser]

Begging, i.e. soliciting donations, is part of the game. It's one part science and two parts art. You're always going to have to solicit new donors. There's no way around that unless you want to maintain only that $200 a month level. Over time, people fall off, circumstances change and passions change. I used to do some work related to fund-raising with a humanitarian aid organization. They usually experienced 15-20% turnover in donors each year, so every 5-6 years, they had to replace a donor in order to maintain current funding. They were very good at fund raising, so much so that only $.03 of every $1.00 was going to fund-raising costs. That's a world-class number.

As far as what's going to motivate a business, it's going to be community involvement. Businesses donate to charities that have worthy, non-controversial causes and a large number of individual donors that come from their customer and employee base. They always want at least the appearance of being concerned about what their customers and employees are concerned about. It's cheap PR. I don't know that $200 a month is going to motivate any businesses long-term. But if you had $2000 a month in $10 and $20 donations from the neighborhoods they do business in, they'll definitely start to care more.

Another rule of fund-raising, money follows money. Someone gives because George gave, who gave because Eric did, etc... The more donors you have, the easier it will be to get more donors. It's human nature to want to be part of something larger than yourself. So the bigger and more famous a charity is, the more likely someone is to donate to it. If you think about it, most organizations and businesses work the same way. Few people want to be first. Being first is risky. They'd much rather be a comfortable second or third. Most people are okay with their life decisions only when those around them have made a similar decision.

[mikehende]

So I guess the summary of this is we will still have to keep on trying to recruit new members and also keep raising more funds.

[lucas.bowser]

Yep. It may not be the answer you wanted, but fundraising is the lifeblood of every charitable organization, and at the end of the day it's people, not corporations, that matter and fund charities.