Start-Up Tips for Nonprofits - Get a Fiduciary

As a member of the board of advisers for two start-up nonprofits, I've learned a secret: You need a fiduciary sponsor. In other words, you need an established nonprofit to help incubate your start-up nonprofit. Aging in Place in Darien, for example, is being sponsored by the Community Fund of Darien. All fund raising is done under the Community Fund banner, and then the money designated for AIP gets funneled to us. This way we get to make sure our concept, mission and vision are all viable. We can fine-tune our strategic business plan. And if we decide that we are worthy enough to become an independent nonprofit, we have an office to work from and funds to keep us going as we fill out all the forms for the state and the IRS.

It helps to be able to show the IRS that the organization is a viable one that meets a real public need. All the business details that IRS wants to know about, we can answer because we have been up and running.

The key to finding a fiduciary to accept donations and provide incubation is discovering one whose mission meshes with your own. Then, you need to work out a contract that stipulates how you will interact with each other. There are lawyers who specialize in such matters. Go out and find one -- preferably one that will do the work pro bono or for a reduced fee.

Nonprofits Need Business Plans

Two days ago I attended a presentation in White Plains, NY, by lawyers in the Pro Bono Partnership on the "Myths and Realities of Starting a Nonprofit." It was eye opening. You need to file incorporation papers with your state. You need an EIN number from the IRS. Then you need to fill out form 990 with the IRS to apply for tax exempt status. And you need to send regular reports to your state attorney general and the IRS. But that's not all.

These lawyers made it very clear that you need a business plan to start a nonprofit. You need to know how you'll generate income. A nonprofit is a business, but it's a business that simply must plow all its income back into the business, rather than distributing it to share holders. A nonprofit's purpose must be to support the public good in a unique way.

Feel free to contact me with questions. If you need a business plan for your nonprofit, email me at: upstartwyn@gmail.com.