Organizational structure:
1. Instead of starting a new nonprofit organization, consider
collaborating with an existing nonprofit.
The benefits of collaboration include:
• Elimination of many start-up and overhead expenses for the
new entity.
• Provision of "back-office" and support services from the
existing organization.
• New services can be provided through the existing organization.
• Fund-raising options may be enhanced due to:
* the expanded services of the established organization;
* and the expanded programs brought by the new organization.
• Greater community and potentially greater funder support based
on the assumption that there are too many nonprofits in existence
and that collaborations strengthen the nonprofit sector.
2. Consider Fiscal Sponsorship instead of developing a separate
nonprofit organization:
• The new program is placed under the tax-exempt umbrella
of an existing 501(c)(3) organization
• It is simpler and less expensive than forming another
independent 501(c)(3) organization
• The sponsoring organization may provide accounting services,
administrative support services, fundraising and strategic
planning guidance.
• The fees for the sponsorship may be based on a
flat rate per year or a on percentage of income brought
by the new program.
• There should be a written agreement defining the
terms of the fiscal sponsorship.
• The fiscal sponsor should have similar mission to the
“new” organization.
• Contact your local community foundation to see if
they know of organizations willing to act as fiscal sponsors.
3. Investigate other organizations serving similar clients or providing
similar services:
• Make sure you are aware of the organizations that already
provide the service you want to offer through the new
nonprofit. Find out where they are located, what
population they serve, what needs they may be aware
of in the community, what their funding sources are currently
and what their expectations are for future funding.
• Foundations and other funding sources are usually not
interested in funding similar programs in similar areas,
i.e. a new homeless shelter down the street from an existing
shelter.
• Support the need that you want to meet through statistics,
city and county planning information, and other sources.
To develop a new nonprofit organization:
1. Form a nonprofit corporation under Ohio law:
• Develop the Articles of Incorporation
• Form the Board of Directors (at least three people)
• Write the Code of Regulations and By-Laws
• Submit the filing(s) with state Attorney General’s Office
(State of Ohio website)
2. File as 501(c)(3) tax-exempt organization:
• Obtain the application from IRS – either online or order
by letter or phone o IRS website.
• Complete and file the application; legal review of the
application is highly recommended.
* It usually takes 6-18 months to receive the IRS
determination letter of tax-exempt status
Operational Issues:
1. Planning and Development Steps
• Determine the organization’s purpose —
the Mission and Vision
• Form Board of Directors
• Hire an attorney to File the Articles of Incorporation
with the State of Ohio
• Draft the Regulations/By-laws
• Develop a Strategic Plan that expresses the vision
for the organization; outline steps necessary to
reach your goals
• Develop a Business Plan, a “blueprint” of the organization
over the next 2 years
• Develop a Budget and Resource Development Plan for
fundraising including all sources
- earned income, membership, fundraisers, donations,
grants and contracts, etc.
• Establish a record-keeping system for your corporate
documents, board minutes, financial reports, and other
official records.
• Establish an accounting system; consider hiring a CPA
with nonprofit experience or recruit a CPA for the
board of directors
• File the IRS Form 1023 for tax exempt status
(Publication 557 provides details)
• Review all State/local charitable trust/solicitation
requirements
• File to obtain the Employer Tax Identification
number (Form SS-4)
• Consider applying for a bulk mailing permit if needed
• Get quotes for insurance including Directors and Officers
• Set up the office operations, including hiring the
Executive Director or CEO, obtain office space, open bank
accounts, hire other staff as needed, get quotes for and
determine all employee benefits.
