Hello, do-gooders! If you’re reading this article, it’s a safe bet that you’ve been planning or doing good work in your community and you’re trying to figure out the best way to organize or formalize that work. Starting a nonprofit is a big commitment. If government forms are not your jam you may be open to other avenues. Read on...
Just do what you’re doing.
If you’re considering an application for 501(c)(3) status because you assume that’s a necessary step in serving your community, do a quick assessment first.
1) Do you need to draw a salary to cover the cost of the time you’re investing in this work?
2) Do you need to cover significant costs to do the work?
3) Are you incurring liability by doing the work?
4) Are people contributing to your work in dollar amounts they may want to deduct on their taxes?
If your answers are “No” then you may not need to formalize your work. If you’re collecting toys for kids or handknit hats for the homeless, you can absolutely do that work without the stamp of approval of 501(c)(3) status. If your charitable work is a side gig and you don’t plan to do it full time, resist the pressure of folks who say “Gosh, you should raise money and do 10x more!” If your friends and family are giving small amounts of money to fuel your community service, they may be happy to continue to do so whether that contribution is tax deductible or not.
Maybe you’re the first member of a new civic club or giving circle! If you’re internet-savvy, share what you know via your favorite social media platform and inspire others to join you.
Create a mutual aid project
Mutual aid projects are formed to make it easy for people to help each other. Philosophically, mutual aid groups are typically opposed to stereotypical “charity” dynamics, and to the structure governing nonprofit decision making. If you’re trying to help people in your community swiftly this may be an effective way to do so. Mutual aid funds have been very effective in disaster relief, as well as providing childcare, healthcare, and bail. Big Door Brigade is a good starting place to learn more about mutual aid.
Expand the capacity of an existing nonprofit.
Another assumption people make is that because the work you’re doing falls into the category of nonprofit work, you’ve got to start a nonprofit to do it. Explore your neighborhood and find out who’s already doing similar work. For example, if you’ve got a group of college student volunteers who want to help kids with homework, reach out to after school programs to find out whether you can help them implement a reading tutor program. If you’ve got a group of friends who want to host a fundraising event for a cause you all care about, you can direct those funds towards an established agency in your community. (Connect with your local community foundation if you’d like help managing those funds!) Donating to an existing nonprofit or helping them to create and staff a program builds capacity in your community while minimizing administrative costs and time. You’ll benefit from their existing relationships and staff support, and their work will benefit from your infusion of energy and resources!
Find a fiscal sponsor.
The administrative cost of operating a nonprofit can be overwhelming. When you’re starting out, the cost of IT, finance, and human resources can be disproportionate. Fiscal sponsorship relationships, between a large nonprofit and a fledgling program, usually involve the established organization providing these backbone services in exchange for a percentage of the revenue of the smaller organization. Fiscal sponsors can also provide help with strategic planning, network expansion, office space, and an array of other resources. Fiscal sponsorship provides new programs with some breathing room that may become a permanent arrangement or a stage in your organization’s development. If you have a strong network in your local nonprofit community you may find an organization willing to sponsor your organization; if not the Fiscal Sponsorship Directory is a good place to start.
Create a social enterprise.
A social enterprise incorporates the mission of nonprofit with the revenue-generating approach of a business. The division between “good” work and profitable work is artificial. Entrepreneurs can incorporate social or environmental measurements of success as well as financial ones. Successful social enterprises include Tom’s Shoes and Warby Parker. Successful social enterprises can shift people’s perspective about an industry in favor of a more environmentally or socially conscious approach. If your world-changing idea fits into this model, you’ll find resources at small business development centers, incubators, and accelerators.
If none of these alternatives to starting a nonprofit sound like the right solution, or if you’re already further down the path and know you need to formalize a board of directors and tax exempt status, you’ll find a wealth of resources on how to start a nonprofit online and in your local community. The legal process of incorporating as a 501(c)(3) is just the beginning... We’ll discuss the back office resources you’ll need as a new nonprofit in a future post.