The Things You Gotta' Do to Start a Nonprofit Organization
The Checklist Project of The Nonprofit Coordinating Committee of New York (NPCC)
Many people who think about starting a nonprofit are unaware that they will be starting a small business with all the needs that a successful business entails.
While the primary purpose to be accomplished by a nonprofit is its mission -- whether it is feeding the disabled or putting on theater performances -- anyone who forms a nonprofit will soon realize that they are also running a business and in order to achieve their mission they must run their business well.
These needs range from the concrete -- setting up financial systems, payroll and opening a bank account; hiring staff and preparing a personnel manual; buying the right kinds of insurance -- to the conceptual -- organizational structure, mission statements, long-range planning, evaluation, etc. (some of which you will find addressed in the
Information Databank section).
For years NPCC has been getting calls from people planning to start nonprofits asking what needs to be done. Often there is much that they do not know about or have even considered. Some believe that most of what is entailed is legal -- forming a corporation, obtaining a tax exemption and the like. There is, however, much more than just the legal aspects, and in fact a good deal of the legal requirements are fairly simple when compared some of the other things that need to be done.
In an effort to provide answers to those seeking help, NPCC has created this web page. While this information was designed primarily for those wishing to start a new organization, it may also be useful to existing groups who want to make sure that all the bases are being covered.
The Checklist provides a list of all the things that need to be done to set up the "office" part of a nonprofit. We have used a checklist form on the belief that a long discursive text explaining the technical matters that need to be addressed would not hold the interest of many. In addition, if there are only a few areas that one is seeking help on, finding the sought material in a long text can be difficult.
If funding can be secured, NPCC's plan is to add a second part to this web page which would provide a brief explanation of each item listed in the checklist, as well as reference to texts, forms, websites and other material that will be useful in implementing the particular items of the list.
This web page should also serve as a reality check. When it is realized that for even the smallest nonprofit there are a number of systems for recording information that need to be set up and reports that have to be filed with the government; that there are myriad aspects to payroll (taxes, withholding, forms reports, etc.); that health insurance and workers compensation will have to be secured for the staff; that the details of the Family Medical Leave Act and the Consolidated Omnibus Budget Reconciliation Act (COBRA) need to be mastered; and much more, second thoughts about the desirability of going forward may emerge.
For those who individuals who don't like to read or are in a rush to see what must be done, we suggest that you skip to the beginning of the check list. You may want to come back to the following paragraphs later.
To complete this introduction, we offer a very brief overview of some of the essentials in starting a nonprofit office. Obviously a bank account needs to be established and choosing the right kind of account requires some research. Financial systems needs to be instituted with someone designated to serve the function of the organization's financial officer. Setting up a financial system includes establishing a chart of accounts, a general ledger and a bookkeeping system to account for cash receipts and disbursements.
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The three succeeding paragraphs are merely illustrative and are meant to give the reader some flavor of what is involved. While it is our belief that the checklist is fairly complete, it is possible that there are some issues that were forgotten. We would appreciate being informed about these omissions. Drop us a line at the address above or send us an email.
A final note on
The Checklist. While the following items do not have to be done successively (and you may in fact find that some of these items are already done) there are some things that are dependant on others being accomplished.
The Checklist
1-39
- Reserve a name with New York's Secretary of State, Division of Corporations. Go to www.dos.state.ny.us/corps/dom_nfpfile.html.
- Select individuals to serve on its board of directors.
- Designate officers to serve on the board.
- Develop a mission statement.
- Develop a nonprofit operating plan, which is like a business plan for nonprofit organizations, and includes a description of the organization’s location, staffing, activities, funding, fundraising plan and budget.
- Establish board committees (e.g., executive committee; finance committee; fundraising committee; volunteer committee; etc.).
- Create by-laws.
- ...
39.
Lease or buy office equipment: copy machine, fax machine, desks, chairs, file cabinets, conference room tables and chairs, coffee maker, etc.
Additional Resources:
Forming a Not-for-Profit Corporation in New York State:
www.dos.state.ny.us/corps/index.html
The IRS has information, guidance, and forms at
www.irs.gov/charities/charitable/article/0,,id=122670,00.html.
From Vision to Reality: A Guide to Launching a Successful Nonprofit Organization ($30) from Community Resource Exchange at www.crenyc.org.
