Perhaps you see a need in your community for which you have a special talent, or maybe you’ve found a calling you simply can’t ignore. But it is very important to know, as you consider starting a new charity, social or service organization, that you are creating a business.
Most of the ones you know pay for their facilities, utilities, advertising, communications and staff. Even with an all-volunteer effort, nonprofits may incur event insurance and travel expenses, etc.
As you draft your mission statement and craft your pitch to potential funders, be prepared to back up your ideas with solid business plan.
A nonprofit is a formal organization that is incorporated in the state where it will provide services. Nonprofit organizations must follow both state and federal laws. Nonprofits contribute to the community and rely on volunteers (Board of Directors) to govern the organization’s affairs. The nonprofit does not give out “profits” to businesses or other persons, rather the money is invested back into the mission of its services.
Misconception: “There is a lot of money out there for nonprofit organizations.”
Although there are many foundations, corporations and individuals that donate to nonprofit organizations, the funding for nonprofits is shrinking and the number of organizations competing for funding is increasing. Additionally, funders are looking to fund organizations with experience and proven results. Here are a few steps you will need to take in the process of visioning and creating a nonprofit organization in Louisiana:
STEP 1: Plan. Plan. Plan.
- First, do you really need to start your own nonprofit? If you want to raise money for a cause close to your heart, consider the benefits of establishing a donor-advised fund with your local Community Foundation. This relieves you of considerable paperwork and responsibility while freeing you up to promote and raise funds for your special cause….
- Have a clear and well developed mission statement. Be sure that your vision and mission statement are identified.
- Have a clear description of all the activities of the organization (goals and objectives)
- Have a clear idea of your financial sources. Remember: a well run organization does not rely solely on government or foundation grants; a significant portion of funding should come from individuals, corporate partners and programs or products providing self-generated revenue
- Identify who is doing similar work in your community (You will have to distinguish your organization in the eyes of funders as well as collaborating partners)
STEP 2: Recruit and develop a Board of Directors
- Recruit individuals who believe in your mission
- Recruit individuals who have expertise (i.e. lawyer, CPA, etc…)
- Include individuals from the target client population
- Engage in strategic planning that includes a fund development component
STEP 3. Reserve a corporate name in Louisiana with the Secretary of State
Search existing Louisiana nonprofit names: http://www.sos.louisiana.gov/tabid/819/Default.aspx
STEP 4. Develop and File the Articles of Incorporation with the Secretary of State's Office
Pay your filing fee (fee is listed on the Secretary’s website) required for nonprofit articles of incorporation
Click online filing link at: http://www.sos.louisiana.gov/
STEP 5. Complete IRS form SS-4 for the employer identification number
File online at http://www.irs.gov/
STEP 6. Draft Organization's Bylaws for the Board of Director's adoption
STEP 7. Complete IRS package 1023 and 8718
- $400– if your organization’s gross receipts are less than $10,000 annually over a four year period
- $850– if your organization gross receipts are more than $10,000 annually over a four year period
- IRS Telephone Assistance for Exempt Organizations: Toll-Free, 1-877-829-5500
Hours of Operation: Monday – Friday, 8:00 a.m. to 5:00 p.m. Local Time.
Conditions required for expediting applications
STEP 8. Develop Policies and Procedures Manual for:
STEP 9. Determine Insurance Needs
- Group Health
- Directors and Officers (for the Board of Directors and Staff Leadership)
STEP 10. Open a Bank Account
STEP 11. Establish an Accounting System.
STEP 12. Establish an operational calendar
- Board Meetings (should be at least 4x/year)
- Important dates