To be, or not to be a c3–Part I

10 Jun

Where do I even start? Without the eye rolling, that is. Okay, so let me just get it out there front and center that the answer is not always starting your very own nonprofit agency.

These are not decision making tools.

I know, I know–you’d do it better or different or there are people who aren’t being served well or at all or you have this great idea that NO ONE ever thought of or you just know that Bill Gates/Michael Dell/Red McCombs or some other Richey Rich would fund you in a heart beat. Or maybe you buy into the guy in the suit with all the question marks who pops up on late night TV and promises you there are millions in government money going unused and super easy to get with no reporting required.

Allow me to gently burst your bubble. Sadly, it is probably just your opinion/belief/hope that all of the above is true. Much as you want to, you cannot will these things into being.

Pair reality with the fact that there are about 3,000 charitable organizations registered with the IRS just in the Austin area. You gotta lotta comeptition when wooing Mr. Gates/Dell/McCombs.

However, if you are serious about looking into dipping your toe in the 501c3 pool, I suggest you start here, with some advice from the San Antonio Area Foundation. They can talk you down, er, help you decide what to do. But for now, let’s breeze through a quick checklist to help you get your thoughts order.

Who will govern your nonprofit? Your mom and your brother don’t count. You need a minimum number of board members to file for “c3” status. While your organization is in its infancy, you won’t have a large board and they will be do-ers as well as governors. But try to diversify your board so they aren’t all related, otherwise it looks like a vanity project. If your cause is really universal, you will be able to find other people who believe in it, too.

Are you sure you don’t just want to start a business? A nonprofit organization isn’t a way to start a business without paying taxes. There are no stockholders who receive a payout and, unlike a for-profit business, you can’t do whatever you like with it.  It’s a zen creation, both owned by no one and everyone, grasshoppah. You have to remain true to your mission and follow your bylaws and articles of incorporation or you risk losing your c3 status. Meaning all that tax-free revenue you generated? Taxable. So check your intentions. Starting a business isn’t a bad thing. Businesses do good things all the time.

Are you ready to relinquish control someday? If the answer is no, start a business. Because a nonprofit is owned by the public and hopefully you have created it in response to a real and ongoing need, your charity is meant to withstand the test of time. Meaning you can’t and shouldn’t run it forever. If you can never see delegating responsibilities to others or even stepping out someday, then maybe the c3 life is not for you. Your nonprofit should be your legacy, not your life.

More to come. The ugly stuff about budgeting and reality and stuff like that.

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