Tuesday, July 22, 2008

Reasons Not to Incorporate a Nonprofit Organization

There are a number of reasons to try to incorporate a nonprofit organization. Here are some suggestions for NOT incorporating.

  1. You do not have a group of people who share your mission, passion and sense of vision who will work with you to create this nonprofit tax exempt organization.
  2. You are not sure whether other people will work with you on the project.
  3. You left a similar organization and you want to compete with them and you know you can do better.
  4. You think it will be pretty simple to incorporate in the State and file with the Internal Revenue Service.
  5. You are not sure what kind of work goes into operating a nonprofit corporation after it is incorporated and recognized by the State as a nonprofit organization and by the IRS as a tax exempt organization.
  6. You own some property that would be perfect for (your choice: an office, a pet sanctuary, avoiding property taxes).
  7. You know there is a need for this service but you have not documented the need and do not know how to go about assessing and meeting the need.
  8. You have never volunteered or worked in a nonprofit group but that should not be too hard.
  9. You are not aware of other groups in your community already doing what you are thinking about doing.
  10. You believe the first thing you should do is create a web site about your ideas and your organization to start raising money (the "if you build it, they will come" syndrome).
  11. You believe it is easy to operate, sustain and maintain a nonprofit organization
  12. You believe it will be easy to raise the money to accomplish your goals and objectives.
  13. You like to be independent.
  14. You have a great idea, this is a great opportunity and you are concerned that other people who become involved will change the programs and activities you want.
  15. You and your family want to control the organization so that it will be run right.
  16. You want to be the chief executive officer with a salary and sit on the board as chairperson.
  17. You are aggressively going to seek grants because it must be easy.

Please rethink why you want to start a nonprofit. If one or more of these are in your mind, back up and think again. I will try to help you think it through as we go along in this blog. There are many great reasons and motivations for starting a nonprofit organization but these are not among them. We'll see some more questions about starting a nonprofit group as we go along that may help you in your thinking.


denisemm said...

Incorporating might not be for you, but your project or collaboration may be the perfect solution to a community challenge or a way to ensure that a community need is met. Instead of getting your 501(c)3 with all of the regulatory red tape involved, you can choose to become affiliated with an existing nonprofit through fiscal sponsorship.

You can learn more about fiscal sponsorship on the Idealist website or from the Foundation Center. You can also go Third Sector New England or the Tides Foundation, among other resources.

Don Griesmann said...

For more on fiscal sponsorship please see -

Fiscal Sponsorship or Agent: A Yellow Light



Fiscal Sponsorship said...

For more on fiscal sponsorship please see -

Fiscal Sponsorship or Agent: A Yellow Light

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