Thursday, December 31, 2009

2010 New Year’s Resolution – No New Nonprofits Unless…

This article outlines my reasons for suggesting that the United States does not need any new tax exempt nonprofits organized or recognized in 2010 unless…. In a way this is a challenge to consultants, dreamers, unincorporated groups, legal clinics and others NOT to assist anyone in creating a nonprofit tax exempt organization unless… Do not reply to questions about incorporating on social media. This article will provide my ideas of “unless”, a list of facts that say no more NPOs and headlines from around the country showing how funding is just an empty bucket - unless..You will see the picture from the national, state and local perspectives.

In 2010 there should be no new nonprofit tax exempt organizations incorporated at the state level and recognized as tax exempt by the Internal Revenue Service…

  • Unless you understand the nonprofit will not be “your nonprofit” and you have enlisted an incorporating board that is interested in the concept and capable of performing the necessary tasks of incorporating and operating the organization and
  • Unless you understand there is no “free money” from the federal or state governments. The federal government distributes funds through scholarships, fellowships, contracts, grants and loans. Each requires an application, meeting eligibility requirements, demonstration of a task to be undertaken, proof that the task was performed and the money used appropriately and in many instances a report evaluating the use of their funds and
  • Unless you understand that foundations and corporations set the standards for how and what they fund and your organization has to meet those standards to be considered. It is not unusual for a foundation to fund less than 5% of the applicants in a given year. That was before the current fiscal crisis across the world and
  • Unless you understand that any funding your NPO will receive will probably be from individuals and possibly local service groups such as the Junior League or Rotary Club, local churches or other houses of worship and local businesses. The NPO may be eligible for a contract from local, county, parish or state agency to provide certain services and
  • Unless you realize that creating a web site with a button for people to contribute money really does not work if no one knows the organization. Many people put up a web site and a button for funding before they finished with the process for tax exemption. Take that web site down. Seeking funding over the Internet can be illegal in many states unless the organization is registered to solicit funds in that state. For a list of states that require registration see the Unified Registration Statement created by the National Association of State Charities Officials and the National Association of Attorneys General This is a complex matter and you may want to talk to an attorney about how to solicit funds on a web site without violating other state laws and
  • Unless you have a concept of what it costs to develop and operate a nonprofit in terms of shared leadership, time, thought, study, serious planning, hard work, evaluation and annual reporting as well as money and
  • Unless you have no intention of attempting to raise more than $5,000 a year for the next 5 years and
  • Unless you have enlisted or been encouraged by an “angel”, funder or investor to create the NPO for a specific mission and
  • Unless you are forming a NPO because of a tragedy, disaster or calamity in conjunction with other organizations as the best vehicle to handle services and to raise funds and
  • Unless you have performed due diligence and created a board of mixed talents, diversity, shared passion and vision concerning a truly unserved issue or need supported by some empirical evidence. If the need is an underserved need, why not join with the current providers and increase the service or product? And
  • Unless you understand that there simply are not grants available to pay for the incorporation process. If you and others cannot raise the first $1,000 or so to incorporate, then where do you think you will get the money to run the organization? When someone asks, as many do, does anyone know where I can get a grant to start my nonprofit, we should either not respond or tell the truth – you are not ready to start a nonprofit. Go volunteer at a local nonprofit and
  • Unless you understand that any funding you may want to seek will be from the local or regional area being served by the organization and
  • Unless you understand that fundraising is about relationship-building with individuals and groups to want to provide the organization with resources, money, volunteers or equipment. Fundraising is friendraising and friend-maintaining and
  • Unless you have developed a business plan that
  1. explains clear identification of the organization on credibility, history
  2. explains your vision, your mission, the goals and objectives, the kind of services that will be provided and the activities, functions and results in detail. How are your goals and objectives measurable? Assesses the problem being addressed, experience, goals and objectives, purpose and methods.
  3. gives description of the service you will provide, how you will provide it and the community or the market your organization will be in
  4. demonstrates your character. Character is the general impression you make to a prospective supporter, contributor or funder. Describe the character of your organization and its leadership. Supporters and funders will form a subjective opinion as to whether or not you are sufficiently trustworthy actually to be able to perform the service and to handle the funds.
  5. provides the educational background and experience of the board and staff for review
  6. shows the quality of the references and the background and experience of your leadership and employees because they will also be taken into consideration
  7. illustrates the research you performed and the conditions and trends in the needs you want to meet
  8. explains the need for your service and the demand for it; how is it unique?
  9. explains any barriers that you will have to face at the beginning, how you will maintain and sustain your activities as a nonprofit organization and how you plan to overcome those barriers
  10. demonstrates that you may have discovered a gap in services; describe that gap, why you believe it exists and how you will close that gap.
  11. assesses how anyone will know you are meeting your stated goals and objectives and meeting them timely?
  12. answers the question, "So what?" So what if you will perform these activities? So what if you outline an extremely busy and detailed activity list? What will be different because you perform these activities in the way you perform them? What difference will it make? How will people or the problem improve or be alleviated or resolved? What have you changed or accomplished? What impact will be made and measured? Many are not able to articulate and prove they accomplished or changed anything. So…what will you change, how will you change it and how will you know your activities produced the change? Explain how you will create and how you will deliver your service and meet the identified priorities and need(s).
  13. specifies how you will get your service out the door to customers/clients or supporters and meet the needs you see. Describe how you intend to provide your service and who will use it. How will people know about the service?
  14. describes your distribution plan and advertisement plan. Describe how you are going to market the mission, the vision, the activities, the results. Describe how you will reach potential customers and clients, how they will learn about the organization. Give the details of your marketing plan.
  15. demonstrates that it takes a TEAM to raise a nonprofit organization – to raise it, to maintain and to sustain it. That team begins with the governing body. Describe the governing body of the organization, the board and indicate whether you will have members. Explain who will direct the day by day operation of the nonprofit.
  16. shows you are going to raise money, seek grants, hold fund raisers, collect dues, sell products, explain how you intend to raise the money, why you need the funds, how you will use the money, and how you will maintain fiscal records. Include budget totals - total project cost, funds already obtained
  17. shows how you will account for the money and what records you will keep. Describe your plan to secure funding and other resources and give a contingency plan in case your initial plan fails.
  18. includes projections and budgets for the expected performance of your nonprofit for the upcoming three to four years.
  19. demonstrates your understanding of basic accounting and the financial concepts for nonprofits that are crucial to the success of your organization


According to the Independent Sector Fact Sheet -

There are over 1.9 million nonprofit organizations in the United States. The Internal Revenue Code defines over 27 categories of organizations exempt from federal income taxes, including private country clubs, labor unions, business associations, fraternal organizations, and many others.

The majority of these organizations – about 1.5 million of them – make up the “independent sector.” The independent sector includes 501(c)(3)s (public charities, private foundations, and religious congregations) and 501(c)(4)s (social welfare/advocacy organizations). Together these organizations are sometimes referred to as the independent sector to emphasize their unique role in society, distinct from government and business.

There are approximately 1.4 million 501(c)(3) organizations, including hospitals, museums, private schools, religious congregations, orchestras, public television and radio stations, soup kitchens, and foundations

The total number of independent sector groups has approximately doubled in the last 15 years.

Most nonprofits are small. More than 73 percent of reporting public charities reported annual expenses of less than $500,000 in 2005. Less than 4 percent of reporting public charities had expenses greater than $10 million.

That's too many nonprofit tax exempt organizations

According to studies by the Foundation Center in 2007 there were 74,470 private foundations and corporate foundations and 717 community foundations to which over 1 million nonprofits could apply for funding

Of the 845,786 active nonprofit charitable organizations recognized by the Internal Revenue Service (IRS) under Code section 501(c)(3), 301,214 filed Form 990 or 990-EZ returns for accounting periods that began in Calendar Year 2006. Those not required to file included churches and certain other religious organizations, as well as organizations with annual gross receipts totaling less than $25,000.

A new study by a Stanford group shows that over 50,000 new nonprofits are recognized by the IRS as tax exempt organizations EACH YEAR over 80,000 new groups filed in the year after September 11, 2001

The IRS approves tax exemption for new groups every 10-15 minutes

Even with government funding there is not enough money to go around for those nonprofit tax exempt organizations already existing to make a lasting impact.


A major problem in the burst of new nonprofits can be laid at the feet of the states and the IRS. They are the gatekeepers for the third sector. In my opinion they have lapsed in their duties to assist and protect the public in approving nonprofit status and tax exemption for just about anything. In the past several years the IRS has tightened its reporting process for current groups and totally ignored its approval process. Here are some suggestions -

  • States and IRS should tighten conflict of interest that no employee may sit on the board, no more than two related people may serve on a board at any time unless the board is three members and then no relatives can serve.
  • There should be a time limit for people to serve on the board of a nonprofit with a maximum of five or less consecutive years and no officer will serve more than two consecutive years.
  • States should ask about the plans of the organization to use the internet, social media and other forms of communication to raise funds.
  • States should ask for more information for incorporating similar to questions asked by the IRS on Form 1023 about fundraising, activities and a 3-year projected budget .
  • The minutes of all boards should be a public document and signed copies filed with the state annually. The IRS should tighten its appraisal of the relationship of the budgets to sources of revenue and activities that are projected – are they reasonable given the mission of the organization?

Please add any changes you would like to see below.


The decisions made now by foundations will impact their ability to maintain their own administrative needs and make grants in 2011. Some foundations are more concerned about their ability to maintain a level of funding for their current grantees in 2011 than they are about 2010. Most if not all foundation boards create budget plans and projections for 3-5 years in advance. While foundations are required to expend 5% of their funds each year, they can and may provide 7% in 2010. They can then reduce the percentage to 3% for 2011.

If you think you will have your nonprofit funded by a grant read on -

  • Foundations are well connected to and experienced with those NPOs they are funding currently.
  • Many foundations have increased the percentage of funding they provide in a year to work with current grantees to maintain a level of service but not new applicants
  • Many foundations have stopped their application process to focus on current grantees only
  • Many foundations have made adjustments to their priorities making basic needs their priorities: food, shelter, jobs.
  • A few foundations have been collaborating and jointly funding certain nonprofits that have been vetted and are well known to them to maintain the level of service.
  • Foundations generally look for nonprofits that have a 3-5 year history of accountability and experience to even consider an application.
  • A few foundations are interested in only start-up grassroots organizations, usually with emphasis on poverty, women, advocacy, race or other similar interests.
  • Some foundations, local and state funding sources are suggesting or requiring that groups merge when they review new applications for grants
  • A number of foundations have ceased accepting any new applications until further notice
  • Many foundations that have staff have reduced the number of employees
  • The funding from the Recovery Act (ARRA) is going only to nonprofits with which the federal, state or local governments have funded in the past
  • The federal Pipeline Safety Technical Assistance Grants currently available is very unique - A nongovernmental group of individuals is eligible for a grant under the TAG program if its members are affected or potentially affected by pipeline safety issues. A nongovernmental group of individuals is eligible for a grant under this grant program if the group’s members are affected or potentially affected individuals who are or are willing to become incorporated as a non-profit organization where they are located. The new deadline is January 18, 2010.

Key survey findings from the Washington Regional Association of Grantmakers for 2010

  • The recession has served as a crucible for many grantmakers, providing an impetus to reduce expenses, reevaluate priorities, and promote and engage in collaboration.
  • A lower percentage of grantmakers reported a decrease in assets in 2009 (65%) than in 2008 (86%). Some saw a decline in 2009 as a result of increasing their payout rates.
  • Grantmakers expect to give fewer grants in 2010 than in 2009.
  • More respondents expect their grants budgets to decrease than increase in 2010. Nearly half expect a decline; roughly one in six expect a decline of 5% or less. Nearly one-third expect grants budgets to increase. Approximately one-quarter are not sure.


National and local headlines and articles about the drop in support for current nonprofits

Little cheer this season for charity fundraising - Ho, ho, no: Nearly two-thirds of charities polled say this November and December have been as bad as—or worse than—last holiday season. By Miriam Kreinin Souccar December 22, 2009 8:52 AM Crain's New York Business

With less than two weeks left in the critical fundraising season, charities are struggling to bring in donations.

Nearly two-thirds of charities polled by the Chronicle of Philanthropy last week said this November and December have been as bad or worse for fundraising as last holiday season, with 32% reporting declines of 10% or more. Most nonprofits bring in more than half their annual donations during the last three months of the calendar year.

Foundation Giving Faces Steeper Decline Than Expected By Ian Wilhelm Chronicle of Philanthropy November 4, 2009

A new report suggests that grant makers will cut back their giving this year more than previously expected.

Housing nonprofit shutting down after 35 years Agency transfers properties, so residents won't be affected. By John Keahey, Salt Lake Tribune Updated: 12/23/2009 06:01:06 PM MST

Rising costs and declining contributions are forcing a nonprofit that develops affordable housing to turn its properties over to larger agencies and shut down its operations.

ECONOMIC SCENE: No quick recovery for charitable giving = The Great Recession has hurt charitable giving — and may keep on doing so for some time By David R. Francis / November 30, 2009 Christian Science Monitor

…giving to foundations is likely to decline more than 10 percent, the Foundation Center in New York noted earlier this month. Many of the nearly 600 foundations surveyed have cut staffs to weather the recession.

One of the few exceptions was religion. Some 37 percent of 1,540 congregations reported an increase in donations in the first half of 2009 compared with the same period in 2008. Another 34 percent reported fundraising to be flat, according to a survey by the Lake Institute on Faith & Giving at Indiana University, Indianapolis.

“Religious giving appears to be recession-proof,” says Timothy Seiler, director of a school for fund-raising at Indiana University.

If history is any guide, easy times for charities won’t return soon. Looking at individual giving after the Depression and the deep 1973-75 recession, a study by GivingUSA concluded that inflation-adjusted giving by households and individuals won’t reach their 2007 level until at least 2012, if the recession ended in June.

Plight of the nonprofit: (Delaware) State's groups struggle By MIKE CHALMERS • The Delawareonline News Journal • December 8, 2009

Delaware's nonprofit groups lack the organization, financial stability and sufficient support from foundations, corporations and individuals to handle the state's growing needs, a new report finds.

The need for greater cooperation and leadership is clear, the report's backers said Monday.

"No one sector can address these challenges alone," said Mary Kress Littlepage, a Florida consultant who wrote the report for a group of Delaware nonprofit and corporate leaders.

The Delaware report, titled "Philanthropy in the First State," found:

  1. More than 35 percent of Delaware's roughly 1,000 active nonprofits operated at a loss each year from 2002 through 2007.
  2. Of the 390 philanthropic foundations in Delaware, only 23 made significant donations to nonprofit groups here.
  3. Donations from corporate foundations in Delaware make up just 2 percent of giving by all major foundations, compared to almost 10 percent nationwide.

Tweeting for $10: new appeals for holiday giving in tough times Posted by Kristi Heim November 20 2009 Seattle Times

With the lingering recession expected to cut into holiday giving, charities are soliciting smaller donations and increasingly using free social media to publicize their efforts, The Seattle Times reports.

American charities may not have a happy holiday - American charities have weathered a significant drop in giving this year, and while they're hoping for a holiday miracle, a recent survey shows they will probably see a decrease in year-end generosity. By DONNA GORDON BLANKINSHIP Associated Press Writer Page modified November 16, 2009 Seattle Times

A Survey Shows Pain of Recession for Artists

Newseum trims its staff once again 29 employees have lost their jobs; meanwhile, Smithsonian's buyout offer gets 158 takers By Jacqueline Trescott Washington Post Staff Writer Wednesday, December 2, 2009

Haven for Disabled Workers Feels Job Market's Sting NOVEMBER 28, 2009 Wall Street Journal

Lott Industries is a nonprofit organization in Toledo OH that trains adults with developmental disabilities to do light assembly work and other tasks. In 1993, Lott became the only program of its kind to earn the auto industry's prestigious Quality One supplier award.

Now, Lott and its 1,200 workers are in danger of becoming another casualty of recession. Seven major contracts vanished in late 2007, representing 80% of its business, when Ford Motor Co. closed a nearby stamping plant. Next, in 2008, went the General Motors contract for truck transmission parts. Earlier this year, business with a Honda parts supplier dropped off. Cleaning and other nonautomotive work also dried up as companies brought those functions back in-house to keep their own employees busy.

As Foundations Close, Anxiety for Charities By DAVID CAY JOHNSTON Published: November 11, 2009 New York Times

See and

Hard times hit Wilder Foundation; jobs, services being cut - The Wilder Foundation plans to cut 260 jobs and end programs affecting about 5,000 individuals and families. By JEAN HOPFENSPERGER, Star Tribune Last update: October 14, 2009 - 10:57 PM

Declining donations drive MADD to trim staff - Citing a nearly 20 percent drop in donations, Mothers Against Drunk Driving is cutting staff at its national office and in 11 states, including West Virginia. By P.J. DICKESCHEID Associated Press Writer, The Seattle Times

Third of Region’s Nonprofits May Close - Economy, rise in demand create perfect storm for nonprofits By Diane Weaver Dunne Hartford (CN) Business Journal October 19, 2009

The recession has hit the region’s nonprofits hard, with nearly a third concerned that they may shutter their operations in the coming year, according to the annual survey conducted by the United Way of Central and Northeastern Connecticut of the nonprofits in its 40-town service area.

Susan Dunn, executive director of the local United Way chapter, said it was “alarming” that one in three nonprofit executives said that they were either “concerned” or “very concerned” that they might close in the coming year.

In last year’s survey, the vast majority of respondents — two out of three — were concerned that funding would dry up in the coming year. They weren’t entirely wrong. The recession has dealt them a double whammy: corporate, public sector and individual funding is down, resulting in a reduction in staffing, while the demand for services has increased 72 percent.

Decreased or flat government, corporate and individual funding was felt by most of the region’s nonprofits. Government funding from local, state and federal budgets also fell, with two out of three saying they will be affected by changes in public sector budgets. Even when government funding remains flat, it translates into a loss for nonprofits because their costs continue to go up

Charitable giving is also down. Individual and corporate funding fell by 20 percent and 10 percent, respectively over the previous year. As a result, nearly a third have tapped into their reserve funds, double the number in 2008. Notably, 25 percent do not have any reserves and 6.4 percent have depleted their reserve funds, consistent with the survey’s findings that nearly a third of the region’s nonprofits may close. Most of the nonprofits are holding their own by finding ways to economize their operations, reduce staffing, cut programs that have lost funding, and by increasing collaboration with other nonprofits.

And few expect the federal government’s stimulus program to help alleviate their financial strain.

The 2010 Crisis in Philanthropy | By Sean Stannard-Stockton

Nonprofit Groups Face Trouble Coping With Pension Obligations Chronicle of Philanthropy October 02, 2009

Decline in United Way Giving October 01, 2009

Legal-Aid Study Finds Continuing 'Justice Gap' for Poor October 01, 2009

Claremont Museum of Art is on verge of closing doors October 5, 2009 doors.html

Grantmaker policies threaten nonprofits September 29, 2009

Recession delivers a double blow to many charities By David Crary (AP) – Sep 29, 2009

Red Cross to Auction Off Little Pieces of Its History By STEPHANIE STROM Published: October 2, 2009 NY Times

Stanford Puts $1 Billion in Assets on Block University Aims to Unload Partial Interest in Illiquid Investments; Private Equity Is Watching OCTOBER 3, 2009 BY CRAIG KARMIN AND PETER LATTMAN Wall Street Journal

Salary cuts for one third of US museum directors Survey shows widespread pay reductions, hiring freezes and layoffs By Jason Edward Kaufman | From issue 206, October 2009
Published online 5 Oct 09 The Art Newspaper

It’s Official: Three Unions Merge to Form Nurses ‘Super Union’ December 9th, 2009 | Lindsay Beyerstein Today’s Workplace a workfairness Blog

Nurses have been called the new face of organized labor. Like an increasing percentage of the rest of America’s labor movement, the typical RN in the U.S. is female, college-educated, and working a non-outsourceable job in the service sector.

This week, American nurses banded together to wield unprecedented power in the workplace and in national politics. Delegates in Phoenix yesterday approved a three-union merger to create National Nurses United (NNU), the nation’s largest union of registered nurses.

Eight months in the making, the merger joins the California Nurses Association, the United American Nurses, and the Massachusetts Nurses Union to create a new super union with a combined strength of 150,000 members.

Two nonprofits that support Yosemite to merge Carl Nolte, Chronicle Staff Writer Monday, December 21, 2009

The Yosemite Association and the Yosemite Fund, two nonprofit organizations that provide private financial support and interpretative programs in Yosemite National Park, have decided to merge.

Nonprofits: Misery loves company - The struggling nonprofit world may be on the cusp of a merger boom. By Lawrence Delevingne, Reporter Last Updated: February 20, 2009

There are my reasons for my 2010 New Year’s Resolution – No New Nonprofits Unless


Anything Goes: Approval of Nonprofit Status by the IRS, Center on Philanthropy and Civil Society, Stanford October 2010

Reasons Not to Incorporate a Nonprofit Organization

The Nonprofit Business Plan - Program Precedes Money. Planning Precedes Program

In Praise of Small and Mid-size Nonprofits - On the Side Streets of America

One Phase of Nonprofit Organizational Readiness for Grant Funding: Recordkeeping

Agenda and Minutes of First Board Meetings

Minutes: The Ongoing Record of Your Nonprofit Organization

Your Nonprofit Library Third Shelf – See What the IRS Demands of Your Tax Exempt Organization After it is Recognized as Tax Exempt

According To My Crystal Ball, Your Nonprofit Organization May Be Toast In 2009

The Stories of Nonprofits Dying


Public Domain: King/Chavez Legacy Teams said...

Don that transfer of knowledge is
so clear that the words thank you
may not so express my thanks.
I will so share within my own network and so save for our first
youth to start their own applied research.
May you so continue to put it out is valued.
Would be interested in your take on
the use of the HCZ for rural america as 1700 so attended the Policy Link event as a show and tell. Many from my small county,
and came away wanted to bring to this rural area.

Dan Hutson said...

Wow. Too much food for thought here to digest. But I wholeheartedly agree that anyone contemplating the launch of a new nonprofit consider their purpose, commitment and just plain necessity before doing it.

My "unless" would be "Unless no one else is pursuing the mission you're contemplating with as much energy, commitment and potential success as you're going to bring to the table."

Don Griesmann said...

Hi, Richard. I appreciate your response to this article. The Harlem Children's Zone has received much publicity since President Obama talked about it when he was a Senator on July 10, 2007.

It is one of many models and programs worthy of study, possible replication and and to be adapted to local needs if there is the leadership and will to do so.


Don Griesmann said...

Hi, Dan. It was good of you to offer your comment. Your "unless" adds another idea to the list.


Sam Drucker said...


I am 17 years old, a junior in high school, and live in South Florida. Two and a half years ago I sustained a hip injury that made it uncertain whether or not I would be able to walk again, that required a four hour surgery, a week in the hospital, and six months of not walking. Although I have since, luckily, been up and running, I have always had the passion of wanting to give back to those suffering through the same dark time I did. I have been volunteering in a hospital for over a year and a half, and a couple of months ago, I came up with an idea to start a program with my close friend who had a similar injury to assemble care packages with things like DVDs, candy bars, you know, cheer up stuff, for kids on pediatric floors of hospitals, and visit them. I am doing it through my school as a club and have already gained support through three prominent local doctors.

Now what I need though, is a stable fianancial plan.

I did some research and found out that the donations I would be looking for such as gift cards to stores like target and Publix(the local grocery) are given to official registered non profits, which I understand would take some time but the club is willing to put that time in. I obviously am not looking for a tax exemption,being a minor, or even a quick ride to college. This is something I feel very passionate about and the only advice my doctor, who I asked first about this, gave me was to think big.

That blog was intended to be a red light to people who are costing the federal government and the general public a lot of time and money, and I myself didnt meet two or so of the "UNLESS"'s of yours.

In conclusion, we have this plan all fired up, ready to launch. This club is not a stupid one. I am in the top 7% of my HS class, my friend is in the top 2%, and the rest of the potential committed members are not far behind. All I want to know Don, is in your opinion, what should I do now?

Anonymous said...


You are my hero! I have been saying this for years! I, for one, am glad that our current economics has brought this to light for so many.

When we have excess money, we go into a sort of coma and never check to see what is really happening with the donations we give.

Accountabilty goes right out the window. We assume the saintly NPO's are doing good things with our money.....but are they?

When a new client comes to me asking for help to start a new NPO, I tell them to go volunteer full time somewhere and if they are still in love with the idea, come back to me, I'll consider helping them, but not before! I usually never hear from them again! What does that tell you....?

Keep up the good work, Don!

All the best,

Cindy Harris
Los Angeles, CA

Don Griesmann said...

Hi, Cindy. I appreciate your thoughts and addition to the discussion. Our experiences match. Don

Don Griesmann said...

Hi, Sam,

I am impressed by your post and I am impressed by you. You came out of your own pain to try to reduce pain elsewhere. The club sounds exciting and you have recruited and included others - very important steps.

Think big - I say, Amen.

Here are some thoughts:

You have a mission with providing cheer-up items to children in the hospital. Can this grow to other hospitals in your county, your part of the state, the whole state? Is someone already doing it elsewhere? Can you join hands to do it together?

That takes some intensive research and planning. You may need more people involved to help in thinking and making decisions, having people take on assignments and meet the goals set for planning. Could you have a long term plan (5 years) to expand beyond children in hospitals to veterans homes and other people in nursing homes? But let's stay with children here.

Is incorporating this mission the way to go? If this were incorporated as a nonprofit tax exempt organization (NPO) it could receive funding and donations for which donors can take tax deductions. In most states a NPO can buy items without paying sales taxes. I am not sure FL has a sales tax.

I guess that FL has an age requirement of 18 to incorporate. You would need to pull together a board of trustees/directors including youth at 18+ and other adults, perhaps one of the doctors to be the incorporating people. They could be the same people you recruit for the planning.

Is this mission one that could continue if you are not involved as much or at all? It takes building a group who share your sense of mission, vision, passion and dedication. And they all bring different talents and are looking long term.

There are articles here that may help. See the list on the right, Nonprofit Business Plan and Nonprofit Incorporating, where you will find the links to other articles here and other resources.

Your family and school should be very proud of you.

I'll be cheering you on however you go.


Public Domain: King/Chavez Legacy Teams said...

Don for me your 2010 is the best so
transfer of knowledge I have ever come across. But to this young man & other such youth please explore
that new iniviative.
Within the site is a Feb 22 deadline for but a seed of but 500
dollars to do that Good.
Have so shared your blog...thanks.

Don Griesmann said...

Thank you for mentioning Geturgoodon by Miley Cyrus (born Destiny Hope Cyrus on November 23, 1992) and her partnering with Youth Service America to create Geturgoodon, a grant making opportunity. I listed it last week in Don Griesmann's Grant Opportunities™

Here are the deadline and links to Geturgoodon

Grant applications are due February 22, 2010.

Kay Lorraine said...

My goodnes, Don. This is a bunch of good information. As it happens, I wrote a very similar blog post (although not nearly as lengthy or detailed) back on November 17th, called "Why We Don't Need Another Nonprofit." I invite you to read it and comment. I would also like to link this post to that one. Wonderful stuff here.

Kay Lorraine
Nonprofit Executive

Sandy Deja said...


I have "known" you for many years and have the deepest respect for the work you do.

Without commenting on your 2010 New Year's Resolution, I want to caution you and anyone else tempted to rely on the statistics in the Anything Goes report from Stanford.

I wouldn't want to speculate about the motivations of these Stanford researchers, but as just one example, their 99% approval rate is way off base.

To reach it's startling 99% approval rate, the Stanford researchers ask us to ignore 23,046 "Other" applications. What they don't mention is that these others received the same level of review as approvals and denials. These applicants were different only in failing to respond when asked for additional information or when told they might not qualify.

In essence, these are applicants who quit. Excluding them when calculating the IRS approval rate is like excluding dropouts when calculating a high school's graduation rate.

I sent a letter to the authors of Anything Goes earlier this year pointing out some of the inaccuracies of their report. Anyone interested can view my letter at

Sandy Deja

Don Griesmann said...

Hi, Kay. I appreciate your comments. I have accepted your invitation to comment at your blog and please do link this to yours if you wish. Don

Don Griesmann said...

Thank you, Sandy, for your comments about the Stanford study. Your experiences and knowledge of the incorporation process and the details of IRS data is top grade. Very few would have seen the issues you have. I have appreciated your writings for a decade and your willingness to share. Don

Taylor Berg said...

Hi Don,

I read an article this morning written in the NY Times about the U.S. suspending its medical evacuations of critically injured Haitian earthquake victims until a dispute over who will pay for their care is settled.

Without getting too deep here my general opinion is, in response to this Times article, since time is critical provide the care for the injured now and worry about collecting the money later. I mean, this dispute over who is paying and stop of flights may actually cost the lives of the victims of this tragedy.

I was very motivated by this article and starting thinking about what kind of organization could provide monetary, or in other ways, aid in this case, and others, after collecting funds from the general public?

And after more thought, what kind of organization NOT seeking 501(c)(3) tax-exemption could collect funds from the general public then distribute those funds as aid, like paying a natural disaster victim's hospital bill?

The reason I ask about an organization NOT seeking tax-exemption is because, as written in and credited to the Anything Goes paper from Stanford, in 2008 Americans donated more than $300 billion to 501(c)(3) organizations, costing the United States Treasury an estimated $50 billion in foregone tax revenue.

Now I think $50 billion would more than cover the costs of disaster victims' medical care and treatment.

Is there such a thing as an organization that is not for profit and FOR tax collection that wants monetary gifts to NOT be tax deductible?

Basically a business that pays taxes like any other but the nature of which is to collect money and distribute it as aid to disaster victims.

Hopefully I have made some sense here and you understand my general viewpoint and the question I am asking.

Thank you sincerely,


Anonymous said...

You are very negative and have NOT discouraged me at all.

Don Griesmann said...

Hi, Taylor,

I appreciate your comments. As to your question -

Is there such a thing as an organization that is not for profit and FOR tax collection that wants monetary gifts to NOT be tax deductible?

Basically a business that pays taxes like any other but the nature of which is to collect money and distribute it as aid to disaster victims.

The tax deduction belongs to the donor, not the tax exempt organization. If the donor does not care about tax deductions, then I suppose they could give to a for-profit that is providing charitable assistance in Haiti. But what would be the experience of the for-profit to provide charitable assistance? Would you give to a pharmaceutical company rather than a charity that has 500 medical personnel in Haiti before the earthquake? I will chose the nonprofit.

I would like to hear more about why someone would provide charitable assistance to a for-profit company in a tragedy or for every-day service to low-income communities, for instance.


Don Griesmann said...

Dear, Anon.

I guess one person's meat is another person's poison. I do not think I was negative. I think I am blunt and in-your-face about starting new nonprofit tax exempt organizations. I hope it does discourage people from starting another NPO and instead putting in the time and effort to join others who share the same passion, vision, values and mission who are already doing "it". I hope it gives pause to folks who believe they are on to something to do their homework. The easiest part about the nonprofit world is incorporating and securing IRS recognition as a tax exempt organization. The hard part comes with getting it a meaningful start and the ability to maintain and sustain it in this climate.

Folks hold out promises they cannot keep.

Folks with creative ideas that need nurturing get lost in the "business" of starting a nonprofit rather than working with others to have the creative idea become real - not a frustrating failure.

Go for it. All I ask is that you read the article one more time first.


Allen B. said...

That was a lot of good information!

I have a question I probably skimmed over the answer to this in your post..

But what is the down fall of having to many nonprofits? Is it that theres not enough funding and you don't want people to waste there time? Or does it have something to do with the tax exempt status and the economy...

I'm messing why to many nonprofits are bad.. I'm asking because you make a lot of good points and I think I'm just missing something.

-Pardon the Errors

Anonymous said...

I have always wanted to start a local non profit to help locally...Not to help other countries the USA is in enough trouble. I want local people to help other local people. Help keep there heat turnedon or the bank from taking the house out from under them...A real nonprofit to help the real people...

Yvo said...

This is a fantastic blog, thank you for taking the time to post this.

I, myself, have been researching what nonprofit organizations do/how they work and if I would be able to start one. I definitely want to work in one to better understand how they work before attempting one on my own.

Thank you again for your insight.

Anonymous said...

Wow. Thank you so much for providing these challenging and thought provoking questions to really probe the commitment of people contemplating incorporating as an NPO. I was wondering if you know how state requirements apply if you are a military family stationed overseas, trying to meet the needs of other military families on a US military installation. I'm guessing we have to check with UCMJ as opposed to state requirements, but the UCMJ can be a bit byzantine, especially if you are not actually in the military. Currently, there is no option for American preschool education for the families here. I have organized a preschool (although we can only take a limited number of children and there are many more who are left behind) and am running it at no cost to the participants which means we can only do what I can personally afford. I've had several offers for sponsorship/donations and some great fundraising ideas, but don't know if I'm allowed to accept funds or not since I am just a private citizen representing a group of parents and not a NPO. Should we try to incorporate as a NPO so we can meet our kids' needs, or is there an easier way? This is really a niche market if ever there was one, but I would love to be able to accept more of the children here. Ideally, we would be able to accommodate every preschool aged child in our small community. No child should be left behind.

David said...

I've been contemplating whether to start a NPO for all the dogs I rescue and find homes for or keep. It's a huge expense and like millions of others, I've lost my job and find myself very under-employed.

Sure, I could take them to the over-whelmed local animal shelter and they would probably put them down within two weeks.

I sought out help from two local NPOs for assistance, one told me to hold a bake sale, the other told me they could take the dogs as long as I could donate all the money to support them until they found them a home, so really, they offered nothing that I couldn't do for myself.

I wish there were a way to get some type of tax relief for the money I spend on rescuing dogs without having to form a NPO but it seems the IRS leaves you no choice other than euthanasia or pay out of your pocket.

What a country.

Anonymous said...

Hey Don,

I live in a very rural community located in Florida. There are many nonprofits here locally that are specific in their mission, some help with emergency financial, food, clothing, shelter needs of low-income and homeless, others help women with drug/alcohol addictions, some help with disabled citizens. I am a grants coordinator with the local government and I see grant funding announcements everday. I know of grant funding that is given to organizations not located in our county for services to be provided in our county and I believe those services are not fairly expensed in our county. I believe those funding sources are not provided directly to our county because there is not a non-profit in our county equipped or who has a mission required for that funding. In my office where I work we receive multiple complaints about one organization that is suppose to be providing housing rehab/weatherization, the clients apply and don't hear from the non-profit for months. I believe it's because that non-profit is administering funds for a seven county region and because we are so small and very far away, we are not high on the priority list of projects. As a tax payer, this upsets me, these individuals need the assistance immediately usually!!!

I'm wanting to do something more along the lines of longterm individual/family assistance through mentoring, counseling (Budget, housing, foreclosure, some mental), educational opportunities (free computer classes, literacy classes, parenting classes, leadership workshops), community preservation (sidewalks, street lights, housing rehab/weatherization, pet population issues). I don't really want to target necessarily low-income but also single parent households, individuals, and neighborhoods with helping themselves and each other. My experience is that I have been a single parent for many years, I own a home but struggled to achieve the things I currently have and continue to struggle. I was always someone who didn't qualify for daycare assistance but didn't make enough to be able to pay it and all my other bills. I believe more people could become leaders within our community if they knew it doesn't take a millionaire to become a leader. I don't think there is an organization in my county that has this vision/mission. Maybe you could provide your suggestion on where I should go to research this and what you think I should do to accomplish my vision to help others.


Anonymous said...

Thanks so much for your insight. I've been thinking of starting a non-profit to meet and unserved need in my community. There are many people that can and will meet that need but the need an organizing force. Your many questions have helped me think through the process in more detail and has only convinced me more that it should and could be done.

Anonymous said...

I've been thinking of creating a nonprofit for some time. I've knocked on houses of worship and have not received any feedback. I have a decent, secure job but feel this is my calling. Obviously, this would be a huge commitment and I may have to reconsider.

Anonymous said...

Thank you for your commitment and energy to educate - your advice please. I'm volunteering for a sudanese cooperative selling a product. They want to sell in the states and I'm wondering if establishing a non-profit on their behalf is the right way to go (all present profits are used in a community development fund - no shareholders, etc). The other option is a private business - they earn at present less than 10,000 USD stateside from direct sales but could with some help earn 50,000 to 100,000 per year. Thanks,

Anonymous said...

This information is so well thought out and brilliant. So much so that I have bookmarked it because it will bed continual review. I do want to say, however, that I am slightly insulted. While the advice is sound, I don't understand why you would put limitations on the motive behind the non profit in the way you do. We are a contemporary performing arts group, and while you may not find that to be the most noble thing, we are deeply passionate about it, and use it to bring awareness to issues often overlooked. What makes our endeavors menial or any less worthy?

Devin said...

The reason for my message is to ask for your perspective on our proposal. I have read your article and it has been most informative. I apologize if this is not the place to request your advice, and thus I'll try not to go into too many details, but here is the simplistic basis of our vision;

We are looking to purchase 10-30 acres of land in order to host Seasonal Camping, Music Festivals, Art Fairs, Community Gardening and other various Organized Events. We are hoping to find beautiful, suitable land that we will use as an opportunity to feature and support local musicians, craftsfolk and artists of the Mid-west.

We are intending to start up as a non-profit organization in order to obtain grants and donations. Shortly, we will be establishing a web-site in order to have a centralized point with which to send people interested in getting more information on the project (we will obviously not have a donation 'button' until the necassary paper-work has been filed, but will provide links to musicians and artists we intend to feature). Over the next few weeks, I will be sitting down with other organizers (future board members) and begin working out a financial plan and attempt to go over the legal issues and steps needed to obtain zoning permits. I've already spoken to several realtors and also have dates to scout out potential land.

I have already been doing as much research as possible and have a rather clear idea of what needs to be done. I, personally, have had quite a bit of administrative experience and event coordinating and and both of my parents have worked in the nonprofit field (and theater) for many years, so they have given me a great deal of advice on the subject, but it's always prudent to seek outside perspective. As it is, I am unaware of any open non-for-profit community land within 2-3 hours of Chicago that is available for year-round use by artists (both musical and visual), but will take steps to ensure that no one has a similar establishment within the same region to prevent encroachment.

We already have a few hundred supporters and willing donaters and have thrown several smaller festivals and events in the past, but this will be the first time we decidedly make a name for ourselves and invest in a permanant setting. We're also in the process of initiating a web-site, which will hopefully be up in the next couple of months, and already have several reliable venues with which to advertise (radio time, newsletters, facebook, websites, etc.). We are in the process of organizing the board now, with a group dedicated towards publicity, another group dedicated towards organizing events and another group dedicated towards land-acquisition.

All in all, the pieces are there, the work now is just to connect all the dots. We are having some set-backs in finding financial and legal advisors (an experience treasurer), however, which will obviously be our greatest stepping stone. We do have a few individuals that have expressed interest in assisting with the project, however, so I'm choosing to remain optimistic about that.

Again, thank you for any advice.

pdxbray said...


I hear you.

My daughter is a young actress in New York out of school, and as all young artists wants to gather a group of friends and start a theatre company. Normally, the route would be 501(c)(3), but I am encouraging her to look into forming an LLC or regular corp. This way they'd be forced to figure out how to break even on earned income, or die trying.

Am I crazy to advise her so? Which structure would be better in NYC for a theatre company that would basically strive to break even (I doubt they'd actually turn a profit), an S Corp or an LLC? If they fail to make a profit would they be looked at as a hobby and lose their business liability shield?

What do you think? The last thing the world needs is another non-profit theatre company, but I want to support my daughter as an artist in creating her art.

Thanks so much.

Thom in Portland

B said...

Wow Mr. Griesmann! Your clarity and no-nonsense approach have blown my little mind. I am currently working on an Arts Administration program and a music degree. I have to admit that all of the lectures, text books, and articles have not been so straight forward as you. I am also a part of a non-profit arts organization and you have given me some important material to present to my board at our first attempt at a retreat. We just completed our 2nd year and realize we have a long way to go. At least we have someone who gives it to us straight! Thanks tons!

Sunkissed404 said...

*Sigh* Wow...So much to consider! I have considered submitting a grant to a few entities. Every organization wants an EIN/DUNS number. Soooo, now I have registered as a NPO. I initially thought of getting things started with my own company under sole proprietorship, but my focus is health education...Seems to fit that of a nonprofit a little easier. Well....Maybe you can answer my question. You've answered so many already.

"Unless you have no intention of attempting to raise more than $5,000 a year for the next 5 years"
Can't grantwriters write a salary?

Don Griesmann said...

I am not sure what you mean by "Can't grantwriters write a salary?". Funders, foundations, government do not want their money spent on grantwriters. They want the $$ for direct services. You need a group of people will share your sense of mission, goals, objectives and perhaps your level of passion. You and they have to put up the $$ to get fully incorporated and recognized by the IRS and probably the first three years. They can help fundraise and friend raise. You need to be certain you are not duplicating services already available close to your ideas. Joining a group already established is easier than starting and sustaining a nonprofit.
You will find many other articles and links in this blog about starting a nonprofit. You have done the easiest part - getting an EIN. Good luck. Don

Life said...

Good information. The thought of too many non profits made me wonder though - only because I come across so many people with so many needs who are not getting them met. This was a good checker for all who have non profits and may need to revisit our original mission statements.

Carlos Lascurain said...

Thank you so much for this huge effort to inform
- Carlos

Jeff Mascornick said...

Glad to see that you are still posting grant announcements. The best on the web.
I was wondering if you still have a grant opportunity listserv/email announcement as you did w/ CC?

Don Griesmann said...

Hi Jeff. I now share grant information through my Twitter account, 6-8 a day. The link to the account is at the top of this Blog. Don

goldenmain said...

I feel there is a need to have a non profit especially in Florida to protect the rights of legitimate pain patients. The state in their efforts to eliminate the pill mill situation by the way they let run wild for many years. The state now has left legitimate pain patients that are suffering miserably. I have a group of 100 people that support my mission to protect their rights and I have an excellent stragetic plan to fix this whole mess. I also have 2 petitions with over 900 signatures of patients all crying the very similar issues. I have a lawyer that's willing to back me up. I have professionals that want to be involved with my non profit. So, in my opinion there is a need for certain non profits. Americans are losing their rights, being discriminated against and patients are being profiled at pharmacies. Did you know that there are many disabling pain conditions that Americans have that require the need for medications? 100 million plus people according to the Institute of medicine report in 2011 have chronic pain on daily basis to be exact. There has to be a balanced approached to seeing that legitimate pain patients have their needs met, as well as creating safety with these medications in the community. So I am moving forward with my plight, so I guess wish me the best. I have put in 12 to 14 hours days, everyday to this effort for at least 10 months.
Maybe I won't be popular with the government, the state or many citizens but I know that I will be supported by the many people with debilitating pain everyday of their lives.
So wish me luck. Btw, The American Pain Foundation dissolved because of the economy in May 2012 and I was a leader for them, so this drives my desire all the more for protecting all Americans that have pain.
I agree that are probably many worthless non profits out there but I believe that mine will succeed. healthcare is not going away and their is no other NPO that is doing anything near, like I have planned.

Donna Ratliff

Don Griesmann said...

Hi Donna.
I wish you well in your mission to people with serious pain in Florida. I am interested in understanding what you believe are the reasons that the American Pain Foundation dissolved. Was it the economy? If so, how will you overcome that issue? This article was and still is a challenge to folks who want to start a nonprofit and to show the cold hard facts they face and have to address. You may be interested in the comments I recently posted here about why start-up nonprofits and others do fail. See

My best, Don

Lili DiVita said...

Dear Don:

Your words were not encouraging but I appreciate your honesty.

I wish to start a non profit to address special education rights of disabled children and their families. I am interviewing candidates who are experienced professionals and have high ethical standards to serve as board members.

The non profit would emphasize on outreach, education, and underservered populations.

Frequently, parents of disabled children do not KNOW that they and their children have Federal rights under the Individuals with DIsability Education Act [IDEA] and all states receiving funds under this act are required to offer services that the federal law but are allowed to supplement them and administrate them as school districts see fit, as long as they do not violate the IDEA and fail to offer all children with disabiilities a Free Appropriate Public Education [FAPE]. Even if a disabled child is in a private school the law dictates that the child be offered a FAPE.

Families often don't know they have rights and sometimes school districts don't understand the law and/or don't enforce it, either from ignorance or from other, possibly more inisidious, reasons.

Children with disabilities can have their disabilities ameliorated or possibly "cured" but interventions require EARLY, intense and possibly expensive therapies. However, the cost of early intervention (0-21) under the IDEA is less than the cost of a lifetime of a person who isn't able to be independent, cannot find a meaningful job, isn't able to succeed in school, cannot support self and must rely on government support for living at the subsistence level.

I have tons of experience working for non profits and I have also been advocating for disabled chilrden successfully and for free for ten years.

I have also been on both ends of Individualized Education Program [IEP] meetings, meaning I have been blown off by the school and then after becoming educated about the IDEA, I was treated r7 respectfully and as a partner of the IEP team as per the IDEA. And, my daughter thrived.

My reason for a non profit is that I believe MORE people can be helped if I have a non profit that offers tax deductions for donators. That, in turn would allow me to use social media, news media, outreach to individual and classes and ultimately a change in public policy which would render my nonprofit unnecessary and ultimately SAVE the government money.

Currently the IDEA has a provision called "Child Find" wherein the school district is required to find all children with disabilities, aged 0-21 (even those in private schools) and tell them about the IDEA and offer the related education services and supports to be in compliance with the IDEA that mandates a Free Appropriate Public Education [FAPE]. Thus, if the parents decide to keep the child in the private school after being offered a special education offer at the public school, the latter still could pay for related services under the IDEA.

In my research and experience what really happens is disabled childrens' parents's find that their children have rights and advocate for their children either with a lawyer, if they can afford it, or by themselves, which depending on how educated parents are, may or may not benefit the child's education.

Or neither find each other.

Ideally, IDEA should have a provision that provides funds for school employees to aggressively pursue outreach and fulfill the "Child Find" part of the IDEA.
This policy change is my long term goal, and would obviate my nonprofit.


Thank you in advance.

Lili DiVita

Anonymous said...

I have wanted to start a non profit for the elderly people in this country. I need to raise money to start this. I have been researching for the last two years and am debating if I can arrange enough golf tournaments, marathons, and other activities to get more money for these people, most living on pennies and don't have family to help contribute.
Any advice you can give? I live in Southern California and would like every city in America to eventually have this help.
Cynthia D.

Don Griesmann said...

Hello Cynthia. Why don't you start by volunteering time with organizations that serve the elderly in Southern Califonia? You don't say what you want to accomplish, what the purpose of your organization will be. Trying to raise funds through golf tournaments, marathons, etc. is very labor intensive with not much in return until there is a history of growing success over a period of yars. They take a lot of volunteer effort. Don Griesmann

Steve said...

There has been a decrease in the number of nonprofits in the last couple years since this was posted. There has even been some consolidation and mergers.

Don Griesmann said...

Thanks, Steve, for your comment. There has been a decrease in the number of nonprofits especially by the iRS dropping groups for failure to file annual reports. The cost of starting a nonproft has also put a small dent in the number of new groups. There is still a lot of duplication of nonprofits in many communities. Don Griesmann

Add to Technorati Favorites