General Question

sustainable_stability's avatar

How to start a nonrprofit from scratch?

Asked by sustainable_stability (82points) February 13th, 2010


I’m founding a non-profit focused on offering innovative housing and work solutions for people with bipolar illness in a structured, therapuetic farm environment in California.

I’m trying to make a list of everything I need to do to get this moving along. I know I need an IRS determination letter, probably a business license, anything else (besides money?) :)

Thanks in advance, fellow flutherites!

Kathleen Foley

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6 Answers

Just_Justine's avatar

I wish you all the luck. I am bipolar so appreciate this topic. As where I am there is no assistance at all it’s really tough. I am sorry I can’t answer your actual question though. But thought I would just say thank you to you for trying to make a difference.

marinelife's avatar

You need a Board of Directors.

You need a set of bylaws.

You need to fill out the paperwork your state requires for a 501©3.

You need more help and information than i can give you here. Look at this site.

Judi's avatar

1. Hire a good CPA
2. Hire a good attorney to write all your documents.

suncatnin's avatar

You need to incorporate the organization with your state, do what @marinelife said in regards to BoD and bylaws. 501c3 is an IRS designation, so it’s not a state-based matter. Most organizations are in operation for a year or two before they get the 501c3 designation because the IRS wants you to have several years’ budgets together in order to prove your non-profit status. You can be a nonprofit organization without being a tax-exempt organization. The 501c3 designation means that you are a tax-exempt charitable organization.

You’re going to need substantial startup funds to be able to do capital purchasing of the farm and pay salaries, etc. Are you planning on modeling this on communal living arrangements in which you may ultimately become self-sufficient? If so, you may want to find out more about how various intentional communities in your area have/have not succeeded. Here’s a directory of ones in California:

Network, network, network. See if there are any local nonprofit executives/founders in your area with whom you could speak to find out more about the process in your area and who’s who in the nonprofit sector. Even better if they are willing to be a mentor/help guide you to resources. Find other people who are passionate about the same cause so that you won’t burn out and can draw on your diverse resources.

Contact your local Community Foundation to see what classes they offer in nonprofit management (might also try Public Administration programs in local universities) and what startup grant opportunities they may be aware of. Unfortunately, this isn’t a great time to try and start a nonprofit because funders’ endowments have been shrinking in this economy. They would probably encourage you to see what similar organizations exist in your area to see what sorts of collaboration/cooperation partnerships you could create. Many startup nonprofits organizations, like businesses, do not succeed due to either external or internal circumstances. Still more remain under $25,000 in revenue per year.

Contact your local Department of Mental Health and/or Social Services to see what the needs in your community actually are. One of the main ways that nonprofits like the sort you’re looking to start thrive is on the basis of fee-for-service. It’s much more stable than trying to be a solely grant-funded organization, but it also means that you will need to look into what regulations apply in CA for interacting in a professional environment with the mentally ill.

sustainable_stability's avatar

thanks, all!
@suncatnin especially – awesome answer. thank you!

that is all great to know. just to reply and see if you have any further ideas based on mine:

i am starting in the duplex i presently rent to pilot the program and help get credibility.

i do already have some awesome volunteers and plan to attend the CL foundation’s nonprofit boot camp in August.

i also have a possible organization i could piggyback and start the community as a program under their previously existing umbrella and am realizing that this could be a good option.

fee-for-service is an idea, too!

thanks so much!

have a great valentine’s day!

suncatnin's avatar

@sustainable_stability Glad to help. Nonprofits were my concentration for my Master of Public Administration work and I spent a year on a research project on a local nonprofit sector. I’d be able to give more directed answers if I had some of my NPM books with me (they’re all in storage right now).

1. You rent the duplex, not own? Or do you mean rent out? If you do not own the space, you may want to be very careful in starting anything resembling a program/organization, especially since my understanding is that your goal is a residential program. Talk things over with your landlord/lady, but don’t be surprised if they refuse. Regardless of whether you own or rent, make sure that you take out liability insurance and generally protect your own interests first.

2. Have you done some research on other similar programs? I did a quick Google search of “residential program bipolar” that have come up with some interesting models that all have a quite high fee-for-service. CooperRiis is one in North Carolina that came up. You are talking about a very resource-intensive project that is going to need more funding than grants can support in the long run, so I think that fee-for-service would be your only feasible option (supported in part by donations for scholarships, capital projects, etc. but donations would not be your primary source of revenue). You’ll need counselors/clinical social workers and to make sure that the ratio of staff to residents remains low, which is very expensive. If you want to see some approximate financial figures, register for free on Guidestar This is an example of the 990 forms you can read on there from orgs. So, not to discourage you, but the CooperRiis organization is a $5 million/year organization with $15 million in net assets (I haven’t been able to find them on CharityNavigator).

3. I think the nonprofit boot camp will be essential for you to understand the scope of what you are talking about undertaking and good for you for investigating that option already.

4. What is your professional background? Social work? Entrepreneurship? Just passion for the issue? Each background has its pros and cons for starting a nonprofit. You need skills, financial savvy, public relations, management knowledge, and passion to run an organization. Most people don’t have all of these skills, which is why you need to form a diverse BoD that is well networked in the community and complements each others’ skills and weaknesses.

5. While many people feel like they want the autonomy of their own organization, if you can be a program under an umbrella organization, you can focus more on meeting the needs of your target population and less on the managerial nightmare that starting/running an organization can be if that’s not what you want to be doing.

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