Non Profit Organizations – What are they?
We all hear about non-profit-organizations or NPO’s and we usually associate them with charities. However that is not entirely true. A non-profit-organization is more like a company. The difference between an NPO and a regular business is that the total profit of a particular NPO is used in future projects or self expansion and cannot be distributed as dividends. Usually a non-profit-organization has a particular cause to “fight for”. There are also big non-profit-organizations that have a large amount of causes, but these causes are usually closely related. For example there are non-profit-organizations with the main cause “Raising the level of education among children in Africa”. This kind of NPOs can have a variety of projects, from collecting donations for building a school in an African village, to collecting used books from schools and sending them to schools in Africa. The end result is approximately the same, but the approach is different.
Opening a charity – First steps
Whether you have a particular cause that you want to fight for, or you know a problem that some individuals have and you want to help them, starting a charity is not as easy at it seems. And when I say it’s not easy, I don’t mean impossible, or even hard, what I mean is that starting a charity like many other things requires great responsibility, motivation and a lot of hard work. This is why, before starting a charity you should know your goals and possibilities. If talking about how to start a charity, one should know all the steps of the process. First of all you should analyze the individuals, the group and area of your cause. You should know if there are other charities with the same cause as yours and like in any other business you should analyze your “competition”. After analyzing what other charity programs have the same cause, think about the way you will treat a particular cause and how your approach is better than the ones that already exist.
Charity members – Employees or volunteers
When opening a charity, one of the first things you should think about is you future charity members. There are two types of non-profit-organizations out there, there are NPOs that hire employees and NPOs that have only volunteers working at there projects. Depending on your cause and the projects you would like to have, you can decide whether to have employees or volunteers. An advantage of having employees is that you will know for sure that all the work will be done in time and without many questions. Volunteers are not motivated by money and they don’t have a fixed working schedule, this is why they are harder to manage, however because they joined the cause for a reason, they are usually more motivated.
How to open a non-profit-organization – Legal issues
Opening a non-profit-organization is not all about “changing the world”. I believe that you have an important cause to fight for. However if you want your NPO to succeed, before “changing the world” you must have good entrepreneur skills. First you should decide weather you want to have a charitable organization or a charitable trust. A charitable organization is usually involved in helping people, while a charitable trust works with the allocation of money. You will then need to decide and write your mission statement. It should be short, usually not more than a few sentences. When you have your mission statement written down, you can start writing your charity’s Article of Incorporation. The Article of Incorporation is the place where you will write about the main purpose of your charity, your approach and main goals. After your Article of Incorporation is ready, you will start writing a set of bylaws for your charity. These bylaws are more about your future charity structure, the set-up and who will make the decisions. When you are done writing all that paperwork, you should prepare yourself for more. Charities in many states are considered corporations this is why you should be ready to fill out the appropriate paperwork. However you can always outsource this to a law company specialized in dealing with these kinds of papers.
After you get accepted by the Secretary of State, you should contact the Internal Revenue in order to receive your charity’s Employer Identification Number. You will need this EIN number when dealing with your employees.
One of the final steps is to file for a charitable status with the IRS. This step can be easily done online, however it requires that you have first completed the previous steps and got accepted by the Secretary of State.
You know the saying “time is money”. This is why you should consider hiring a registered agent for your charity. A registered agent will take care of all the communication between the state and our charity.
When opening a non-profit-organization, the cause is the most important thing. However no matter how hard you want to solve a problem or to help a group of people, you should keep in mind that a non-profit-organization is like a business and should be treated the same way. If you want to achieve great results you should be a good manager and a great entrepreneur. Revenue is not important when it comes to non-profit-organizations, but it is an important asset when it comes to funding your future projects.
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