By Julie Holdaway
Published in the Orange County Register on July 8, 2013
Lots of people in O.C. yearn to found one. Too bad it's so hard. Here are some tips for getting started.
Orange County is a hotbed for nonprofits.
Over the past 10 years, new nonprofit organizations have started in Orange County at a rate more than twice the national average. And if you count only smaller nonprofits—those with budgets under $500,000—the O.C. startup rate is nearly three times the national average.
So, with that in mind, this week's column is for a lot of people—men and women considering the challenge of starting a nonprofit.
Some of you, at least those who begin the process by going to OneOC and taking the "Reality Checklist" class on starting nonprofits, start out seemingly starry-eyed and eager to make a difference.
What you learn is that launching a nonprofit can hit you like a wave at the beach—you see it coming, and you know in your head that it's a big thing, but when it actually reaches you you're still shocked by its strength. Despite the noble causes and noble intentions, people are constantly surprised by the time their mission requires. Too often, they miss opportunities to engage in what they want to be doing because of infrastructural issues.
So, consider the nonprofit route carefully, and explore your options.
And, once you've done that—and decided you're still on board—there are 1,001 questions to answer, starting with "What?" and "How?" and, yes, "Why?"
Why is a nonprofit the best model to accomplish your goal? What is your nonprofit actually going to do? What are your programs and services that will deliver solutions? How are you going to grow and sustain your nonprofit organization?
And, critically, there's the world of "who?" questions: Who is your leader? Who will make up your board? Volunteers? Stakeholders? Donors?
These questions are all big and constant; larger than this single column can handle—yet it's imperative that they be addressed.
For those who are confident that 501(c)3 (don't worry, you'll learn about this tax label) is the best way to go, below is a quick look at the forms and steps you'll need to complete to actually create a nonprofit. Completing legal processes generally takes three to nine months or more. The cost is $400 to $925 or more in filing fees, not including any professional fees you might shell out for an attorney or accountant.
Step One: Register with the California Secretary of State. You'll need to submit Articles of Incorporation and request an employer identification number (EIN), even if you do not have any employees.
Step Two: File the initial registration form (Form CT-1) with the California attorney general's Registry of Charitable Trusts.
Step Three: Apply to the IRS for tax-exempt status. This is a big one, and Form 1023 is the document you'll need. Expect the form to be long, arduous and intimidating. As part of this, you'll need to submit bylaws and policies about avoiding conflicts of interest. Not to worry, there are resources available to help. The Public Law Center, based in Santa Ana, provides legal assistance to those interested in starting new nonprofits designed to benefit Orange County's low-income residents. The IRS also has a customer service department for nonprofits.
Of course, there is no better teacher than experience. To get help, give help—volunteer for other nonprofits. You will develop your expertise, make new contacts (and possible collaborators) and make a difference today.
It may feel like a huge milestone when you've incorporated and received 501(c)3 status from the IRS, only that's when the real heavy lifting begins.