How do I start a nonprofit organization ?

Here are some suggestions from the SC Association of Nonprofit Organizations.

Free Download: Starting a Nonprofit: With Information about Board of Directors, Questions and Answers, and Links to Internet Resources, SCANPO

Five Alternatives to Starting a Nonprofit

1. Study the list of nonprofits already active in the same area and join their efforts as a volunteer, a board member or even as staff.  Click here to search SCANPO's on-line membership directory.
    

2. Analyze the list of nonprofits already active in the same area, identify the three most compatible with your ideas and meet them to explore creating a special project or initiative - and negotiate your involvement.
    

3. Explore the list of national organizations in the area of your interest and see if a local chapter is needed in your geographic area.
    

4. If your effort will be quite local and small, consider forming an unincorporated association or club - have meetings and activities but skip the reporting requirements (an option for groups with an annual budget of under $25,000).
    

5. If you are considering creation of a group to finance activities or needs of others (scholarships, family emergency funds for a specific population, etc.) explore sponsorship of the fund by a community foundation or other organization.

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If you still think starting a nonprofit is for you, check out these helpful tips.

1. Clarify your mission, goals and exactly whom you would like to serve.
    

2. Talk with as many people as you can to find out what other groups are already doing in related areas. Work with them if you possibly can rather than creating a new organization. In the current financial climate, you will find it difficult to garner support or raise funds if you duplicate or significantly overlap the goals or services of existing organizations.
    

3. If you are sure a new organization is really needed, the next step is to establish a board of directors of at least 5-7 people. Be sure each board member understands the legal and financial responsibilities of a nonprofit board member (see #4 below and Ten Basic Responsibilities of Nonprofit Boards, available from BoardSource. Members of the S.C. Association of Nonprofit Organizations (SCANPO) may receive discounts on BoardSource publications. Contact the SC Association of Nonprofit Organizations for more information, 803/929-0399.
    

4. Review Nonprofits 101: A Guide for Staff and Board Members of New and Smaller Charitable [501(c)(3)] Nonprofits. This publication, which covers the legal requirements for South Carolina nonprofits including such issues as legal and financial responsibilities, is available for review in the SCANPO office or members may purchase a copy for $75 plus shipping, nonmembers $90 plus shipping. This is available in hard-copy, electronic and CD-ROM formats.  You may also want to read How to Form A Nonprofit Corporation by Anthony Mancuso ($39.95 + $4 shipping, Nolo Press in California, 800/992-6656, fax 415/548 5902).
    

5. Define your organization's purpose and create your bylaws. Reviewing bylaws of several existing organizations may be helpful, but remember that organizations' structures and purposes vary. What may be appropriate for one organization might not be for yours. A useful reference available in your local library is Nonprofit Corporations, Organizations, and Associations (6th ed.) by Howard L. Oleck. In addition, Securing Your Organization's Future by Michael Seltzer ($24.95 + $4.50 shipping, Foundation Center, 800/424-9836, fax 212/807-3677) is an excellent resource and includes helpful worksheets. How to Form A Nonprofit Corporation by Anthony Mancuso ($39.95 + $4 shipping, Nolo Press in California, 800/992-6656, fax 415/548 5902) includes fill in the blank bylaws on computer disk.
    

6. Incorporate in South Carolina by filing Articles of Incorporation with the Secretary of State. Call 803/734-2158 for forms and fee information. The fee to incorporate as a nonprofit corporation is $25.
    

7. Get a Federal Employer Tax Identification Number even if you do not have employees. The number is used by the IRS to track reports and your 1023 tax exempt application. You can get it on the Internet at: www.irs.ustreas.gov, or call: 800/829-3676 to get it by mail or go to your local IRS office.
    

8. Apply for tax exemption as a 501(c)(3) nonprofit. This is needed before you can receive grants or tax-deductible contributions. Call the IRS (877/829-5500, 800/829- 3676 or 800/829-1040) for Form 1023 and the packet that goes with it. You can also get the forms on the IRS's web site at www.irs.ustreas.gov. The process takes 3-24 months. It is recommended that a lawyer and/or CPA who are knowledgeable about nonprofit tax law review your bylaws and application for tax-exemption before final submission. You might ask established nonprofits in your area for their recommendations or call SCANPO for referrals.
    

9. Certain retail sales by nonprofits are exempt from sales tax. Some (but very few) items purchased by nonprofits are also exempt such as food for feeding the homeless. Once you receive your tax exempt status from the IRS, then apply to the S.C. Department of Revenue for exemption from state sales tax for items you are going to sell. Call the S.C. Department of Revenue at 803/898 5788 to request application #ST387 and to get more information. You can also get the forms on the Internet at www.dor.state.sc.us.
    

10. Apply for local property tax exemption on real property or vehicles by contacting Ronald Cassels, 803/898-5473 at the S.C. Department of Revenue. Should your nonprofit qualify for an exemption from property tax your local county tax office will be notified.
     

11. As you proceed, be sure to check with an attorney or CPA who is knowledgeable about nonprofit accounting about other needed financial documents and filings.
     

12. If you plan to solicit contributions you must file a registration statement each year with the Secretary of State. It costs $50 annually to register. If you raise more than $20,000 or receive contributions from 10 or more people you must register. You also have to file a financial report with the Secretary of State within four and one-half months after the close of your fiscal year.

Other resources for nonprofits:

The South Carolina State Library maintains an extensive collection of publications designed to help nonprofit organizations locate grant funding from corporate foundations and government entities. The Grants Research Collection may accessed at the Anderson and Charleston County Libraries and the State Library in Columbia. Karen McMullen is the reference librarian in charge of this collection; she may be reached at 803/734-8666.

The S.C. Association of Nonprofit Organizations (SCANPO) offers training in the basics of nonprofit management. Two seminars “Nonprofit 101” and “Navigating the Nonprofit Regulatory Maze” could be helpful to newer nonprofits. Call SCANPO for more information, 803/929-0399.

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Publications for Order

Links to Related Websites

How to Incorporate in South Carolina
www.incorporate-usa.com/southcarolinaindex.html

Federal forms and filings- Information for tax-exempt organizations
www.irs.ustreas.gov/prod/bus_info/eo/index.html

Applying for tax-exemption
www.irs.ustreas.gov/prod/bus_info/eo/eo-appl.html

Filing Requirements
www.irs.ustreas.gov/prod/bus_info/eo/file-req.html

Fundraising Registration- Labyrinth Inc.
www.labyrinthinc.com/charity.htm

South Carolina Requirements
www.faffa.com/Interior/s_frame.htm

Unified Registration Statement
www.nonprofits.org/library/gov/urs

Nonprofit Issues
www.nonprofitissues.org

IRS Exempt Organizations Division

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