Next Steps

Ready to take the giant leap from being a philanthropist who supports causes near and dear to your heart to starting an actual non-profit of your very own? You’ll need to keep the below tips in mind to help complement your noble intentions.
Text by Sandy Lindsey | May 11, 2018 | Lifestyle

Ultimate Transparency
“Get prepared to get naked,” says non-profit consultant Mark Grimes about the fact that non-profits’ taxes are public record. “You’d better be real comfortable with people knowing how much you make.” While privately held companies can keep their operating details private, a nonprofit’s Form 990 Tax Form can be found online, putting it all out there: revenue, salaries, expenses and more. If you’re not ready to be fiscally exposed, remember you can still support a charity even if you don’t run it.

Straight & Narrow
“Nonprofits need to prevent conflicts of interest, such as using the foundation to advance business purposes,” says Jeff Hurwit of Hurwit & Associates, legal counsel for the non-profit sector. “Having a foundation sell products or services from your business could mean forfeiting your tax-exempt status. Non-profits also cannot generally engage in political activities without jeopardizing their tax-exempt status. It’s critical to keep the foundation and your business as two distinctly separate entities.”

Think Big
“Incorporating a non-profit into a 501(c)(3) frequently elevates an organization’s status in the eyes of the public,” reports The Center For Non-Profits. Additionally, 501(c)(3) non-profits are exempt from federal income taxes on income related to the exempt purpose; they are exempt from federal unemployment tax and “as a separate legal entity, incorporation inserts a legal buffer between the corporation and its trustees, officers and associates.” Simply put, this means the assets at risk are solely those of the corporation, not of the personal assets of the individuals involved.

Gifting Control
“Creating a non-profit is creating an asset you will never own,” says The Non-Profit Center’s Founder Elizabeth Heath. “A nonprofit essentially belongs to the community, so you will never be able to sell it. If it goes bust, its assets will be distributed to other non-profits. That ownership concept is a struggle for many successful businesspeople to let go of.” Every non-profit needs a Board of Directors to help raise funds and set goals, further limiting the founder’s ultimate control.