Incorporating your Nonprofit Organization

I previously listed the first seven steps in starting up a nonprofit organization.  Today we will cover the next two steps. 

8. Find an insurance agent that can help you develop an insurance policy that will protect you and your non-profit organization. You will probably need liability insurance, property insurance. If you plan on hiring employees you will also need workers' compensation insurance, health insurance and life insurance (Health and life insurance is optional).


9. Draft and File Your Legal Incorporation Document

• Identify the basic information about your non-profit organization. You will need to include the name of your non-profit, where the headquarters will be officially located and what the purpose of your non-profit will be.
• Draft your purpose clause. Your purpose clause will need to define what the goals your organization will have. Keep the goals general to give you flexibility in what services you provide now and what services you can provide later once you are more established.
• Determine if you want your organization to be a membership organization or not. This be based on how you want your non-profit organization to be run. If you make your non-profit a membership organization, then the members may have a say in how money is spent and how the organization is run.  
• Most Secretary of State web sites have templates and/or instructions for nonprofit articles of incorporation. You may also search online using keywords “nonprofit articles of incorporation”, plus your state.  
• Check with your state to see if by-laws are required in your articles of incorporation. If so, draft your by-laws for your organization. Bylaws are the ruling documents of an organization or, in this case, the organization’s board of directors. Bylaws are critical, because they tell the board how to conduct its business. However, because bylaws are more or less set in stone, it is in the interest of the board to keep them as brief as possible. If your state requires by-laws, you will need to include them with articles of incorporation. If your state does not require them, you will need to draft them as a separate document. A lawyer who specializes in incorporation can help you set up your non-profit the way that you plan to have it set up.

The legal incorporation documents are filed with the Secretary of State office in your state. The fee will be determined by the state in which you incorporate. Still more to come tomorrow.

Starting a Nonprofit Organization

OK so you've made the decision to start a nonprofit.  I will share with you the steps you will need to follow to get your NPO off the ground. 

1. Decide what your non-profit organization will do. What needs need to be met in your community? You might call local agencies to see exactly what areas need the most help.


2. Write a mission statement. A mission statement is a formal short written statement of the purpose of your organization. The mission statement is intended to guide the actions of the organization, spell out its overall goal, provide a sense of direction, and guide decision-making. It provides the framework on which the organization’s strategy is built. Of course the mission should be about meeting a need in the community.

3. Name your organization. This requires some careful thought. The name should indicate what services will be provided and to whom they will be provided. Do an online search to make sure that other organizations in your area do not have the same or a similar name. If you plan on having a website, do a search to ensure the availability of the domain name.

4. Select the members of your Board of Directors. Choose your board members to meet the needs of your non-profit as well as the requirements of your state. You will need at least a small number of board members to help you start the new nonprofit. Select your board members based on their field of expertise. Board members with previous nonprofit experience such as fundraising, planning, and accounting can be especially valuable.

5. Find a lawyer that you can consult with during the incorporation process. You can do much of the work yourself to incorporate but you will benefit from a lawyer who can help guide you through the process.

6. Set up a bank account for your non-profit organization. Look for a bank that is familiar with the banking needs of small non-profit organizations.

7. Set up an accounting system. You may need to hire the services of a Certified Public Accountant (CPA). If you do not have at least a basic understanding of bookkeeping and accounting, then you should get some help. If at all possible, enlist a volunteer who has accounting skills, and may possibly be the Treasurer on your Board of Directors.

More steps tomorrow...