Planning is key for any nonprofit – as it gets started, as it grows with new funding opportunities and program activities, and as pivotal changes occur (internally and externally) that may dramatically affect its impact. Also essential is strong leadership, legal compliance, and responsiveness to changing circumstances. The following guidance addresses key legal aspects for launching a new nonprofit successfully, along with reminders for keeping existing nonprofits well on track.
Start at the Beginning
No nonprofit venture should begin without a great deal of careful, advance planning. Key questions include the following: Who will serve as leaders? What is the organization’s purpose? What will the organization’s revenue stream look like? Related legal questions include the following: What legal responsibilities will the leaders owe, and to whom? Will the organization’s purpose qualify it for tax-exempt status? And what accompanying legal requirements, if any, will apply for its fundraising activities? Another helpful perspective may be to start with the end in mind: Where will the organization go, and how it will get there?
In short, every nonprofit needs a business plan that includes provision for legal aspects. The plan should include core elements such as the organization’s name, purpose statement, leadership, anticipated funding, planned activities for achieving its purpose, governance structure, and accountability measures. After this business plan is developed, this tool may be used in a variety of ways: guidance for founders; marketing to donors and other supporters; recruiting for new board members; and groundwork for the organization’s IRS Form 1023 tax-exemption application.