I have several clients who were actively engaged in some causes.  And, that led them to decide to start their own charitable foundations.

But, that idea requires paperwork.   A lot of paperwork.  Starting with the incorporation – which needs to recognize that filings for a 501(c)(3) (tax exempt status) from the IRS demands certain considerations. Oh, and since these are typically startups, the entities lack three years of financials.  Which most state and federal agencies desire to provide the full approval for the charitable status.   And, you need a plan to dispose of any assets you have should you fail.  (No, the contributions can’t go to your Aunt Sally.)

Then, there’s the issue that there may already be a well-run institution that is doing exactly what you plan to do.  Are you sure there’s room for yet another institution?

And, running a charitable entity is not like running a corporation.  All your salaries, all your expenses (ok, at least the totals), all your (larger) donations are going to be public information.

Raising funds is not a cake-walk, either.  Neither is event planning.  You should have some experience raising money from services you provided to another organization.  You should speak to folks that serve on the boards of non-profits to understand the issues they face each day, week, month.

My first big effort to raise funds for a cuase involved putting on a concert.  Sure, I had been running a company (or a division or two or three) for some years.  And, I understood the logistics of big events from my efforts with multi-site catering halls.  I also relied on the processes recommended by the Jaycees for their events (especially since this was to be a Jaycee event).  But, the logistics of a concert- including the rental of a huge hall, arranging for (ego-laden) musical artists and their needs, publicity, ticket sales, etc.- I can assure you these considerations were overwhelming at times.

If you plan to run such events, you will need some very accomplished staff and co-workers.  (Oh, yes.  Don’t forget that this won’t be a part-time event that you can effect in your spare time, after your full day of running a company!  Something is going to fall by the wayside.)  And, you should recognize that the time you spend on planning and running events is about the same amount of time you will need to spend on your fundraising efforts.

I won’t go through the admonition I provide each business client- that your mission statement and business plan are NOT afterthoughts, but completely essential.  Because folks who will be donating funds to your organization are going to want (no, they’ll demand) to know what it is you are doing with their money.

The paperwork demands- besides the business plan- are substantial.  There’s incorporation, state and federal registration, the occasional demand to register with the local city or county.   And, then, there’s the financial records you must keep.  Tracking every donation, making sure that what you buy and where you buy it has no aroma of self-dealing.

(By the way, while you are awaiting your 501(c)(3) approval from the IRS, you may be able to “piggyback” off another charity’s status.  And, you can expect they will either have missions virtually identical to yours, or will expect part of the funds raised to advance their own mission.)

And, please don’t forget that bonding for those that handle money would be a wise addition to your plans, too.   And, insurance.   Especially for those events you plan to run.  Because if you have no insurance and something goes wrong, you can expect EVERY officer and board member to be on the hook for any damages that ensue..

Now, that I brought up board members…   You need folks who absolutely believe in your mission.  Many non-profits require that their board members provide a substantial donation to the charity (or will raise that amount from others) as demonstration of their commitment to the “cause”.  You should consider such covenants for your own charity.  Because the “public” will wonder why these board members aren’t donating, if you expect the public to ante up some funds.

Good luck.

 

 

(Oh, yes.  We are available to help you wade through the paperwork morass- and keep you ‘kosher’ as you go along.  We’ve been doing so for other charitable entities for a long time.)