How to Start a Non-Profit Organization for At-Risk Youth

By John Green

Starting a nonprofit for at-risk youth can be as complex as starting a for-profit enterprise. Although it may be tempting to focus solely on the organization's mission, the business aspects of starting a nonprofit are equally important. Early mistakes can have long-term consequences on the organization's ability to fulfill its charitable purpose.

Preliminary Matters

Before any legal documents can be filed, the founder or founders need to select a name that is not already registered in the state where the organization will incorporate or in any states where the organization will operate. For example, in New York, the website of the Secretary of State has a searchable database of corporate names currently in use. It is also possible to lay claim to a name prior to incorporation by filing an application for a reservation of name with the Secretary of State. In addition to naming the nonprofit, the organization will also need a mission statement that sets forth the scope of the organization's activities.

Incorporation

In order to set up a bank account, to sign a lease or even to obtain grants, the organization must become a legal entity by filing articles of incorporation with the appropriate state authority. The articles of incorporation must be consistent with state law. For example, some states, such as Delaware and Nevada, require only one founder, while many others, such as New York and Illinois, require a nonprofit's initial board of directors to consist of at least three people. Moreover, the articles of incorporation need to be consistent with the standards set by federal law governing tax exemption. As the Internal Revenue Service indicates in its model articles of incorporation, the document will typically include such information as the organization's name, principal office, purposes, and limits on activity inconsistent with its exempt status.

File a DBA for your business online. Get Started Now

Approvals

Some jurisdictions require organizations that will work with youth to obtain special approvals or licenses. As Professor James Fishman explains, the rules in New York State are among the most restrictive in the United States. An organization with educational purposes must obtain a consent or waiver from the state's Department of Education, while a social service organization must obtain approval from the Department of Social Services and an organization helping neglected or dependent children requires approval from the Office of Children and Family Services.

Insurance

Working with children can expose an organization to significant financial liability. Accordingly, obtaining insurance for the organization and its leadership is essential. In addition, as The Points of Light Foundation notes, an organization should also develop a risk management program that includes such preventive measures as risk assessment, personnel training, supervision, waivers and program monitoring.

State Registration

Most states require organizations that engage in fundraising to register with the state attorney general's office. For example, in New York, this involves registering and submitting annual reports to the Attorney General's Charities Bureau. Organizations raising funds in multiple states might be able to streamline the process by using the Unified Registration Statement, which is accepted by most of the states that require nonprofits to register. A joint initiative of the National State Charities Officials and the National Association of Attorneys General -- the Unified Registration Statement -- contains a form that can be submitted to each state that has agreed to accept it. Besides the Unified Registration Statement, the nonprofit may have to submit additional supporting documents or data required under state law.

Federal Tax Exemption

Besides incorporating as a nonprofit, the organization should also obtain recognition of federal tax-exempt status under Section 501(c)(3) of the tax code. This requires filing Form 1023 with the Internal Revenue Service. If the filing is approved, the organization will receive a determination letter certifying its exempt status, which many grant-makers require in order to provide funding.

File a DBA for your business online. Get Started Now
How to Incorporate a Non-Profit Ministry

References

Resources

Related articles

Non-Profit Vs. Incorporation

When we think of corporations, the image that comes to mind is usually a for-profit venture. However, nonprofits can also benefit from incorporation, particularly if the organization is interested in pursuing federal tax exempt status. Yet, the formalities of being incorporated under state law may not be desirable for all organizations operating in the public interest. Smaller nonprofits that receive limited contributions may choose to remain an unincorporated association. Knowing the benefits and drawbacks to incorporation can help you decide whether it makes sense to pursue a corporate structure for your nonprofit.

501(c)(3) Incorporation Laws

Nonprofit organizations that can claim federal income tax exemption under section 501(c)(3) of the Internal revenue Code comply with two sets of laws. The nonprofit is formed under the incorporation statute of a particular state. Each state has its own nonprofit incorporation statute, but they are all substantially similar. The incorporated nonprofit can then apply with the Internal Revenue Service for 501(c)(3) status for recognition as a tax-exempt entity.

Can Non-Profit Organizations Sell Tickets to a Concert?

Whether a nonprofit organization can sell concert tickets, or conduct any other common fundraising activities, is a something it needs to consider before embarking on the project. The primary issue its fundraising team will want to take into account before making the decision to proceed is the way that the IRS will characterize the fundraising activity in relation to the nonprofit's tax-exempt status. The organization should also determine whether state registration of the event is required.

Related articles

How to Apply for Nonprofit Status in New York State

For an organization to be exempt from New York state taxes, it must incorporate as a nonprofit corporation by filing ...

How to Start a 501C3 Nonprofit Ministry

Charity work is often part of a church's activities -- and some churches may choose to expand their charitable work by ...

What Is a 501(c)(3) Determination Letter?

The Internal Revenue Service sets down the tax rules for nonprofit corporations, including the charitable organizations ...

What Are the Requirements to Receive Donations in Georgia Through a Non-profit Organization?

Because the success of a nonprofit organization hinges on its ability to receive donations, an understanding of the ...

Browse by category
Ready to Begin? GET STARTED