5 Things to Consider When Starting a Nonprofit in Los Angeles
Starting a non-profit organization can be an incredible and rewarding venture3 min read
Starting a non-profit organization can be an incredible and rewarding venture. Non-profits often provide vital services to people that would otherwise go unserved. However, they are also quite challenging both in terms of their scope and the requirements to legally operate in Los Angeles. Aspiring founders should understand the particular ins and outs of the legal landscape, identify their source of income and develop their strategic direction for the long-term. To help guide founders who want to launch a nonprofit in Los Angeles, here are five things to consider.
1. Research Potential Sources of Income
As with any business, the non-profit needs to make money, but this money cannot serve the founders of the organization. To achieve this, nonprofits have mechanisms to generate income as well as opportunities to seek donations from individuals or organizations. There are a number of options for a nonprofit organization to generate or solicit income, including grants, public and private donations, membership fees, fund-raising events, sponsored investments, and other non-profit activities. It is important for each organization to understand the requirements for each source of income, especially government regulations, to stay in good legal standing.
2. Structure and Governance
The number and qualifications of people who will oversee the non-profit are important considerations for organizations in Los Angeles. There is significant paperwork, including the filing for the nonprofit’s tax exemption status (Form 1023) and the filing for the charitable solicitation license (Form CL1), which will require the non-profit to appoint a Board of Directors of at least three people. The Board will oversee the non-profit’s officers and the work that they do on a day-to-day basis. It is critical to choose each Board member carefully, rather than just relying on many friendly faces. Each Board member should have specific qualifications and expertise in the mission of the non-profit to ensure effective governance.
3. Write a Business Plan
Non-profits, like any other business, need a clear plan for success. This must include an analysis of the nonprofit’s mission and purpose, accessible goals, long-term plans, executive structure, a system of decision-making, and general management, as well as a detailed financial plan. Writing a comprehensive and realistic business plan that details the present and future direction of the nonprofit in question will lay the foundation for all further decisions that the organization makes.
4. Obtain License and Certification
Once the Board of Directors is in place, there are additional legal and financial steps to be taken. These include obtaining nonprofit status from the IRS, obtaining a Los Angeles sales tax permit and registration with the Attorney General’s office. There are many forms to complete for each application and all must be done when setting up a nonprofit. Business attorneys can ensure that the organization follows the proper procedures to not only get accepted, but remain in good legal standing.
5. Research the Competition
Before launching a non-profit organization, it is important to perform a SWOT (strong points, weak points, opportunities, and threats) analysis of the local competition. This will provide a comprehensive view of the existing organizations that could be performing the same or similar missions. It is critical to understand the scope and quality of the current organizations and what services they offer in order to differentiate from them and provide unique solutions.
As there are many local regulation requirements for setting up a non-profit organization, it is important to consider all of the components involved before starting the process. To use the organization’s resources more effectively and efficiently, seek counsel from experienced business lawyers who understand the local legal regulations.