Help Desk FAQ: How Do I Start a Nonprofit?

There are many passionate individuals in Maine who are working to find solutions to community problems, and we’re often asked questions about starting a new nonprofit. Nonprofits play an important role in addressing community issues and can be a great structure through which to work for social change, but forming a new one is not always the best route, nor is it a quick or simple one.

Before jumping into the process, ask yourself some questions:

• Do I have a clear problem statement and mission? Make sure you have a clear sense – and can express to others – what the problem is you want to address, what your nonprofit would do about it, and how you would do it. Not only will you have to be able to state your mission as part of the paperwork process, but this type of “elevator pitch” will be necessary for recruiting partners in your community.

• Are there other organizations already working on this issue? If so, know that you will likely be in competition with these organizations for grants, donations, and other support. Consider volunteering for an organization with a similar mission, or explore the possibility of an existing nonprofit acting as your fiscal sponsor, rather than seeking your own 501(c)3 status. And, of course, there is the option to support another organization financially. You could donate money directly,  rally others to a cause through social media tools, or start or join a giving circle, an increasingly popular way to increase your impact as a donor by pooling money with others who share your passions.

• Do I have partners to help me? It’s a lot of work to establish a new nonprofit, and it’s essential to have others involved who are committed to the mission and willing to roll up their sleeves in the early stages of the process. Not only will you need at least three people to act as board members (MANP recommends five who are unrelated to you or one other), but you will need to demonstrate public support should you choose to apply for tax exemption as a public charity (under code 501(c)(3)) with the IRS. If you’re having trouble recruiting partners to your cause, circle back to the first bullet in this list. Can you tell a compelling story? If you feel like you’re making your points and are still having trouble rounding up support, you may want to reconsider your approach, since lack of support early on doesn’t bode well for support once your nonprofit is formed.

• Do I (or my partners) have the skills to manage a nonprofit? Running a nonprofit is much like running a business, and there are a range of skills your leadership team will need to be successful. Passion for your mission is a must, but so is the ability to create a viable business plan, raise necessary funds, comply with rules and regulations, form and maintain relationships in the community, and produce results. (For a more cynical take on why starting a nonprofit isn’t always the best way to realize your vision, read this post by the Nonprofit Curmudgeon.)

• Will my organization meet the criteria to be a nonprofit? Incorporating as a nonprofit (a “public benefit corporation” or a “mutual benefit corporation”) in Maine requires plenty of thoughtful consideration, but is relatively straight-forward and inexpensive.  To be a tax-exempt nonprofit, however, involves a time-consuming and more expensive application process with the IRS.  There are many types of tax-exempt nonprofits, some of which allow your donors to deduct their contributions and some of which do not. Learn about the different types of tax-exemption for nonprofits, and the requirements for each.

Should you and your partners decide that starting a nonprofit is the best route, MANP provides a number of resources that can help you along the way:

• Start-Up Checklist: This is MANP’s recommended process for starting a 501(c)3 nonprofit (many of the steps are the same when starting another type of nonprofit).

• Answers to Frequently Asked Questions About Starting a Nonprofit in Maine: There’s no doubt about it – the process can be confusing, and there are a number of questions that seem to crop up regularly. Find information on how much it can cost, whether to incorporate, how to recruit board members, what it means to be tax exempt and more.

• MANP does not have the staff capacity to work with people directly on this process, though we are happy to try to answer specific questions via our Help Desk. Should you choose to hire support, MANP’s Yellow Pages is a resource for lawyers who can help you through the process.

All organizations that have started the process of becoming nonprofits are eligible to join MANP and access the many benefits of membership, including training discounts, publication discounts, unlimited access to our Help Desk, pro bono legal and accounting advice and more. Learn more about membership with MANP.