HOW TO SET UP YOUR NONPROFIT ORGANIZATION FOR SUCCESS!
Starting a nonprofit grows out of a passion to fill a need in the community,” says David Yates, an attorney at Greenberg Traurig in Buckhead. “The difficulty comes in developing a structure to help solve that need.”
Rony Delgarde, founder of Global Paint for Charity, found his passion while volunteering with CARE, an international humanitarian agency, delivering emergency relief in Uganda where the buildings were void of color. He thought about the difference a coat of paint would make, not only to protect the structures, but to bring color and joy to the people they serve.
He began with a chance donation of 20 gallons of paint that expanded a few cans at a time until he needed a warehouse. But he had no idea how to go about establishing a nonprofit so he could solicit funds to help with distribution. A friend recommended the Pro Bono Partnership of Atlanta that engages volunteer attorneys to provide nonprofits with business services.
“Robyn Miller, senior corporate tax council at the Pro Bono Partnership, advised me about all the steps I needed to take and referred me to LegalZoom.com to work with an attorney,” he says. “I couldn’t have done it without legal assistance.” Since 2012, the organization has donated more than 600,000 gallons of paint destined for landfills to 13 million individuals and public buildings in 44 countries.
“Unless founders want to hire people or establish a foundation, it’s possible to create a nonprofit without an attorney,” Yates says. “But it’s advisable to identify areas the IRS focuses on and get answers to those questions from a lawyer.”
The process is similar to starting a business. Both begin by writing a concise business plan that helps determine the structure of the organization, but that’s where the similarity ends. For-profit business plans generally appeal only to executives and investors, while nonprofit plans must appeal to donors, volunteers, investors, foundations and beneficiaries. Each must be structured accordingly.
“The next step is creating a board of directors to help lead the organization,” Yates says. “Georgia only requires one member, as long as it’s a different person from the founder.” Next comes selecting a registered agent who is responsible for all legal documents received or submitted by the organization. Fees are required for most filings.
Once founders file Georgia’s Articles of Incorporation to create their nonprofit, they should file for a free federal Employer Identification Number online, which acts similarly to a social security number but for a business or nonprofit. An important next step is to create bylaws and a conflict of interest policy to ensure that all decisions made benefit the intended recipients and not the founder or board members.
Then it’s time to apply for federal and state tax exemptions. “Even though most nonprofits are exempt from income taxes, reports still have to be filed,” Yates says. “It’s a complex process, and I advise clients to find a tax accounting firm to partner with throughout the years.”
Nonprofit organizations can raise funds and get tax benefits without obtaining 501c3 status, but they must register as a charity with the Georgia Secretary of State. The distinction is that donors cannot deduct their contributions until the organization is granted 501c3 status. According to Yates, the process normally takes six to nine months from filing, but it’s unpredictable. “For me, it was well worth the wait,” says Delgarde.
Greenberg Traurig
gtlaw.com
@gtlaw
Global Paint for Charity
globalpaints.org
@globalpaintforcharity
