Non-profit organization
July 14, 2011 7:21 AM Subscribe
Help me start a non-profit
I want to start a non-profit organization. The first, perhaps only, function of this organization is to pay for spaying/neutering of dogs and cats for low-income individuals and families in the county (or perhaps surrounding counties). The idea is to increase the number of spay/neuters by paying for those who would normally not get them done.
Suppose the foundation has a $1,000,000 endowment. So this money is sitting in the bank, well not a bank, probably some low-risk financial instrument, earning 5% yearly (just guessing). So that's 50K/year earned. Of course that $1,000,000 gets smaller each year due to inflation, so some of that earnings would have to go right back to the endowment (say 3%), so now we're down to 20K/year. Then someone would have to be paid to run the organization. There would be costs for legal, accounting, insurance, advertising (for lack of a better term). Any way to estimate these?. ie for an endowment of $X, can you say it will have y% in yearly legal fees? Maybe this someone would be a full-time employee, who in addition to administering the program, would be responsible for fund-raising to increase the endowment, pay for her salary and the other costs.
Then there would be fraud prevention. That is, we would want to make certain that the individuals participating were indeed low-income.How? W-2? And to verify residence. And also that spay/neuters that were charged were indeed performed. I guess we would work with only certain veterinarians that we trusted. Would we make a deal with the vets such that they would perform the service at a discount, though perhaps still make a small profit? Would we play the vets or the individuals? Could we do random visits to dogs/cats to verify?
I've probably got some things wrong, please feel free to correct them.
I've probably missed a number of things, please feel free to mention anything you see fit.
Tell me anything you can think of.
I want to start a non-profit organization. The first, perhaps only, function of this organization is to pay for spaying/neutering of dogs and cats for low-income individuals and families in the county (or perhaps surrounding counties). The idea is to increase the number of spay/neuters by paying for those who would normally not get them done.
Suppose the foundation has a $1,000,000 endowment. So this money is sitting in the bank, well not a bank, probably some low-risk financial instrument, earning 5% yearly (just guessing). So that's 50K/year earned. Of course that $1,000,000 gets smaller each year due to inflation, so some of that earnings would have to go right back to the endowment (say 3%), so now we're down to 20K/year. Then someone would have to be paid to run the organization. There would be costs for legal, accounting, insurance, advertising (for lack of a better term). Any way to estimate these?. ie for an endowment of $X, can you say it will have y% in yearly legal fees? Maybe this someone would be a full-time employee, who in addition to administering the program, would be responsible for fund-raising to increase the endowment, pay for her salary and the other costs.
Then there would be fraud prevention. That is, we would want to make certain that the individuals participating were indeed low-income.How? W-2? And to verify residence. And also that spay/neuters that were charged were indeed performed. I guess we would work with only certain veterinarians that we trusted. Would we make a deal with the vets such that they would perform the service at a discount, though perhaps still make a small profit? Would we play the vets or the individuals? Could we do random visits to dogs/cats to verify?
I've probably got some things wrong, please feel free to correct them.
I've probably missed a number of things, please feel free to mention anything you see fit.
Tell me anything you can think of.
This is a very commendable idea. I don't know where you are located but have you researched animal shelters/rescue organisations/local vets in your city/county/state to see if a similar program already exists? It is possible for a new non-profit to start up underneath the umbrella of a larger, similar-goal, already established non-profit to get their 501(c)(3) status and then spin off. The most important item is funding and fundraising. If *you* can raise the money, then you can start a non-profit.
In my area, certain vets already have a sliding scale arrangement for spaying dogs and cats if they are brought in by one of the volunteer rescue organisations. I would recommend volunteering with one of them to gain experience.
posted by TWinbrook8 at 7:48 AM on July 14, 2011
In my area, certain vets already have a sliding scale arrangement for spaying dogs and cats if they are brought in by one of the volunteer rescue organisations. I would recommend volunteering with one of them to gain experience.
posted by TWinbrook8 at 7:48 AM on July 14, 2011
Talk to a financial expert about your assumptions. I believe in order to maintain a non-profit status, you have to spend off a certain percentage of your endowment every year. If so, your numbers need to be significantly adjusted.
posted by NotMyselfRightNow at 7:57 AM on July 14, 2011
posted by NotMyselfRightNow at 7:57 AM on July 14, 2011
The animal shelter where I live has a program like that. They do it by vouchers, where the person gets a voucher to take to one of a list of vets for the surgery. I think the owner pays the vet the small fee. I think they confirm residency with a driver's license. It's not for just low income, though, but limited by residency. I really think the lack of spaying/neutering isn't necessarily about cost, but more about awareness and education regarding the need for it.
A w-2 would work for income verification, but if you are dealing with a low-income population, not everyone will have a w-2 - they may work for cash, be on public assistance or social security, etc.
There are alot of books out there on starting a nonprofit - this is a good one:
http://www.nolo.com/products/how-to-form-a-nonprofit-corporation-NNP.html
posted by lawhound at 8:06 AM on July 14, 2011 [1 favorite]
A w-2 would work for income verification, but if you are dealing with a low-income population, not everyone will have a w-2 - they may work for cash, be on public assistance or social security, etc.
There are alot of books out there on starting a nonprofit - this is a good one:
http://www.nolo.com/products/how-to-form-a-nonprofit-corporation-NNP.html
posted by lawhound at 8:06 AM on July 14, 2011 [1 favorite]
I wish you had a location listed.
Most NPOs don't start with a large endowment. Many don't even have paid staff to start. I work for a large (very large, international) NPO that has a significant staff load, but I also sit on the board of a small arts NPO where everything - from accounting to administration - is done by volunteers, and our overhead is under $7000 a year (mostly for insurance). Most organizations fall somewhere in-between. If you have people who are passionate about your cause, then it's possible to start up with very, very low overhead - volunteers running key positions and operating out of some borrowed space. Also, you're not calculating donations or fund-raising into your budget, and you really should.
In many states there are organizations that can help get new NPOs going. In Maine we have the Maine Association of Nonprofits, and if you Google around you may find something similar for your state. They'll provide great resources to help you get started.
posted by anastasiav at 8:31 AM on July 14, 2011 [2 favorites]
Most NPOs don't start with a large endowment. Many don't even have paid staff to start. I work for a large (very large, international) NPO that has a significant staff load, but I also sit on the board of a small arts NPO where everything - from accounting to administration - is done by volunteers, and our overhead is under $7000 a year (mostly for insurance). Most organizations fall somewhere in-between. If you have people who are passionate about your cause, then it's possible to start up with very, very low overhead - volunteers running key positions and operating out of some borrowed space. Also, you're not calculating donations or fund-raising into your budget, and you really should.
In many states there are organizations that can help get new NPOs going. In Maine we have the Maine Association of Nonprofits, and if you Google around you may find something similar for your state. They'll provide great resources to help you get started.
posted by anastasiav at 8:31 AM on July 14, 2011 [2 favorites]
Response by poster: >>more about awareness and education regarding the need for it.
I agree that this is a factor. I guess when I said "advertising" in the original post, part of what I meant was education about this.
posted by allelopath at 8:31 AM on July 14, 2011
I agree that this is a factor. I guess when I said "advertising" in the original post, part of what I meant was education about this.
posted by allelopath at 8:31 AM on July 14, 2011
I'm a fundraiser at a mid-sized local nonprofit and have been working in nonprofits for over five years.
A lot of your assumptions are starting out WAY too big for beginning a nonprofit. Anastasiav explained a lot of this well, but basically, most nonprofits start out (and some stay) very small with no endowment. I've been in organizations with million dollar budgets that do not have an endowment, so assuming that you're going to have a $1m endowment almost immediately is a faulty premise.
Secondly, staff. You will not have a full-time paid staff person upon beginning your organization. Very likely, for the first year or two or three or four your organization will be run y volunteers donating their time. In a perfect world, you will also have a small but dedicated fundraising board that can pitch in. You would likely be able to hire a part-time Executive Director or something of the sort a few years in. Then they can go to full-time; then you can hire more people.
Finally, fundraising is a huge component that, as Anastasiav said, I think you're underestimating here. Where is your money coming from? It doesn't just fly out of someone's pocket and into yours. My organization has a budget of $8m and spends several hundred thousand dollars a year on fundraising. That includes salaries, benefits, creating and distributing communications materials (we don't really use "marketing" on the NFP side, unless you're a patron service organization), a donor database, maintaining a website, etc. It would be great for you to find someone who has grant writing experience and could help you out in that regard; there are plenty of foundations committed to animal population control. However, most funders require you to have a 501(c)(3) designation before they will fund you. (This designation is also required for individual donors to be able to write off their donation to your organization.)
Any questions, feel free to mail me.
posted by anotheraccount at 1:03 PM on July 14, 2011 [1 favorite]
A lot of your assumptions are starting out WAY too big for beginning a nonprofit. Anastasiav explained a lot of this well, but basically, most nonprofits start out (and some stay) very small with no endowment. I've been in organizations with million dollar budgets that do not have an endowment, so assuming that you're going to have a $1m endowment almost immediately is a faulty premise.
Secondly, staff. You will not have a full-time paid staff person upon beginning your organization. Very likely, for the first year or two or three or four your organization will be run y volunteers donating their time. In a perfect world, you will also have a small but dedicated fundraising board that can pitch in. You would likely be able to hire a part-time Executive Director or something of the sort a few years in. Then they can go to full-time; then you can hire more people.
Finally, fundraising is a huge component that, as Anastasiav said, I think you're underestimating here. Where is your money coming from? It doesn't just fly out of someone's pocket and into yours. My organization has a budget of $8m and spends several hundred thousand dollars a year on fundraising. That includes salaries, benefits, creating and distributing communications materials (we don't really use "marketing" on the NFP side, unless you're a patron service organization), a donor database, maintaining a website, etc. It would be great for you to find someone who has grant writing experience and could help you out in that regard; there are plenty of foundations committed to animal population control. However, most funders require you to have a 501(c)(3) designation before they will fund you. (This designation is also required for individual donors to be able to write off their donation to your organization.)
Any questions, feel free to mail me.
posted by anotheraccount at 1:03 PM on July 14, 2011 [1 favorite]
If you're really serious about starting the organization, then getting 501(c)(3) status is incredibly important. Without it, donations to the organization will not be tax-deductible.
I see people reacting to your phrase "Suppose the foundation has a $1,000,000 endowment" because this is a highly atypical way for nonprofits to start, but let's suppose it. You want to protect your own assets from taxes just as much as you want to protect your donors. So even if you're fully funded from the get-go, obtaining tax-exempt status is a crucial first step.
If we're supposing that you have a million dollars, then I think you should hire a lawyer (or find one to donate their time) who can help you incorporate and obtain tax-exempt status (two separate steps, both necessary). If you prefer not to hire a lawyer, then it's definitely possible for you to incorporate and apply for 501(c)(3) status on your own, but be prepared to spend some time reading IRS forms and figuring out the laws of your state as they concern incorporation.
Having done this kind of work in the past, I can tell you that it's a bit of a slog, and you have to read carefully, but the IRS webpage has very detailed instructions which will guide you through the application.
That said, if you can get a lawyer to do it, that would be best.
posted by prefpara at 1:42 PM on July 14, 2011 [1 favorite]
I see people reacting to your phrase "Suppose the foundation has a $1,000,000 endowment" because this is a highly atypical way for nonprofits to start, but let's suppose it. You want to protect your own assets from taxes just as much as you want to protect your donors. So even if you're fully funded from the get-go, obtaining tax-exempt status is a crucial first step.
If we're supposing that you have a million dollars, then I think you should hire a lawyer (or find one to donate their time) who can help you incorporate and obtain tax-exempt status (two separate steps, both necessary). If you prefer not to hire a lawyer, then it's definitely possible for you to incorporate and apply for 501(c)(3) status on your own, but be prepared to spend some time reading IRS forms and figuring out the laws of your state as they concern incorporation.
Having done this kind of work in the past, I can tell you that it's a bit of a slog, and you have to read carefully, but the IRS webpage has very detailed instructions which will guide you through the application.
That said, if you can get a lawyer to do it, that would be best.
posted by prefpara at 1:42 PM on July 14, 2011 [1 favorite]
I've worked in nonprofits for many years. Everyone seems to want to start their own nonprofit when generally speaking you would do a lot more to help by supporting an existing nonprofit. It sounds like what you might want is a donor advised fund (say at a community foundation) or maybe a stand alone foundation that supports an existing organization(s) that do the spay/neuter work. Does that sound right? I would research to make sure there aren't existing organizations in your area already providing these services -- ie. spay/neuter for the pets of low-income folks. There probably is an organization doing this that would love your fundraising help.
posted by fieldtrip at 7:36 PM on July 14, 2011 [3 favorites]
posted by fieldtrip at 7:36 PM on July 14, 2011 [3 favorites]
Response by poster: Thanks for all the responses. I 've learned what I need to learn, so to speak.
Some replies:
The shelters have deals with vets to do spay/neuter pets that are getting adopted, which is great. A gap I see is for people who already have an animal, but haven't had it neutered. The reasons for it not being neutered are usually cultural, and also, inertia. So a part of this program, as lawhound points out, would be awareness and education.
I understand that supporting an existing nonprofit might have benefits over starting a new one. One benefit of starting a new one, perhaps what originally motivated me to consider this, is having to deal with the politics, the infighting, of existing organizations. Ultimately, this decision should come down to what will benefit the animals the most, not my personal preferences.
I have ordered the book recommended, I expect that will be an education, regardless of the route chosen.
posted by allelopath at 1:50 PM on July 15, 2011
Some replies:
The shelters have deals with vets to do spay/neuter pets that are getting adopted, which is great. A gap I see is for people who already have an animal, but haven't had it neutered. The reasons for it not being neutered are usually cultural, and also, inertia. So a part of this program, as lawhound points out, would be awareness and education.
I understand that supporting an existing nonprofit might have benefits over starting a new one. One benefit of starting a new one, perhaps what originally motivated me to consider this, is having to deal with the politics, the infighting, of existing organizations. Ultimately, this decision should come down to what will benefit the animals the most, not my personal preferences.
I have ordered the book recommended, I expect that will be an education, regardless of the route chosen.
posted by allelopath at 1:50 PM on July 15, 2011
MPA degree holder here, with focus on nonprofits. Agreed that there are already a lot of nonprofit organizations out there, and very often you will be able to be more effective by contributing resources (time, money, work) to one of those. I appreciate your desire to avoid infighting and politics, but you will have to navigate those pitfalls if you start your own NP as well.
As others have said, the issue of where your funding will come from is central: getting grants usually requires a track record of success, along with some degree of matching funding; the support of community partners; a clear mission, set of goals, and programming plans; a plan for evaluating success; a plan for sustaining funding into the future; a clear demonstration of how this project fulfills a need not being met elsewhere; etc. Plus actually identifying and writing grants takes a lot of time and work. Fundraising through donations and private contributions is a similarly major undertaking.
In addition to the funding issue, the governance structure of nonprofits means that you will need to put together a board: this is a group of people who are the ultimate decisions-makers about (and people responsible for) the NP. Managing boards and managing the relationship between board members and staff can be challenging and can require dealing with a lot of the political stuff you're looking to avoid.
I'm not trying to be a total downer here, but starting and sustaining a successful nonprofit is a big deal. You might be well served by, as others have suggested, finding an organization that does related work and getting involved with them (as a volunteer orpossibly as a board member) to help you learn about both the existing animal-welfare-related services in your area and about nonprofit management in general. If the existing orgs in your area are super dysfunctional, then you'll learn a lot about what to NOT do, which is also useful!
Best of luck to you! It's great that you're interested in making this contibution!
posted by aka burlap at 12:38 PM on July 17, 2011 [1 favorite]
As others have said, the issue of where your funding will come from is central: getting grants usually requires a track record of success, along with some degree of matching funding; the support of community partners; a clear mission, set of goals, and programming plans; a plan for evaluating success; a plan for sustaining funding into the future; a clear demonstration of how this project fulfills a need not being met elsewhere; etc. Plus actually identifying and writing grants takes a lot of time and work. Fundraising through donations and private contributions is a similarly major undertaking.
In addition to the funding issue, the governance structure of nonprofits means that you will need to put together a board: this is a group of people who are the ultimate decisions-makers about (and people responsible for) the NP. Managing boards and managing the relationship between board members and staff can be challenging and can require dealing with a lot of the political stuff you're looking to avoid.
I'm not trying to be a total downer here, but starting and sustaining a successful nonprofit is a big deal. You might be well served by, as others have suggested, finding an organization that does related work and getting involved with them (as a volunteer orpossibly as a board member) to help you learn about both the existing animal-welfare-related services in your area and about nonprofit management in general. If the existing orgs in your area are super dysfunctional, then you'll learn a lot about what to NOT do, which is also useful!
Best of luck to you! It's great that you're interested in making this contibution!
posted by aka burlap at 12:38 PM on July 17, 2011 [1 favorite]
The shelters have deals with vets to do spay/neuter pets that are getting adopted, which is great. A gap I see is for people who already have an animal, but haven't had it neutered.
one more thought: you could develop a well-thought-out proposal for a program to increase spaying and neutering for those people who already have animals, and approach these shelters you mention with your plan. If it helps fill a gap and helps fulfill their mission, they might be The shelters have deals with vets to do spay/neuter pets that are getting adopted, which is great. A gap I see is for people who already have an animal, but haven't had it neutered. amenable to creating a new program under their auspices. I don't know what the culture is like at those shelters, of course, but if you have a really great proposal, and you're able to volunteer your time to make it happen, or you're able to bring in money to pay for this new program, working with the shelters to expand their services might be a really effective way to fill this gap you see.
posted by aka burlap at 12:50 PM on July 17, 2011
one more thought: you could develop a well-thought-out proposal for a program to increase spaying and neutering for those people who already have animals, and approach these shelters you mention with your plan. If it helps fill a gap and helps fulfill their mission, they might be The shelters have deals with vets to do spay/neuter pets that are getting adopted, which is great. A gap I see is for people who already have an animal, but haven't had it neutered. amenable to creating a new program under their auspices. I don't know what the culture is like at those shelters, of course, but if you have a really great proposal, and you're able to volunteer your time to make it happen, or you're able to bring in money to pay for this new program, working with the shelters to expand their services might be a really effective way to fill this gap you see.
posted by aka burlap at 12:50 PM on July 17, 2011
This thread is closed to new comments.
Do you currrently have that money sitting around?
Is there a current non profit out there doing similar work?
Most non profits are rather small, and there are many good books to get you started with your idea.
A non profit applys for status with the government.
The forms are easily available.
Do you need to raise money? You need to write a case for support to raise money.
Do you have a Mission Statement?
You should start off by talking to people involved with non profits to get an idea of how they work. Many things you list are not really applicable if you simply starting one at this time (but would be as you grow).
I
posted by handbanana at 7:42 AM on July 14, 2011 [1 favorite]