Non-profit corporations are organizations that receive favored tax status from the Internal Revenue Service in order to perform a public service. Persons wishing to start a non-profit must first incorporate according to the laws of their particular state and then apply to the IRS for 501(c)(3) status. This process can take three to six months to complete.
No one owns a non-profit; not even the founders. A non-profit must have a Board of Directors made up of volunteers, and the Board must meet regularly. The Board may hire paid staff to fulfill its mission, but Board members cannot receive compensation.
In order to incorporate, the organization must create bylaws that it is then legally bound to follow. The bylaws will specify the mission of the organization, the size and composition of the Board, the meeting schedule and any policies the Board deems appropriate. Bylaws can be amended according to outlined procedures. The minutes of meetings, once accepted, become legal documents that should be retained for reference. The Board is responsible for promoting the mission of the organization and overseeing finances.
Non-profits raise funds by direct appeals to the public and can offer tax-exempt receipts so their donors can deduct donations from their income tax. Fund-raising strategies also include seeking gifts from federated giving campaigns such as United Way, local corporations, private foundations, and government grants and contracts. A non-profit can earn income to support its work by selling donated items, for example. There are some restrictions on income earned by non-profits, and the IRS can clarify the distinctions.
Public relations is vital to the success of a non-profit. This includes not only press releases, websites and printed material, but also collaborating with other agencies. An important aspect of public relations is building trust in the community by ethical behavior and effective program management.
A non-profit has a mission to make a positive change in the community. The amount of that change is the impact the agency is having. If a soup kitchen serves 2,000 meals a month or an agency provides 300 hours of instruction in CPR--those are measurable impacts. Tracking impact is important when assessing your organization, applying for grants or asking for donations.