Are You Ready to be a 501(c)(3)?

A checklist for emerging organizations

Fewer than one in six new nonprofits survive their first five years. CRC strongly values the opportunity to help emerging nonprofits start off on path to long-term sustainability. We offer a class every other month that can walk you and your leadership team through what it really takes to start and succeed with your new nonprofit. In the meantime, before you rush down to the Colorado Secretary of State’s office and file your articles of incorporation, you might want to consider the following questions. If you can answer all of these questions with some degree of confidence, you may be ready to be a 501(c)(3) nonprofit organization.

Do you have a clear and well-defined mission?

Is there an understandable program that falls within that mission? Do you know specifically what you are trying to accomplish? How will you know when you have achieved success?

Do you have a constituency that embraces your mission and program?

Are there other people beside you (and your family) who believe strongly in the organization that you propose to form? Is this constituency broad-based, reflecting the community you intend to serve?

Are you certain that starting a new 501(c)(3) is the best way to cause the change you wish to see?

Many times, an individual decides to start a nonprofit because they are passionate about the mission. Their own lives have been touched by an issue, and they want to turn that passion into a meaningful impact for other individuals. But a greater impact can sometimes be made by collaborating and getting involved with existing nonprofits that are already addressing that mission area. Increased duplication among nonprofits leads to a lower impact on the issue -- check out your other options first!

Have you identified a group of individuals who have agreed to serve as a founding board of directors?

Nonprofit best practices indicate that founding Board members should not related to you or each other, and should not have strong financial ties with you or each other. Is this group diverse, reflecting the community in which you work?

Do you know what your legal obligations will be as a 501(c)(3) nonprofit?

What must you file with your local government, the state, and the Internal Revenue Service? What restrictions will you face around lobbying, political endorsement, etc?

Do you know of other organizations that provide similar services in your community?

Who is your charitable "competition"? What makes your services unique? How will you partner with them, or how will you distinguish yourself to funders?

Do you know how much it will cost to run your nonprofit, and where your first round of funding will come from?

More than 80% of the charitable contributions made in the US are made by individuals, not foundations or corporations. Are there individuals who will donate to your organization? If you do not receive any foundation or government funding in the first two or three years, will you be able to make it? Based on your research, what foundations, corporations or other institutions will support your work with cash or in-kind donations?

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