Do You Really Need to Start a Nonprofit? by Tisa Silver Canady

I meet a lot of people who say, “I want to start a non-profit.”  I encourage the spirit of giving but not every worthy cause requires creating an organization.  The process of starting a nonprofit involves more than picking a noble cause and a nice name.  You will need to get the government involved to make things official and before you go that route, you need to figure out if it is worth the investment.

What does the “charity” designation mean?
The charitable organization designation is granted by the Internal Revenue Service (IRS).  A normal business organization is typically setup to generate profits for the benefit of its owners. On other hand a charity is setup to raise money (and not necessarily profit), for the benefit of others. The IRS designation means that your organization’s purpose is one that should benefit the public.

What is the purpose?
Charities benefit the public and carry benefits for their supporters, particularly the tax-exempt status and the ability to receive tax-deductible donations. A charity does not have to pay federal taxes and people who donate to public charities can claim their donations as tax deductions. These benefits are at the heart of determining whether you should pursue the official designation for your cause.

Do you need the charitable status?
If the vision you have for your cause is one that involves a large amount of money or money from outside sources, then you should seriously consider obtaining the charitable status.  There are plenty of compelling causes, but the tax benefit provides donors (both individuals and businesses) with an incentive to donate to your charity.  On the other hand, if your cause is a small, non-recurring effort then it is likely not worth the time and money it takes to involve the IRS.  Setting up a nonprofit includes an initial application with a fee, as well as annual reporting and governance requirements.

Here are some ways you can give without officially getting the charity status for yourself:

Donate to an existing charity – Is there another organization already doing what you want to do? If so, do some research on their projects, search for reviews, and attend an event if you are able. Learning about the organization will help you decide if you want to trust it with your donation.

Find a fiscal sponsor- In some cases, you may find an organization that will allow you to attach its charitable status to your cause.  Essentially, you do the work and receive the benefits of having the charitable status without having to obtain it yourself.

Give the gift of an experience – You can ignore the financial side of giving and opt to give the gift of time.  Mentor a child or volunteer at a hospital or senior center. A small gift will have a significant impact.

Whether you need the charitable status or not, give back and give thanks!


To find out more about Tisa Silver Canady, visit her at:

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