When building a nonprofit, it's important to pay close attention to the legal nature of the project. A nonprofit is defined by specific legalities, and it's wise to ask for professional guidance during the startup process. People in the nonprofit startup services world often encourage their clients to focus on these four areas of potential legal concern.
Taxes
Much of the benefit of nonprofit organization arises from its unique tax structure. This is an opportunity to ensure the organization doesn't pay a lot in taxes, but it also creates some unique issues. Of notable importance is the fact that a nonprofit has to operate without producing a regular surplus. To the extent that a nonprofit develops surplus capital, it has to find ways to use, dispose of, or invest the money without violating local, state, and federal tax regulations.
You'll need to keep close tabs on the accounting at a nonprofit startup. Likewise, you may need to document and justify surpluses that might be part of the startup process, such as fundraising money that will be used soon. It's wise to ask a lawyer for advice on how to handle the money during this stage.
Organizational Charter and Governance
Every nonprofit operation needs to have some degree of governance. In the beginning, a nonprofit startup services provider can help you draw up a charter. This will need to outline the organizational structure of the nonprofit, and there should be an emphasis on making sure officers of the organization can make decisions.
Likewise, there needs to be a structure in place for changing the corporate charter and organization structure. It's critical to strike a balance between providing flexibility and protecting the organization against sudden shifts. The goal is to ensure stability while also allowing the operation to evolve as needed.
Trademarks, Copyrights, and Other Rights
It's normal to build a brand for a nonprofit. Just as for-profit corporations have to do, your organization will need to register and defend many identifying names and marks. From your organization's name to its logo, you'll want to be well-positioned to defend the nonprofit's rights if someone infringes them.
Conflicts of Interest
If people who are involved with the nonprofit have outside interests that conflict with the organization's purpose, that can create a lot of trouble. It's a good idea to make sure all members of the nonprofit don't have conflicts of interest. This can be accomplished through interviews, background checks, and declarations of financial interests.
Contact a company that offers nonprofit startup services to learn more.
