FAQs

  • How much does it cost to start a new nonprofit?

    Some nonprofits choose to engage an attorney or accountant to help with this process. Those fees range significantly depending on the services provided and the fee structure of the professionals providing the service. If you are a member of CDP Forming a 501c3 Nonprofit training is included with your membership. This training will give you the five steps needed to complete this process yourself. We also offer a service for $750 to complete this process alongside you. There are two basic fees whether you do this work yourself or engage someone to help: a state fee and the IRS fee. State fees are generally determined by the Secretary of State and range from $25 to more than $250 depending on the state you incorporate in. The IRS fee ranges from $400 to $600. Do your homework and make the best decision to move your nonprofit forward in the way that you can afford and that is most comfortable for you.

  • Are there grants for new nonprofits?

    Yes and no. There are funders who will provide grants to new and emerging nonprofits but these can be tricky to navigate. Funders are investors so demonstrating you have the ability to do work without you having done much can be challenging. If you can’t sell the history of the organization because you are new, then sell the history of the team involved. How can you best demonstrate that you can do what you are proposing to do…if you need more information about grants and the process for applying, consider participating in the Grant Writing Basics course available through the CDP Training Academy.

  • Do I have to be a nonprofit to get a grant?

    Generally speaking, yes. Most foundations and grantmaking institutions are required to give their funds to registered 501c3 organizations. Each funder will generally outline on its website the limitations and requirements for applying for funds. If in doubt, call and ask them.

  • Can you help us figure out our board?

    Of course! Board governance is one of our primary areas of assistance. We can work with your board in a variety of ways. We can do individualized sessions, specific coaching around particular issues or engage your board in the CDP Training Academy for help in specific subject areas. Board Basics through the CDP Training Academy is a great place to start for an overview of what a board should be doing.

  • Is it okay to have my family members serve as my board members?

    Is it acceptable? Generally. Is it a good idea or practice? Not usually. The IRS will ask you about conflicts of interest and related parties so be prepared to answer those questions. If you are new, that question will be vetted during the 1023 application process. If you have an existing nonprofit that question will come up on your 990. My general question to nonprofits is this….if you were not related is this family member someone you would pursue to be on the board? If not, then they shouldn’t be placed on the board. If yes, what makes them a good candidate? The familial relationships should not be a consideration when selecting board members and in general, family members should not serve as board members. Perception is everything so be careful that everything you do as a nonprofit is above reproach. Avoiding family members as board members is generally best practice.

  • Can the nonprofit board be paid?

    Generally speaking, no. Nonprofit board members are volunteer boards. There are occasions where a board member doubles as a staff member. The individual can be paid as a staff member, but not as a board member. In general, we advise nonprofits to have four professional partners: attorney, accountant, banker and insurance agent. These types of specific questions are great to run by the appropriate professional partner for your nonprofit.

  • How do nonprofits get money?

    Believe it or not this is a common question. There’s no easy or simple response to this question. CDP helps nonprofits develop Resource Development Strategies to outline specifically how the organization plans to bring in the resources it needs to run. Each method of bringing in funds requires tenacity, planning and WORK. Slow and steady and consistent implementation is required to be successful over time and grow the nonprofit’s resources to be self-sustaining. Typically, nonprofits bring in money through a variety of sources – individuals donors, businesses, grants, contracts for service, social enterprise, and fundraising events are common sources. It is important to map out a plan for resource development and work the plan.

  • How many board members should our nonprofit have?

    There’s not an exact number that is best. It really depends on the organization. You are legally required to have three board members but most nonprofits need more than that to function effectively. The organization’s bylaws will (should) specific detail about how many board members are required so you’ll want to ensure you are always in compliance with that governing document. When nonprofits are starting out we generally advise engaging 5 -7 members to help get the nonprofit on solid footing. For more information about how to discern what is best for your organization, consider attending Board Basics in the CDP Training Academy.

  • Where do I find new board members?

    Potential board members are everywhere! First identify what you need (what skills, demographic, etc are you looking for?). Second, make sure you have the process in place. Put together an application, materials about the organization, and job description for board member including role, expectations, etc. Last, make sure the organization is connected. Join a community group, civic association or service club and meet people. Use social media to attract new members. Look at who has attended events, participated on committees, or donated to the organization. For more information about how to develop a quality board, consider attending Board Basics in the CDP Training Academy.

  • Who owns a nonprofit?

    There is no owner of a nonprofit. Nonprofits are not owned the way for-profit businesses are owned. Nonprofits are set up for public benefit and are governed by the board of directors. A founder typically starts the nonprofit but they are not the ‘owner’ of it.

  • Can I receive donations before I get my tax-exempt letter from the IRS?

    Yes! The IRS gives organizations 27 months from the time the nonprofit is recognized as an entity in the state to submit the 1023 application to the IRS.  The organization gets all of the benefits of being a tax exempt entity during this period.  The risk to the donor is if the organization doesn’t end up applying and/or receiving tax-exempt status, the donor would need to go back and adjust his/her tax filings. (The link to the IRS website that speaks to the ‘pending status’ issue can be found by click the button below.)

  • Where do I find my tax-exempt number?

    There is not a separate tax-exempt number. When people use that term that are generally referring to the organization’s Employer Identification Number (EIN) or Tax Identification Number (TIN). The EIN/TIN is tied to the organization at the IRS. Once tax exemption is granted, that number will pop up on the IRS’ list of charitable organizations. To apply for an EIN click the button below. This will take you to the IRS website. Once there, click on the Apply Online Here button.

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