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| Re: New Not for Profit: Is it possible to obtain funding at the outset?
Posted by Tony Poderis   on 12/31/2008, 5:53 pm, in reply to "New Not for Profit: Is it possible to obtain funding at the outset?"
VIP Poster
Hello Kumar: My experience, and what I provide on my website, are all about the non-profit fund-raising process. Your interesting post deals with the early stages of a non-profit organization’s startup process, with its attendant rules and regulations. While I am comfortable with making a few comments about your range of issues, you may be best served with counsel from an attorney---especially one who knows non-profit law. With that caveat regarding my credentials, here are my comments, sent on to you with the best of intentions, but necessarily to the point and quite candid in some areas:
-- You referred to your project as being a dream, but on the other hand, you have registered in Illinois and you are filing for tax-exempt status. This suggests to me that your Mission Statement may be unclear, with no real parameters for the good you want to do.
-- The possible Mission lack-of-clarity and focus are as well suggested to me when you want to “work in the area of “civic engagement” in India. “Empowering democracy, accountability in government functioning, etc.,” are all noble aims, but the scope and breadth of such goals appear to be staggering, thus making the means to those ends all but impossible to detail in strategies and tactics. And, such aims will be proportionally challenging if you are taking about providing service to all of India, to a province, or to a community. Perhaps the following article of mine will help:
Don't Make Your Organization's Statement Of Purpose A "Mission Impossible"
http://www.raise-funds.com/1101forum.html
-- Surely there are already such organizations at work in India doing the same thing as you dream to do. (Just think of the many “better government” groups and organizations operating in the US exercising oversight and vigilance to their goals for a “better” America.) You want to look for what is already in operation in India in that way for your possible collaboration/participation with any such groups.
-- As premature as it seems to me, considering if my observations above are credible, nonetheless, let’s address your key questions concerning the raising of money at this time. Here is what I know from sources I have tapped from time to time:
• Extra caution is needed, but many organizations have started work before the formal process was completed. State laws vary, so check closely. State law governs absolutely. Then, there are the IRS regulations
• Declaring oneself to be a non-profit before the state’s approval of incorporation can be risky, but, so long as the status is correctly disclosed, it is probably not illegal.
• However, receiving charitable funds before organizational status is granted, may very well be illegal. Again, state law governs. But you can in some instances solicit (simply ask for) funds as a non-profit before the IRS and your state recognize your tax-exempt status. A non-profit can possibly apply for grants or solicit support before the IRS rules, so long as the interim status is absolutely and clearly disclosed first and foremost.
• A donor giving to a non-profit during this period does take a risk that tax-exempt status will not be granted, in which case the contribution is not deductible. For a private foundation, the chances for funding are slim to none, since that type of grantor may not grant funds to other than a recognized exempt organization.
• Raising money in the US to spend in another country is an issue strictly governed by the IRS. Do read my following article, especially the Addendum, before you go too far:
--- Greetings from America:
How U. S.-Style Fund-Raising Can Work In Your Country
http://www.raise-funds.com/020907forum.html
Getting grants---any money---is going to be difficult, unless and until you are in compliance with state and federal law. Even then, any potential grantor/donor will want your best possible mission statement, at least an outline of a strategic plan, and your and other volunteer leadership to carry out all of the necessary initiatives. Still, looming in sight as far as I can see, is the real concern that your dream and stated objectives are far too broad and general---even highly subjective---to allow for a clear understanding of your goals and confidence by potential funders that you can meet them.
With true and sincere respect for what you are trying to do on a massive scale in all of India, if your dream has any chance to succeed, I would think that the work to install those noble and lofty initiatives will best be possible by starting in a single, manageable, village or smaller community. But, that’s only if that is even possible while working within the rules and regulations of the governments of the US and India. You need a non-proft-knowlegeable attorney.
While you are along the way to some degree with your organization, perhaps some ot the following resources will be useful:
--- IRS: Life Cycle of a Public Charity
http://www.irs.gov/charities/charitable/article/0,,id=122670,00.html
--- Foundation Center:
Reference Guide for Starting a Nonprofit
http://foundationcenter.org/getstarted/guides/nonprofit.html
Best wishes for success,
Tony
Tony Poderis
http://www.raise-funds.com
- Fund Raising Forum Library: 50 feature articles
- Exhibit & Document Library: 98 items
- Potpourri Library: 10 Incidental/essential articles
• Permission to reproduce any material is not required
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