Starting a business is arguably one of the great American dreams conjured in the minds of many. Combining the freedom to be your own boss and the ability to pursue a passion to the fullest lures many to become entrepreneurs. The same can be said for those who want to start a foundation, social enterprise or a nonprofit organization. There are many parallels between a for-profit venture and a nonprofit one, such as possessing working knowledge of laws and creating an organizational structure. Perhaps the largest difference comes in the core mission; nonprofits work with their communities in mind rather than their pocketbooks.

So how do you start a foundation? NOLO.com explains that incorporating, similar to starting a for-profit business, is an initial and crucial step. Next comes filing for nonprofit status with the federal government, specifically the Internal Revenue Service (IRS). A piece from Entrepreneur makes it clear that while filing for this special tax-exempt, 501(c) 3  status is made easier with help from an attorney, individuals can complete the process themselves.  Hurwit & Associates, a Newton, Mass. law firm that specializes in nonprofit law, provides the filing requirements for each state. Additionally, there are professional services like legalzoom.com that specialize in helping potential entrepreneurs start their firms and offer an easy three step process wherein they complete and send the nonprofit paperwork to you. The cost is highly agreeable versus hiring an attorney and starts at $99.

Obtaining 501(c) 3 status is contingent upon completing IRS Form 1023 and can be a difficult process. NOLO contends that the best time to file that form is “…within 27 months of the date you file your nonprofit articles of incorporation.  If you file within this time period, your nonprofit’s tax exemption takes effect on the date you filed your articles of incorporation…”  The 1023 Form itself is made up of 11 parts in which you disclose the full structure of your venture.

Entrepreneur, advises from Jeff Hurwit of Hurwit & Associates for the next step, “The foundation must be governed by a set of bylaws…provisions for the organization’s governance and board selection process, general decision-making, required meetings and conflict-of-interest policies.  GrantSpace.org provides a good collection of bylaws information and samples.” The following steps involve being very selective and discerning in who to award foundation money to and building a strong board of directors. The board might ideally be composed of individuals who are considered experts in their field and therefore would lend credibility to decision making and the overall donation and award process. Last, the organization must practice good money management to remain viable and sustainable.  This includes strong fundraising efforts.

Chris Guillebeau, entrepreneur and New York Times bestselling author of The $100 Startup: Reinvent the Way You Make a Living, Do What You Love, and Create a New Future, contends that following one’s passion can be done today with very little money. Speaking to Forbes, Guillebeau explains his experiences meeting fellow entrepreneurs who began with little planning and startup cash, advising young people to take a chance and follow their passion. Specifically, he advises specifying ideas, acting now, networking heavily and committing to growth.

Going into business for oneself or starting a foundation are nearly synonymous at their inception. Both involve paperwork, commitment and proper management in all phases. With a plan, a little cash and unwavering passion for a cause, getting a venture off the ground is definitely something doable for anyone.

– Dave Smith

Sources: NOLO, Entrepreneur, LegalZoom, Forbes
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