by Adele Gregory

Created on: September 13, 2010

It’s not necessary to create a non-profit organization to do good work, but it is if you intend to apply for funding or other charity-related benefits such as tax exemption. Charity laws can vary depending on where you’re based. So the very first step is to contact the office of your local charity regulator or a non-profit advice organization to find out what’s required. They’re not hard to find, any existing charity in your area will have contact details.

There are two documents you will want to look over before you begin. One is the registration application to become an officially recognized charity. The other is a sample constitution. A constitution lays out the aims and objectives of your organization but also outlines the duties of its trustees. You will need, for example, to decide beforehand a minimum number of members, minimum number of meetings per year and how many people need to attend for a meeting to be valid (or “quorate”). Constitutions also formally state that trustees should uphold the organization’s objectives and not be working for profit. Having a sample constitution in your hands is useful for the first concrete step  - recruiting trustees.

To start a non-profit organization you need to, not surprisingly, create an organization. In practice this usually means turning a small group of concerned individuals into a managing committee or board of trustees. You should have, at the very least, a Chair, Secretary and Treasurer but more may be required by your local charity laws. Technically they won’t a board or management committee until you submit your forms to the regulator. While a group is still getting the paperwork together and putting plans in place they’re often called a “steering group” or “steering committee”.

The steering committee meets to determine the organizations aims and objective and the practical details of the constitution like meetings etc. This is also the time to consider whether the organization should become a company limited by guarantee. Limited by guarantee means that individual members cannot be held liable for the charity’s debts over a certain amount (usually $1.00). Once the details are hashed out and the constitution and registration forms are submitted and approved, you should receive your charity registration number and your non-profit organization has come into being.

As a registered and constituted charity, you are now in a position to receive funds. Fundraising is a whole area unto itself. But on the organizational side, there are a couple of things that will help a newly-formed charity when it comes to applying for funding. It’s a good idea to have your first AGM (Annual General Meeting) so your office bearers have been legitimately elected. Draft a written report of the steering group’s work to present at the AGM. You can offer it in lieu of the Annual Report that funders sometimes request. Lastly, recruit whoever will serve as your auditor. Your treasurer will keep your financial books throughout the year but at some point they will need to be checked by an external auditor. It will stand you in good stead to have this name ready if asked.

Creating a non-profit organization is a lot simpler than people sometimes imagine. The hardest parts can be translating your ideas into a clear, concise set of objectives and working out the roles and responsibilities of trustees. Exactly how your organization will advance its aims and keep itself afloat is your board’s next job. Starting a non-profit organization is, of course, only the beginning.

Learn more about this author, Adele Gregory.
Click here to send this author comments or questions.