Starting a 501(c)(3) nonprofit | Legal issues | Forum

Put succinctly there is a lot of work that goes into starting a nonprofit.

Some of the first steps that have to be taken:

A mission statement – just one or two sentences relating to what this organization is all about

Board Members – we need to pick people who will meet regularly to run and make decisions relating to the corporation. If we want to incorporate in Delaware, the minimum number of people on the Board is 3

By Laws – we need to draft by-laws that state exactly how the organization is going to be run, we have some leeway with this, but 501(c)(3) puts restrictions on how a the corporation can be run

Articles of incorporation – we need draw up documents that we file with the secretary of state where we plan on incorporating. This document must include:

• A name of the corporation
• An Address for the corporation
• Names and addresses of the board members (they need not live in the state of incorporation)
• Witnesses signatures

After that we need to think a lot about how we want to record documents, legally we have to save all board documents, including minutes and financial documents. There has to be a recording system in place.

We need to develop a budget and accounting system as well.

That's what we need to do to start. After that we file the by-laws and articles with the secretary of state, and start filing with the IRS for an EIN number (like a social security number for corporations) and file with the IRS for tax exemption status.

So what we need to start thinking about:

The mission of the organization

What size board we want to have, and who we want on the board

How we want the corporation to be run

Where we want to locate our corporation (we need an address to incorporate)

How and when we want to meet, and how we intend to preserve documentation from when we meet (not sure yet if meetings can be done electronically or not, inclination is that it's fine provided we still meet the recording requirements)

How we want to run our finances and how we plan on raising money – keep in mind there are filing costs with the state so we'll need to start raising money (and recording) before we file.

I should say, that I'm happy to do a lot of the leg work on this and put this together, with a few disclaimers.

First, I, along with most law students in the country, are in the midst of or rapidly approaching finals. The amount of work I can do right now is limited, but I have a nice long winter break coming up with nothing better to do.

Second, I am just a law student. Granted that you don't need to be an attorney to file and that I'm in my last year and will take the bar this summer, but it makes sense that after I (or someone else) have put together this documentation that an actual attorney with 501(c)(3) experience review the documentation to make sure that its all in order.

Finally, this is going to be a major time and effort commitment. We should all reflect on the level of investment we're willing to put into this project. In otherwords: Are we for real and going to go for this, or are we going to think this is cool for a little while, talk about some space ship ideas and then move on to the next internet meme.

Anyway, question away, I'll answer them as I can. I hope this is helpful.

I'm still really excited about this idea

As for the state that we want to incorporate in. I think that ideally it should be where our highest concentration of people are located at. At the moment I don't think that we really have a concentration in any one spot, but hopefully this changes soon.

It would be nice if we could colocate everything so that we only have one facility. For the time being I assume our "facility" will be someone's shed. Once things eventually get established I imagine that members will come to the physical location on vacation so they can help construct things and have quarterly meetings in person.

johnnyping said:

Finally, this is going to be a major time and effort commitment. We should all reflect on the level of investment we're willing to put into this project. In otherwords: Are we for real and going to go for this, or are we going to think this is cool for a little while, talk about some space ship ideas and then move on to the next internet meme.

About this. I think you'll find that we are all excited and committed to this project/organization. And as I see it, it will only grow. I am extremely impressed with how far it has already gone. There are people with so many backgrounds and expertise chipping in anything they can. It's amazing what is being done. The website and logo look great. Collaboration on designs is underway. 3D models and math code are being shared. We now have lawyers/law students helping with becoming a non-profit. The way I see it is that anybody that is willing to help can have a roll. I also think that when everything gets in place, there will be a flood of new users if we do it right.

In short, your expertise is needed and much appreciated and the commitment is here :)

rpulkrabek said:

About this. I think you'll find that we are all excited and committed to this project/organization. And as I see it, it will only grow. I am extremely impressed with how far it has already gone. There are people with so many backgrounds and expertise chipping in anything they can. It's amazing what is being done. The website and logo look great. Collaboration on designs is underway. 3D models and math code are being shared. We now have lawyers/law students helping with becoming a non-profit. The way I see it is that anybody that is willing to help can have a roll. I also think that when everything gets in place, there will be a flood of new users if we do it right.

In short, your expertise is needed and much appreciated and the commitment is here :)

Excellent to hear, the enthusiasm I've seen so far is fantastic. I just wanted to mention that once we file we've got a cash commitment and restrictions by which we'll have to operate, we're no longer working in the world of the hypothetical, is all.

Post edited 3:55 pm – November 20, 2009 by johnnyping

Rizwan said:

A mission statement –  

a collaborative space agency dedicated to research and exploration of the solar system.

Board Members –

A trust issue comes up with this, since the board members will be handling the money and the bank accounts. Is it possible to have board members from different countries?

By Laws –

Can someone make a wiki for this?

Articles of incorporation

• A name of the corporation – Collaborative Space Travel and Research Team
• An Address for the corporation – This would be hurdle, if something goes wrong (we working with rockets here) this place would be instantly raided by the police. I am not sure if someone would be willing to risk his address. Is it possible to have the address in another country? Outside the jurisdiction of US laws?
• Names and addresses of the board members – Again can these members be from different countries? Since this project is all about collaboration.
• Witnesses signatures – Shouldn't be a problem I guess. Or am I day dreaming?

A couple of things come to mind here:

Regarding the boardmembers, they won't technically be handling the money. Instead it will likely be one of the officers (elected by the board), specifically the treasurer. This is part of the reason that corporations have such strict recording requirements, every penny needs to be accounted for at all times. We should be able to figure out pretty quickly if there is some sort of scandal going on. As Luke said, we'll have easy recourse against a dishonest officer.

By laws – I'm happy to make a first draft of the bylaws and post it to a wiki to be commented on and discussed. I'd like to get some ideas before I do that though, how do we want the corporation to be run? How often does the board meet, how many board members must be present for a quorom, how many officers? What should the officers roll's be, how often do we want to vote for the officers, etc. This will be the governing document and we'll be stuck with it absent consent of our members to change it. Think of it as our company's constitution. If you like I can find a couple of sample bylaws and post them so that everyone can get a better idea of what the document I'm talking about looks like. Edit – Link Here.

Address – Yes the place will be instantly raided by the police, but I don't see that as such a bad thing if something that terrible happens. It is not possible, I don't think, to incorporate as a US corporation in another country. But as I see it, wheverver we end up working, if there is a major explosion, law enforcement will be involved

Board members – handled above, but I don't see a problem with international boardmembers.

johnnyping said:

Address – Yes the place will be instantly raided by the police, but I don't see that as such a bad thing if something that terrible happens. It is not possible, I don't think, to incorporate as a US corporation in another country. But as I see it, wheverver we end up working, if there is a major explosion, law enforcement will be involved

This person wouldn't be personally held accountable right? They would just be the point of contact. Doesn't incorporating help to remove personal responsibility should something go wrong?

The state of incorporation has no bearing on where the operations can occur, right?