Many people assume that nonprofit corporations aren’t permitted to generate profits, but actually, that isn’t true. They can make profits, but it’s the way in which they’re used that differentiates them from limited liability companies, or LLCs.
In most instances, LLCs distribute their profits among the different business owners and shareholders, while nonprofits are not permitted to do this. While employees of a nonprofit may still earn a salary if hired to work rather than being a volunteer, what they are paid will not increase even if the organization is experiencing financial success; those profits are used to further the mission and enable it to keep running.
Have a cause that you’re passionate about? Want to help by setting up your own non-profit organization? Here are some of the many advantages of starting a non-profit in the U.S.A today:
- You’ll gain credibility
When people unite for a cause, incredible things can be achieved, but rarely can they be achieved without some form of funding. Even if you have an adequate amount of money while setting up a non-profit, it isn’t likely to last without you having to make additional efforts to raise funds to finance your work. This can be extremely difficult to do if potential donors don’t see you as an official organization, as many may find it hard to trust where their money is going.
Once you’ve incorporated your organization though (and you can seek help from an entity management firm to do this), you’ll give yourself the credibility to be able to approach donors confidently, and are far more likely to be successful.
- You’ll gain access to funds
By making your organization an official non-profit, you’ll find it possible to approach grants from both the public and private sector, and better pursue your organization’s goals and mission. When you register your non-profit as a 501 (c)(3), you can make your organization more donor-friendly, as donations are typically exempt from tax. Note also that some states require you to register as a non-profit in order to be able to receive general public donations.
- You’ll have limited personal liability
One significant advantage of running a non-profit is that unlike those businesses that aren’t incorporated, should you find yourself in the unenviable position of being sued or you’re really struggling with debt, all of your personal assets remain protected. This of course doesn’t mean that you can act in whatever way you choose and not be liable once your organization has officially been made a non-profit, but generally speaking, board members are very well protected provided the rules and regulations applicable to non-profits are followed.
Should you seek professional guidance?
Incorporating a non-profit requires hiring a registered professional agent, and if you work with an experienced entity management firm, they should be able to handle this for you and many other aspects of running a non-profit. It’s really important to have all of your legal paperwork taken care of as a non-profit, and investing in a registered agent is absolutely worth doing.
For more detailed information about following your passion and setting up a non-profit for a cause close to your heart, reach out to an entity management firm with plenty of experience of working with such organizations. The advice and support they can offer you could well prove invaluable, and could help you realize your dreams far quicker and more effectively than if you were to go it alone.