Starting a nonprofit organization is a decision that should not be taken lightly. Like any other entrepreneurial endeavor, you must seriously take into account whom you are going to serve, how you are going to serve them, how much it is going to cost, where you are going to find start-up capital, who is going to help you and what kind of return or impact you expect. Before starting a nonprofit organization, we highly recommend taking the time to develop a strategic plan or a business plan. (Click here for a great resource to help you get started on your business plan.)
After carefully planning your charitable initiative, there are two primary ways to start your nonprofit organization:
Option 1: Incorporation as a 501(c)3, tax-exempt charitable organization
You can form your own nonprofit organization by incorporating as a legal entity with the State of California and applying for tax-exempt, 501(c)3 status. There are a number of fees associated with this process, and you may have to hire an attorney or an accountant to assist you. Incorporating can cost up to a few thousand dollars and can take anywhere from six to nine months to complete. If you are interested in going this route, we recommend contacting the Center for Nonprofit Management or Public Counsel Law Center. You may also find “The California Nonprofit Corporation Handbook” by Anthony Mancuso helpful. Since 2014, the IRS has made the simplified form 1023EZ available to organizations meeting certain qualifications, including limited projected and actual income. Learn more about the pros and cons here.
Option 2: Fiscal Sponsorship
Another option is to partner with an existing nonprofit corporation who will act as your fiscal sponsor. A fiscal sponsorship relationship is one in which an existing nonprofit corporation extends their 501(c)3, tax-exempt status to a project so that they may solicit tax-deductible contributions and grants and operate under the “umbrella” of that organization. If you choose this option, we strongly recommend that you create a written agreement between you and the organization serving as your project’s fiscal sponsor that includes an understanding of the services provided, fees charged, the term of the engagement, and the grounds for terminating the relationship. (Read the Guidelines for Fiscal Sponsorship from the National Network of Fiscal Sponsors.)
Community Partners is a nonprofit organization that operates a fiscal sponsorship program. We provide fiscal sponsorship to projects that demonstrate genuine charitable intent, able and committed leadership, potential for significant community impact, and strong prospects for growth and financial sustainability.
Community Partners provides our fiscal sponsorship projects with financial and administrative services, as well as programmatic support. Our financial and administrative services include accounting, general liability insurance, payroll and other human resources services, audits, and tax and lobbying filings. Programmatically, we provide project leaders with a Community Partners staff liaison who provides one-on-one counsel on organizational development issues ranging from fundraising and resource development to strategic planning. Community Partners also facilitates trainings and workshops, networking and peer learning opportunities, and “Meet the Grantmaker” sessions on an ongoing basis.
Projects accepted for fiscal sponsorship by Community Partners share costs by paying a 9% fee on all revenue raised from private sources (including grants, contracts, donations, special events, etc.) and 12% on revenues from government sources. We also require that our project leaders maintain close communication with Community Partners by updating their staff liaisons on current programs, grant proposals, activities and special events, fundraisers, board development and budget changes. In addition to regular verbal updates, a Periodic Project Report is also due semiannually. Lastly, we require that all our projects identify themselves as a project of Community Partners on public materials such as websites and brochures.
For a comprehensive overview of the services, benefits, and expectations involved in Community Partners' fiscal sponsorship program, please read our Mutual Expectations.
How do I become a project of Community Partners?
If you are interested in applying to Community Partners’ fiscal sponsorship program, please review our How to Apply page.