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Procedures to establish a not for profit organization

You have been asked by a group of local citizens to assist in establishing a not-for-profit organization for the purpose of raising funds to keep their neighborhood safe and clean. These people are concerned about the growing crime rate and increased amount of trash and traffic in their community. They believe that a collaborative effort is needed to address these problems. The citizens are not sure how large the organization should be.

1. Prepare a memo to the group that outlines the process involved in creating a tax-exempt not for profit entity. Include particular alternative strategies, including advantages and disadvantages.

2. What resources are available on the internet to help this group understand the regulatory, taxation, and performance measure issues they will face as a tax exempt not for profit organization.

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Group name:


Subject: Process involved in creating not for profit entity

The first step involved in the not for profit entity creation process is determining the type of nonprofit organization that the group wants to establish and this is determined by evaluating primary objectives. Wrobel (2011) provides that there different nonprofit legal statutes thus it is important to determine what laws the entity will be subject to. The type of non for profit the group wants to establish is a social welfare organization since it is concerned with public safety and community service which is maintaining cleanliness. The not for profit entity will be subject to IRC 501 (c)(4) since it promotes the common good and welfare of the entire community.

The next step involved in forming a not for profit entity is formulating a mission statement. The mission statement is based on the purpose and services to be carried out in the organization. Starting a Non Profit (2008) provides that the mission statement should be brief and describes what the entity is trying to achieve. The purpose of establishing the entity is raising funds to maintain security and cleanliness in the community.

The next step is creating a board of directors and this should be based on organizational needs and objectives since the board should comprise members with different qualities and skills. A board of directors typically comprises three members but can accommodate more members (Wrobel, 2011). The group then checks whether the intended name is available and reserve the name since entities are required to have a unique name.

The group ...

Solution Summary

The procedures to establish a not for profit organization is examined.