NonProfit Formation

Alternatives to Nonprofit Incorporation

You're committed to a social cause and now you're fired up to form a new nonprofit. But before you move too quickly, you might want to consider these worthy alternatives to nonprofit incorporation.

Nonprofit organizations attract people who are dedicated to using their talents to make the world a better place.

Many people who serve in nonprofits will eventually branch out and incorporate new nonprofits themselves. But is nonprofit incorporation really the way to go?

Not always. It turns out that there are several alternatives to nonprofit incorporation that are also worth considering, especially when you consider the expense and hassle that it takes to start a nonprofit corporation from scratch.

Although some of the alternatives may require you to modify or refocus your not-for-profit activities, others will let you function with a minimal amount of interference.

• Start a chapter. There are myriad national and international nonprofits interested in starting new chapters. And the advantages of starting a new chapter instead of incorporating a new nonprofit are significant. Existing infrastructure, name recognition, high-profile marketing initiatives, and more make starting a chapter a popular alternative to nonprofit incorporation.
• Join another organization. If you are primarily interested in performing nonprofit activities (rather than leading organizations), launching a new nonprofit probably isn't the best option. Thousands of nonprofit organizations across America need both paid staff and volunteers to achieve their missions and are ready to welcome you with open arms.
• Operate under an umbrella organization. It's common practice for non-incorporated nonprofits to operate under the fiscal umbrella of another incorporated 501(c)(3) organization. Although the umbrella organization may assess a small, prorated administrative fee on your grants and other revenue sources, it's a viable option until your nonprofit gains enough traction to pursue its own incorporated status.
• Social entrepreneurism. Some of the most effective nonprofit initiatives happen through for-profit companies. Social entrepreneurism is a movement in which entrepreneurial ventures are formed for the purpose of achieving or advancing a social cause. Instead of being guided exclusively by a profit motive, these companies are guided by the dual purpose of doing good and earning profits (most of which are poured back into the cause).
• Operate informally. If your organization makes less than $25,000 per year and has no employees, it's possible to operate informally rather than as a nonprofit corporation. You may still have to fulfill minimum reporting requirements, but it's a lot easier to maintain than a full-blown nonprofit corporation.

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