Why are you starting a nonprofit?

Why are you starting a nonprofit?

Jun 19, 2021

A tax-exempt nonprofit in the US is an organization that is founded for the public good - it does not have profit as its main objective. In return for helping others, it is exempted from income tax and donations to it are tax deductible (somewhat.)

If you are starting a nonprofit, you have found a cause and you want to work to solve a problem. You have defined a mission and you have a plan for achieving the mission. This is the reason to start a nonprofit.

I have heard a lot of reasons to start a nonprofit lately, and they all have a major fallacy - "nonprofit" does not mean "needs no money." A nonprofit is a corporation with even more rules than a regular corporation. If you don't like rules, just start a for-profit.

As someone once said, "Nonprofit is a tax status, it's not a business plan." As I said a lot lately, "Important to you" is not the same as "important."

If you are starting a nonprofit so you can get grants to keep your company going, do not start a nonprofit. Go determine why your business cannot generate enough income to be successful.

If you are starting a nonprofit because you don't have the money to start a for-profit, nobody is going to fund you. Go figure out how to start your own business or just keep going to work.

If you are starting a nonprofit to earn a decent salary, ask yourself which is more important - the cause or your salary? If it is not the cause, don't start a nonprofit.

If you are starting a nonprofit to make money off some property that was left to you, don't start a nonprofit. Just enjoy your inheritance or sell it and cash out.

If you can't find two other people (in Texas) who believe in the cause enough to be on the board with you, don't start a nonprofit. Revisit your mission.

Worst of all, if you are starting a for-profit to fund your nonprofit, just start and run your for-profit. Donate the proceeds to a worthy nonprofit.

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