CHAPTER 2
IS A NONPROFIT NECESSARY FOR YOU AND
YOUR GROUP?
If you currently represent a nonprofit organization
eligible to receive grants and gifts — as a staff
member, consultant, board member or other volunteer —
you already know the answer to this question.
If, on the other hand, you are an individual artist,
or one of the many filmmakers who visit the Resource
Library, or simply someone who has come to the Center
bearing good ideas about a particular project you’d like
to get funded, the question posed in this section is a
timely one.
A number of angles must be considered when
determining whether you need to be involved with a
nonprofit eligible to receive grants and gifts. On one
hand, you will find some organizations willing to
finance the work, projects or pursuits of individuals,
especially artists or learners seeking support such as
scholarships or fellowships. (See CHAPTER
10 for more information.) Nonetheless, you must bear
in mind the following reality: the majority of funds
available to support the kinds of activities you have in
mind are awarded to eligible nonprofit organizations.
Far more money in the nonprofit sector reaches
organizations than individuals. (Accordingly, much of
this handbook concentrates on organizational resource
development.)
Knowing this, it may make sense for you to do one of
two things: affiliate with an existing nonprofit
organization (often referred to as “fiscal sponsorship”
or getting a “fiscal agent”) or create a new nonprofit
organization. Let’s consider each possibility.
FISCAL SPONSORSHIP
You may decide to affiliate with a nonprofit
organization with the hope of getting financial support
from a funder through that nonprofit’s eligibility to
receive such money. If you choose this option, it will
be important for you to seek out an organization that
has values compatible with your own, as evidenced by its
overall philosophy, mission or programs. For instance,
if you are interested in creating a video project
concentrating on street crime in a particular community,
it wouldn’t make much sense to seek funds for your work
through a nonprofit organization that provides language
and educational services to newly arrived refugees.
In addition, you will need to clearly develop a plan
of action indicating the nature of the respective roles
you and a potential sponsoring organization will play,
both in seeking out and administering financial
resources — most likely some sort of a grant. You can
also expect that any compatible organization willing to
embrace you and your project ideas for purposes of
grantseeking will want to assess some kind of an
administrative fee for its cooperation. This shouldn’t
exceed 10% of the money you seek.
For further guidance on affiliating with a nonprofit
organization, you may want to take a look at Fiscal
Sponsorship: 6 Ways To Do It Right, published by
Study Center Press. Also go to the Nonprofit Genie
website at http://www.genie.org/ and scroll down
to the FAQs section where you will see a link to
Fiscal Sponsor information.
Resources for locating existing California nonprofit,
tax-exempt organizations include:
Another option to consider is teaming up with
Community Partners, a Los Angeles-based nonprofit
incubator that encourages and supports new and
innovative charitable endeavors throughout Los Angeles.
See Appendix
C for more information.
STARTING A NONPROFIT ORGANIZATION
If affiliation is not for you, and you are
considering starting your own nonprofit, the first thing
you should do is read Get Ready-Get Set: A Guide to
Launching a Nonprofit Organization. Download it for
free from the Center for Nonprofit Management’s website
at http://www.cnmsocal.org/StartingANonprofit.html
or purchase a copy for $5 by calling
(213) 623-7080.
There is nothing particularly mysterious about
starting a new nonprofit; all you really need is the
patience and persistence to fill out the requisite forms
and await the blessings of the appropriate state and
federal offices. Very briefly, the process involves the
following steps:
- Selecting a board of directors
- Choosing a name for your organization
- Drafting Articles of Incorporation
- Drafting bylaws of the corporation
- Filing the applications for tax-exempt status
- Holding your first board meeting
In reality, the process requires a full understanding
of the terminology and concepts just listed, and
anywhere from three to six months for a review of your
applications. You must also understand that, along with
the benefits of nonprofit, tax-exempt existence, there
are also legal requirements to maintain such status. Not
the least of these is the need to be financially
accountable, including filing necessary annual tax
returns at both the state and federal level. A number of
publications address the matter of setting up a
nonprofit, including whether to seek out an attorney to
assist you, who and how many members to include on your
board, and how to create bylaws.
The Internal Revenue Service (IRS) produces a
publication called Tax Exempt Status for Your
Organization, Publication 557, available free online
from the IRS website at http://www.irs.gov/. Look for the box
that says Search Forms and Publications and enter
557. You can also order a copy directly from the IRS by
calling (877) 829-5500. | 
