The Grant Seeker's Handbook: A Guide to Finding Funds
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:

• The GuideStar site at http://www.guidestar.org/, an online database of nonprofits
  
• The Healthy City site at http://www.healthycity.org/, an online database of nonprofits in Los Angeles County
  
• The current Rainbow Resource Directory for Los Angeles County, available at the Nonprofit Resource Library
  
• Technical assistance providers listed in Appendix C

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 Get Ready-Get Set (PDF) for free from the Center for Nonprofit Management’s website.

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 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.

Continue to Chapter 3