Consultant’s Corner: Starting a Nonprofit Association
Q: I wish to start an “unincorporated nonprofit association” as a nonprofit enterprise to help disabled veterans. What steps should I take and what are the limits of an “association” rather than a 501[C](3) nonprofit organization?
These informal groups are called unincorporated associations. The advantages of being an unincorporated association is that there are (generally) no legal requirements, and they are easy to create. The disadvantages are that they are not tax-exempt, cannot provide a charitable tax deduction to donors for money given to the organization, and will find it impossible to apply for and receive grants from most foundations and corporations.
What is an Unincorporated Nonprofit Association? | About Money
Unincorporated nonprofit associations work best for informal, ad hoc situations where people get together to perform some sort of community service or raise funds for a particular, and usually short-term, goal. If an organization is not ready to file for 501(c)(3) status from the IRS, an alternative may be to seek a fiscal sponsor. This option is discussed in more detail in the article below:
How Fiscal Sponsorship Works | About Money
As to setting up an unincorporated nonprofit association, the following websites outline some of the basic steps, which you can discuss with your lawyer:
5 Reasons to Incorporate Your Nonprofit Association | NOLO.com
About Nonprofit Organizations | AirportNoiseLaw.com
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