How to start a foundation
If you are a successful entrepreneur who wants to give back to the community, you might think about starting your own foundation. But first, make sure you understand the many demands of managing a non-profit organization.
Creating a foundation can be rewarding, but it requires much more than financial aid, says Janne Gallagher, vice president and general counsel for the Council on Foundations in Arlington, Virginia. Among other things, the founders of the foundation have to catch up on the laws and regulations, monitor operations, attract donors and screening programs for possible funding.
Some companies choose instead to create a fund to a charity of the community, but not necessarily have the final say in how the money is distributed. For those who want to maintain control through its own foundation, here are some important steps to follow:
Take the necessary commitment. As Dick Palazzo built his Tinton Falls, New Jersey, pet boarding and grooming business, Purr’n pooch, saved regularly dogs animal shelters and found homes for them. As your company approaches its 30th anniversary in 2009, his daughters decided to launch the Purr’n pooch Animal Foundation to continue work animal rescue his father. Because often a foundation is like running another business, needs real dedication, Palazzo said.
“You must have a passion for what you do, because you will have to spend a lot of their personal time to the cause,” he said. “If you love what you do, I think success will follow.” Its foundation has awarded more than $ 40,000 to various animals and nonprofit plans to disperse $ 25,000 to $ 30,000 in January.
Get good advice. An experienced attorney can help you decide if your organization must be a charity fund or 501 (c) 3, which is named after the part of the definition of the IRS code entities without profit. Although Palazzo said working with an attorney makes the process easier, you can file documents on your own. firm lawyers Newton, Massachusetts. Hurwit & Associates, specializing in nonprofit law, provides the filing requirements for each state.
Create regulations. The foundation should be governed by a set of regulations, said Jeff Hurwit of Hurwit & Associates. provisions for the governing process and the selection of the management of the organization, decision-making in general, necessary meetings, and conflicts of interest policies are included. GrantSpace.org offers a good collection of sample information and standards.
Develop award criteria. Foundations need to create a clear set of criteria for the selection of beneficiaries of the funds. “Although not a legal requirement, you want expectations are not are setting people will be eligible for grants without meeting specific criteria,” Hurwit said.
Its foundation must identify the types of programs that will support, and a timetable for applications, the selection of programs and awarding grants. It may also require monitoring reports from beneficiaries of funds to document how the money and the impact it has used.
Recruit a strong board. A foundation often fills his board with family members, but this may not be the best approach. Family members fill all positions of the board of the Memorial Foundation Gabe W. Miller, founded by attorney Alan B. Miller in memory of his son Gabe, who died in 2005, while a student in social work at the University of Colorado.
Although Miller like having a whole family council, said the fundraising limits. “To allow more and more scholarships and grants for social service projects, you might have to go to a donor card or sub-plate to extend our support,” Miller said. For example, animal foundation focused Palazzo recruited these aliens as Nicholas H. Dodman of the Cummings School of Veterinary Medicine at Tufts University and Brian T. Voynick, a veterinarian who hosts a show of animals in a television channel New Sweater. brought additional insight, dedicated service and networking opportunities to the foundation, Palazzo, who served with her daughters on the board said.
Create a sustainable plan. Unless you’re independently wealthy, you will need to collect funds to support the foundation. Miller, for example, to raise funds through the “celebration of life” of the annual dinner of its foundation, as well as email and direct mail solicitations.
Since 2005, the Miller Foundation has given approximately $ 55,000 in scholarships and $ 40,000 in grants for social work projects. “We are not rich like that,” Miller said. “What we do is raise money to everyone we know and everyone can find that are interested in the work of our foundation is.”
Avoid conflicts. Nonprofits need to avoid conflicts of interest, such as the use of the base to advance commercial purposes. Hurwit said, with the products or services they sell their business base could mean the loss of their tax-exempt status. Nonprofits can also enjoy political activities in general without jeopardizing their tax-exempt status.
Manage the funds properly. It is essential to maintain the foundation and its business into two separate entities with separate accounts, Hurwit said. Setting individual numbers employer identification for each entity and comingle funds. If you donate your company to the foundation, corporate records clearly indicate that the money will fund. But not funneling money to the foundation of the company, Hurwit said, unless your lawyer has authorized a transaction. He says it is best to assume that never allowed to.