Structural Options for Pursuing Your “Big Idea”



Pursuing Your “Big Idea”

Many groups/individuals have “big ideas” that they would like to pursue for an intended positive outcome. It is often assumed that forming a new nonprofit organization is the BEST way to proceed; sometimes this is accurate and not at other times. The following questionnaire helps to answer this very question: Is forming a new nonprofit organization the BEST way for me to pursue my “big idea”?

What is my mission (WHY should my concept become a service to the community)?

What are two or three key goals (WHAT do I hope to accomplish)?

What do I personally hope to get out of this project?

Which of the following have I considered or am I willing to consider for pursuing my concept?

____ do it myself as an individual citizen

____ do it informally with a group of people who also are interested

____ do it formally with a group of people or existing organizations who/that also are

interested (“committee,” “task force,” “network”)

____ do it formally as a committee/task force or as an on-going program with “sponsorship” or

“adoption” by an existing business, government or nonprofit

____ do it as my own business without forming a new legal entity (“sole

proprietorship”)

____ do it as a business with others without forming a new legal entity (“partnership”)

____ do it as a business by forming a new legal entity (“corporation”)

____ do it as a government by forming a new legal entity (e.g. “special district,”

“municipality”)

____ do it as a nonprofit by forming a new legal entity (e.g. 501c3 charitable organization. The IRS specifies that an organization – not an individual and not a partnership – may qualify if organized and operated exclusively for one or more of the following purposes: charitable, religious, educational, scientific, literary, testing for public safety, fostering national or international amateur sports competition, the prevention of cruelty to children or animals. Keep in mind that there are numerous additional nonprofit designations, but 501c3 is advantageous for accepting tax-deductible contributions.)

Have I considered the pros and cons of each of these options (see following chart)?

Which are some of the likely advantages, disadvantages and other “realities” of pursuing my idea via a particular structure?

|

I

N

D

I

V

I

D

U

A

L |

I

N

F

O

R

M

A

L

G

R

O

U

P |

F

O

R

M

A

L

G

R

O

U

P |

A

D

O

P

T

E

D

P

R

O

G

R

A

M |

P

R

O

P

R

I

E

T

O

R

S

H

I

P |

P

A

R

T

N

E

R

S

H

I

P |

N

E

W

F

O

R

P

R

O

F

I

T |

N

E

W

G

O

V

E

R

N

M

E

N

T |

N

E

W

N

O

N

P

R

O

F

I

T | | Financing/Resources | | | | | | | | | | |Charge fee and enter into contracts for services |

λ |

λ |

λ |

λ |

λ |

λ |

λ |

λ |

λ | |Collect and spend taxes | | | | | | | |λ | | |Attract and collect donations |λ |λ |λ |λ |μ |μ |μ |μ |λ | |Provide tax deductibility for donations | | |

μ |

λ | | | | |

λ | |Receive grant funding |μ |μ |μ |λ | | | |μ |λ | |Attract and utilize volunteers, in-kind donations, discounts |

μ |

μ |

λ |

λ |

μ |

μ |

μ |

μ |

λ | |Find investors who may benefit from profits | | |

μ | | |

λ |

λ | | | |Personally benefit from profits | | | | |λ |λ |λ | | | | Governance and Staffing | | | | | | | | | | |Make all the decisions myself |λ | | | |λ | |μ | | | |Make in/formal decisions with a small, “closely held” group of associates | |

λ |

λ |

μ | |

λ |

μ | | | |Partially/fully give up decision-making power to an existing organization | | |

μ |

λ | | | | | | |Give up decision-making to community representatives, including elected officials | | | |

λ | | | |

λ |

λ | |Employ staff; may include paying self | | | |λ | | |λ |λ |λ | | Public Issues | | | | | | | | | | |“Avoid” taxation on revenues over expenses |

μ |

μ |

μ |

μ |

| | |

λ |

λ | |Retain full ability to lobby and otherwise be involved in public policy that may impact your effort |

λ |

λ |

μ |

|

λ |

λ |

λ |

| | |“Allow” public access to your financial information | | | | | | | |

λ |

λ | | Other | | | | | | | | | | |Maximize project “credibility” in community | | | |

λ |

λ |

λ |

λ |

λ |

λ | |

λ full ability μ possible but may be restrictions

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