Starting a Nonprofit
Voluntary health agencies for specific diseases are most often started by people who are affected by the ailment, their relatives or friends. The need to create a charitable organization is often very apparent. Public attention and research dollars are generally aimed at diseases that are highly publicized, and raising substantial amounts of money for research is usually not possible if donors cannot get a tax deduction for their gifts. Furthermore, if the efforts of individuals and families go uncoordinated, it is much more difficult to make progress than if all interested parties work together for the same cause. Incorporation of a nonprofit organization is the logical remedy to solve these problems.
The success of any charity is based, first and foremost, on its credibility. Because of highly publicized scandals, the public’s confidence in charities is not automatic. Nonprofit organizations must constantly work at earning and keeping the public’s trust. It is therefore important to understand the technical aspects of creating and sustaining a nonprofit organization, decide what its mission and programs will be, and develop adequate governance that ensures each donated dollar will be spent for the benefit of the organization’s constituents.
Starting a new nonprofit patient organization may seem complicated at first, but it is the only way to draw together the maximum number of people interested in a specific disease. It is also the only way to create a vehicle that can raise money to accomplish the many important things that need to be done. It may be tempting for one or two people to launch the process of applying for incorporation and tax-exemption status, but making the effort on behalf of the entire community—with the participation of many individuals—will result in a more effective organization.
Too often, NORD hears from individuals who want to start a charity for a disease when one already exists for the very same condition. Splintering the efforts and loyalty of a certain number of people who care about a disease, by creating additional charities to compete for limited dollars, may not be the wise thing to do. If you feel the original charity is not accomplishing enough or appears too slow in looking for a cure, sometimes the very best thing you can do is join that organization and work to improve it. If not, you may simply be diluting the effort to educate people about the disease, and perhaps limiting the audience of potential donors who could contribute toward finding a cure.
“Support Groups” can be informal mechanisms that enable people to get together and talk. But nonprofit organizations are, in fact, corporations—legal entities that must have a board of directors, bylaws, and incorporation papers that explain the organization’s purpose and scope. In order to effectively raise money from the public, an organization must be a tax-exempt nonprofit corporation, not an informal support group.
The purpose of the organization must be clearly spelled-out in a legal document known as the Articles of Incorporation. This statement is usually rather brief, for example: “The XYZ Association is a Corporation dedicated to finding the cause and cure of XYZ disease, and educating the public about the disorder.” Once the purpose of the Corporation is defined, it can only be changed through legal amendments to the Articles of Incorporation, which can be a complicated process.
An organization’s founders must file Articles of Incorporation with their state government. In most states, this official document should be filed with the Secretary of State’s office, or other department that has authority for the filing.
One practical reason to incorporate is to keep board members and other individuals in the corporation from being held personally liable in case of a lawsuit. Receiving a Certificate of Incorporation tells everyone that the state recognizes your organization as an incorporated nonprofit organization, conducting activities for charitable purposes.
Board of Directors
The board of directors is the group of legal, individual leaders of the corporation, elected to serve set terms and carry-out prescribed responsibilities. Nonprofit organizations are required by law to have a board of directors as the governing body. Board structure often varies widely from one group to the next. Perhaps the most crucial task is to recruit a board that works well with your organization’s style and mission. It is prudent to determine the desired skill-set before you begin recruiting board members. Spend a little extra time and energy to gather a well-rounded board that works effectively toward your organization’s goals.
New patient organizations can ensure that the board stays on track by clarifying its responsibilities. Ultimately, the board of directors is responsible for the oversight of all operations and finances. At some point, most boards will establish committees when issues become too complex or numerous for the entire board to handle effectively. Nonprofit boards are typically required to record minutes of meetings and keep them on file. The terms of board members, and the role of officers, should be described in bylaws that explain the governance of the organization.
It is important to define the organization’s purpose and scope by writing a mission statement. The mission statement should explain why people will want to invest in your organization—as donors, volunteers, or recipients of service.
Nonprofit patient organizations should have a concise mission statement that describes why the organization exists, for example: “The XYZ Society is dedicated to education and research for XYZ disease.” or “The XYZ Association is dedicated to the diagnosis, treatment, and cure of XYZ disease.” If the organization does not intend to fund research, and will focus instead on education or social services, your mission statement should clearly reflect those limitations.
The mission statement can be communicated in printed materials, repeated in newsletters and on the website, and inserted in various fundraising and advocacy letters that you write. Here are three real examples of well-written mission statements from NORD member organizations: