How to Set Up a Non-Profit Foundation

by Rachel Levy Sarfin

Nineteenth century industrialist Andrew Carnegie established a non-profit foundation in 1905. Microsoft founder Bill Gates and his wife Melinda also set one up in order to improve the health and technology of the developing world. Establishing a non-profit foundation requires vision and effort, but the result can have a positive impact on thousands of people.

Conduct a feasibility study to ensure that your non-profit foundation will be a viable enterprise. Although for-profit businesses usually carry out feasibility studies to see how a new venture will work out, non-profit organizations and foundations can also benefit from this kind of examination. People who want to start a non-profit organization need to ask themselves if they are ready for the psychological, financial, and legal challenges of setting up such a foundation.

Write a mission statement for the foundation. Not only will a mission statement clarify the purpose of the organization, but it is a requirement for incorporating the foundation. A good mission statement includes the target audience, the benefits and services provided to this audience, and the values that will guide your foundation. Formulating a mission statement may take a few tries, so do not be afraid of writing several drafts. A mission statement does not need to be long. In fact, it can be a few sentences.

Recruit people for the foundation's board of directors. Your foundation can not be incorporated without a board of directors. Choose individuals who support the goals and vision of the foundation. A foundation's board of directors acts as the rudder of the organization, steering it in the right direction if it veers too far off course, ensuring that it continues on the right track.

Incorporate your foundation. "Incorporation" means that your foundation will exist as a separate legal entity. In addition, your foundation can have its own bank account and property. Incorporating your foundation also protects you from any financial or legal liabilities. Articles of incorporation or other necessary charter documents can be filed with the relevant state office.

File a request with the IRS to become a tax-exempt and tax-deductible foundation. Such an organization will not be taxed and can receive donations for which the givers will not be taxed. A lawyer with knowledge of non-profit foundation law can be very helpful in assisting the organization in this matter.

About the Author

Rachel Levy Sarfin has been writing professionally since 1998. She has written for the "Yardley News" and the Healthwise Lifewise blog, and served as the Jerusalem correspondent for the Omanoot website. Sarfin completed her Master of Arts in Middle Eastern studies at the Hebrew University of Jerusalem.

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