Charity Begins At Home

Entrepreneur, Jan, 2000 by Paul Edwards, Sarah Edwards

So how do I initiate a homebased, not-for profit business?

QUESTION: I want to start a homebased, nonprofit organization to help people who can't afford dental care. I plan to telemarket or go door-to-door for donations. How can I find out about the regulations on such a business? How much salary can I expect to draw? I'd like information on how to run this type of organization legitimately.

Eva H. Carman

Royal Oak,

Michigan

ANSWER: We've been surprised to learn how many not-for-profit organizations are operated from people's homes. The causes range from providing clothing, shelter and jobs to saving animals of terminally ill patients.

Before you start, check with state and local authorities regarding any pertinent regulations. The Web makes checking these formalities easier now that many states and cities have their entire body of governing laws and ordinances posted on their sites. Still, you may need an attorney to interpret complexities in the laws.

To build your organization, you need to incorporate as-a not-for-profit. Since you plan to solicit money, apply for 501(c)(3) status with the IRS. Notify the state when you get your 501(c)(3) status; in your case, contact the Michigan Department of the Treasury. This will enable donors to make tax-deductible contributions to your organization. Some states also require a license for certain types of businesses, and some cities regulate the solicitation of money.

Your salary must be comparable to what others in similarly sized nonprofit organizations are paid. A useful resource to help you get underway is How to Form a Nonprofit Corporation (Nolo Press) by Anthony Mancuso; the book includes a disk with forms and sample letters you can use to get through the legal steps.