View Full Version : Profit vs Non Profit?

01-30-2006, 06:21 PM
I have been running a business that teaches children bully conflict resolution, women's assertiveness & self-defense. My staff and I do virtually all our courses for free as a public service. I would really like to pay my staff for their time and effort. I was told that if I was a non-profit entity, I could aquire grants and donations that could be used to reimburse my staff.

I am clueless on what to do next. Is non-profit the way to go? Is it possible to aquire grants? Any advice appreciated.

Mike Snisky

02-01-2006, 04:41 PM
I see three options for you. Since I don't any detailed information on your company, services, or needs, I'll have to "punt" here and hI provide the info you seek.

What state are you in? Corporations are established through state regulations. Only the TAX part is federal.

The 3 options are:
1. Public benefit nonprofit corporation
2. Standard C Corporation (for profit)
3. A Foundation

If you have a good business plan, in a position to make income from clients now, and have the potential to grow into a substantial income, then a C for Profit Corporation might be in order.

If you need to stimulate support from donors, corporations, and supporters, the either the Public benefit Nonprofit corporation or a Foundation, would be your choices.

Both of the nonprofits would require a special filing to the IRS for a tax exemption called a 501C3. Its benefit to you is a TAX FREE status with the IRS and additional credibility to your contributors since they see you are for "real" by qualifying for the exemption AND they can right off their contributions to you.

If you are a strong net worker with viable business friends and connections in the right place (or a talented salesperson), then you may be fortunate enough to raise regular contributions since some would likely rather give the money too you for support of your program, than just pay it to the IRS.

It's VERY difficult, expensive, and hard to qualify for a true Foundation status. I believe the current asset requirement is $20,000,000. BUT, don't despair, Maverick is here (always wanted to say that :>). Seriously, visit the following link (it's NOT an affiliate link) and review the requirements to become a Heritage Sub-foundation. You can become a Foundation for a mere Application Fee of $285.00 - Simple. Read EVERYTHING, including ALL their fine print to see if this legal format will serve your purpose. You only have to distribute a minimum of 5% of your income to your cause. Someone as dedicated as you and your group will likely use the Lyon’s share for your project.

$285.00 - That is all it costs to set up your foundation. National Heritage Foundation (NHF) is a public foundation, and your new foundation is “A Foundation at NHF.”

Compare this with setting up a private foundation - first the state incorporation expenses, the preparation of the Articles and Bylaws, and then the submission of form 1023 to the Federal Government. And then the "cost of waiting" nearly a year for IRS provisional clearance.

(It will be four years from that time when you will have your permanent clearance.) With NHF you will be ready to go from the time our Board approves your foundation application.

Once you evaluate your options, get back to us here in the group for your next guidance session. You can do it.

A word about grants

They are rather difficult to get because there are more worthy causes chasing the money than available funds. The MOST worthy generally win. You MUST have a STRONG and VERY focused business plan outlining your entire program if you expect to raise funds. Again, there is inexpensive software you can get to help you do a good job even if you're a rookie.
Go to entrepreneur.com/bizplan/0,7253,,00.html for free information on how to build a business plan.

Then visit http://www.sba.gov/training/business_planning_tools.html for additional FREE Business Plan info

Also, go to grantgate.com/contact.htm and download the FREE version of "Federal Money Retriever" software - It will SAVE YOU hundreds of dollars providing you with sources of private and government grants and foundation money. You don't need to buy any books on grants sources. This has it all.

Let us know when you need additional information and more resources. This should keep you busy for a day or two.