• Friday, February 10, 2012
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How do we register our charity as a nonprofit organization without having to pay legal fees?

Q. My husband and I spent two years in South Africa on a mission for our church. While there, we began several small charitable programs, such as providing tools to women so that they could make products to sell. We are now back in California and have several people telling us they'd like to contribute to those programs to keep them going - but they want us to register as a nonprofit organization so that their gifts will be tax-deductible. Any suggestions for making this happen, without having to spend a lot of money on a lawyer?

A. Creating a nonprofit organization isn't as complicated as it sounds, assures Nancy Lublin, founder of Dress for Success, in New York, a nonprofit organization that helps women find employment by providing them with professional clothing and career support. "What you are doing is terrific," she says. "Don't let organizational bits like this stand in the way of your good work."

Registering a charity involves two basic steps:

  • First, you must incorporate the organization with the state in which you'll be running the charity. You can find instructions and forms for registering in California on the state attorney general's Web site. (For a list of other charity offices by state, visit the National Association of State Charity Officials' Web site.

  • Second, you need to apply for charity status from the Internal Revenue Service, the paperwork for which can be found on its Web site. Be sure to carefully read Publication 557, "Tax-Exempt Status for Your Organization."

Keep in mind that it can take the IRS several months to review your application, warns Ms. Lublin. In the interim, you might want to find a fiscal sponsor - an already established organization with a similar mission - that can act as a parent organization for your project while the IRS is considering your application, she suggests.

The Foundation Center, in New York, has an online "Guide to Fiscal Sponsorship" that may prove helpful to you.

The Foundation Center and BoardSource, a group in Washington that assists charities with board development, also post lots of information on their Web sites that can help you with the fundamentals of starting a new organization.

Applying for charity status does not need to be costly. You don't need to hire a lawyer and can either do it yourself or get help from several online companies that handle charity applications for a small fee.

Because this is your first time establishing a charity, however, you might benefit from some professional handholding, says Ms. Lublin, who now serves as chief executive officer of Do Something, a New York charity that helps connect young people with volunteer opportunities. Many lawyers volunteer to help good causes, she says.

"In all my years at Dress for Success and now here at Do Something, I've never paid for legal counsel," she says.

To track down free legal help, visit the American Bar Association's Standing Committee on Pro Bono and Public Service Web site and click on "Find Legal Help." The Web site also includes a comprehensive directory of pro bono programs by state. Also, LawHelpCalifornia.org offers a directory of free and low-cost legal services.

You could also seek help from a teacher at a local law school, suggests Ms. Lublin. "Filing your forms would be an excellent teaching tool for his or her students and a nice project for a couple of them to tackle," she says.

And sometimes state umbrella associations of nonprofit groups can direct fledging charities to legal resources. For example, in 2002, when Kate Atwood created her charity, Kate's Club, which provides programs for children who have lost a parent or sibling in Atlanta, she got assistance in filing her paperwork through the Georgia Center for Nonprofits, which helped her locate a consultant who offered his services at a discount.

"The consultant not only filed successfully, but was also able to expedite the process a lot faster than I would have been able to do alone," she says.

And don't forget to tap your friends and supporters to see if anyone knows a lawyer or consultant who would be willing to donate their time, suggests Ms. Atwood. "With a good cause and passionate founders, you'd be surprised who will come to the table to help," she says. "But you do have to ask."

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