Login | July 01, 2025
A nonprofit for your favorite cause?
JULIE JASON
The Discerning Investor
Published: June 26, 2025
Do you have a favorite cause or a favorite charity you support, either through volunteering or donating funds? Or, perhaps you have a vision for more than you see being done, a vision for more than the work that you see charities taking on?
My personal cause is financial literacy education, which I support through donations to educational institutions and through my writing and lecturing. But, because of my business running an investment counsel practice for high-net-worth clients, I notice a gap that I don't see being addressed, and I'm itching to solve that problem.
My vision is to transform 401(k) education for those who believe they cannot afford to contribute. I want to see everyone, no matter their financial circumstances, retire securely. And, I'm exploring the idea of setting up a nonprofit to do just that.
I'm guessing that a few of you may have the same urge to fill a perceived gap in your own way. And if that's you, I know there are hundreds of thousands more of you. According to the National Center for Charitable Statistics (NCCS), there are more than 1.85 million nonprofits, based on 2024 data (tinyurl.com/4mwu83yz).
However, anyone who is considering setting up a nonprofit has to be ready to approach the exercise as if he were setting up a business, with a well-thought-out "business plan," starting with a clear mission and an answer to the "why" questions. Why do we need a new nonprofit? Why is the mission desirable? Why will the vision encourage people to join the effort? Why should this cause succeed? Why do other nonprofits with similar missions fail?
Add to that list questions suggested by Greg McRay, founder and CEO of The Foundation Group: "Who is the target or beneficiary group that my organization will impact?" and "How will I accomplish my mission?" The Foundation Group provides startup, compliance and consulting services to nonprofit 501(c)(3) organizations. "Why?" is not enough. In "11 Must-Dos for Starting a Nonprofit" (tinyurl.com/yc4b8mad), McRay writes that you also need to address who, what, where, when and how.
Once you've identified the mission, the work begins. Among the 12 steps Sharon Cody, JD, lists in the Kindful article "How to Start a Nonprofit: Complete 12-Step Guide for Success" (tinyurl.com/5xc73ssn) are:
-- Research federal and state legal requirements for nonprofit registration
-- Incorporate your nonprofit
-- Create your bylaws (a necessary step for a 501(c)(3) application to the IRS)
-- Develop a conflict-of-interest policy
-- Apply for federal tax-exempt status and state tax exemptions
Cody adds that you will want to seek out local expertise (an attorney, accountant or someone else familiar with how charitable organizations work) to make sure you comply with all the laws related to a nonprofit organization.
One resource provided by the National Council of Nonprofits is a list of state nonprofit associations (tinyurl.com/yc4rywdw). For example, in my home state of Connecticut, there is the CT Community Nonprofit Alliance (tinyurl.com/yru6nx2s). Another resource is Legal Zoom's "How to Start a Nonprofit" (tinyurl.com/32t5d3zf).
Once you decide to go ahead, be aware that it will take some time before you are recognized as a nonprofit. The IRS provides details on getting federal tax-exempt status, including processing times for the various forms of nonprofits, on its website (tinyurl.com/bevwyfpu).
Beyond the tax-exempt approval, there are other issues, as highlighted by the National Council of Nonprofits article "How to Start a Nonprofit" (tinyurl.com/y8yena7m): "Will you need office space or a facility? What will the program costs be, including labor (which may include payroll taxes and benefits)? In some cases, special licenses, permits, or certifications will be necessary to provide certain services."
It's obvious that creating a nonprofit is a big decision, not to be thought of lightly. There are other avenues to pursuing your vision. For one, as suggested by the National Council of Nonprofits: "If there is an organization in your community that you admire, consider approaching that organization to explore establishing a new or expanded program to reach the people you are hoping to serve."
In the end, what's important is delivering on the promised eleemosynary outcome that drives your vision.
Seasoned investment counsel (tinyurl.com/52nus8hz) and award-winning columnist and author, Julie Jason, JD, LLM, promotes financial literacy and investor protection. Read her latest book, "The Discerning Investor: Personal Portfolio Management in Retirement for Lawyers (and Their Clients)" (tinyurl.com/4u7h9pjs), published by the American Bar Association. Write to Julie at readers@juliejason.com. While all questions cannot be answered, each email is read and reviewed and can lead to discussion in a future column.
COPYRIGHT 2025 Julie Jason, DISTRIBUTED BY ANDREWS MCMEEL SYNDICATION, 1130 Walnut St., Kansas City, MO 64106; 816-581-7500.