Post a new topic
    6 Replies Latest reply on Aug 24, 2011 2:21 AM by shirleystuff

    How is a non-profit's owner determined?

    ZetaMonkey Newbie
      I'm currently thinking of starting a non-profit organization but I'm confused on if I would get a salary? I am currently in the military with very little management experience, so I would have to seek members with more experience. Where would I fit in and will I be able to receive a salary?
      Thank you
        • Re: How is a non-profit's owner salary determined?
          ZetaMonkey Newbie
          In my original post I obmitted the word salary in my subject line. The subject line in this reply is corrected. Thank you
          • Re: How is a non-profit's owner determined?
            Lighthouse24 Ranger
            By definition, non-profit (in most states) means no part of the organization's income can be distributed to members, directors, or officers. A non-profit can, of course, have a management team and staff members who are paid. Rules governing this vary depending on the basic mission of the organization and the state in which it is formed. (In some states, it's difficult for an individual to even be the founder of a qualified non-profit.) If you can provide more information about your organization's proposed mission and the state in which it would be based, a more specific answer may be possible.
            1 of 1 people found this helpful
              • Re: How is a non-profit's owner determined?
                ZetaMonkey Newbie

                First of I'd like to thank you Lighthouse24, I have read some of your replies to other members and found them to be very helpful.
                To answer your question I will consider incorporating in any state with the best regulations to incorporate. I've read Delaware is a good state for that. However, I was thinking of incorporating in Maryland because that's were I will be operating from. As for my mission that's not so clear yet, my wife and I are currently working on it. I was thinking of possibly awarding scholarships for minorities or funding performing and visual arts programs of some sort.
                I know this is kind of vague I'm just trying to get a sense of where I would fit in the management team. I'm currently active duty in the Navy and plan to get out next year serving a little over 7 years by then. As for my education I'm currently finishing up my AA in business admin and I also have an AAS in Medical Technology. The only real world experience I have with management has been with the Navy and a few months with my current ecommerce venture.
                So my ultimate question is would I be able to assume a salary that I can live off, based on my current skills? Is starting a non-profit organization in my league?

                Thank you for your feedback,

                Zeta Monkey
                  • Re: How is a non-profit's owner determined?
                    Lighthouse24 Ranger

                    I appreciate the acknowledgment, ZetaMonkey.

                    Whether you decided to initially form as a Delaware corporation or a Maryland corporation (or trust), you'd still need to register the organization in Maryland to operate as a non-profit there. Although some states require that non-profits have multiple board members, and some states do not allow non-profit board members to be compensated, Maryland does not appear to be one of those states -- it looks as though a non-profit there can have a single director and that the director can be compensated. So I think that answers your bottom line question.

                    A couple of things to keep in mind: Compensation must include a regularly paid salary, and the IRS states that the salaries of nonprofit directors must be in line with their duties and with salaries paid to other nonprofit directors in organizations of a similar size and scope in the same geographic location. So the non-profit organization will have to start paying your salary as soon as you begin work, and will be obligated (like any other corporation) to "make payroll" each pay period. The organization can't arbitrarily pay you less if funds are tight, nor can you just give yourself raises at will. Remember, a non-profit's tax returns are open to public inspection. No math is needed to see that the dollar amount on the "Compensation of Officers" line is what you're being paid. Plus, when you start fundraising, people (including donors, the media, and regulatory officials) will look closely to see how the organization spends its money -- and will be quick to raise concerns if anything looks questionable.

                    Here is a web link that should give you a lot of information to help you get started:

                    http://www.sos.state.md.us/Charity/Charit
                    yhome.htm

                    Best of luck!
                      • Re: How is a non-profit's owner determined?
                        ZetaMonkey Newbie
                        That link has a lot of great resources, I now have a sense of direction. Thanks again for the great info Lighthouse24.

                        ZetaMonkey
                        • Re: How is a non-profit's owner determined?
                          shirleystuff Newbie

                          Good information but please remind people that

                          • only the IRS can grant a non-profit a tax-exempt status for an organization. You will have to go a step further and file for a 501 (c) 3 with the IRS.to obtain a non-profit status.  There is also a fee for the filing and it is not a flat fee. The application is quite long and complicated.  .
                          • A non-profit is governed and operated by a board of directors or trustees. The directors are responsible for establishing the by-laws and management of the organization.  If any paid employees are hired, the board will vote to elect that person.  Of course all of these procedures for hiring and firing of employees among everything else involving the non-profit will be found in the by-laws and agency policies which are all approved by the board.  No person can just decide they are going to start a non-profit and pay themselves. 
                          • There is a difference in a for profit corportation and a non-profit corporations.  Both Federal and local governments define the purpose of both.