Starting a Nonprofit

2. Choose the Right Governance

Choosing the right governance structure for your organization is critical.

You will need to decide whether the organization should be a member organization or a nonmember organization. You will also need to decide what the role (or roles) of the founders will be. You should confer with legal counsel with experience representing nonprofits about this step to choose the governance structure that is right for your organization.

For more information about the roles of voting members and the difference between a Board member and voting Members of a nonprofit organization in Pennsylvania, you’ll want to download our Guide Sheet on the Role of Members in Nonprofit Corporations.

Sometimes new organizations run into trouble when there are disagreements among Board members, and founders can get voted off of the Boards of the nonprofit organizations they formed. Founders should be thinking about these issues and doing some succession planning when they are incorporating, and with some forethought and careful planning, they can make informed decisions that help provide organizational stability and a plan for succession. For more on protecting the founder’s role as a voting Member, download our Guide Sheet on the Role of Members in Nonprofit Corporations, and these two related articles by Pennsylvania nonprofit lawyer Don Kramer, “The Key Question: Whose Organization Is It?” and “Sole Member Bylaws Can Protect Founder of Nonprofit.”

If you designated yourself as a sole member when founding a nonprofit corporation, you’ll want to develop a succession plan. Some sole members decide to designate a successor. Download our Designation of Successor Member for a sample succession planning document and be sure to consult with legal counsel about your plans. Having a plan in place can help preserve your legacy and make the transition as smooth as possible for the organization for the benefit of those it serves.

If your nonprofit is being created by a for-profit entity, or will have a close working relationship with a for-profit entity, confer with legal counsel with experience serving nonprofit organizations before moving ahead with formation and the process of applying for federal tax-exempt status for your nonprofit organization. For an overview of the complexity and compliance issues involved in structuring these relationships, download our Guide Sheet to Structuring Nonprofit/For-Profit Relationships.

In Pennsylvania, if you are under 18 and want to incorporate a nonprofit, you are going to need one or more adults involved until you turn 18. Legal counsel can advise on how to set up a plan for succession and to give teens and other youth a voice.