Evaluate the business structure that best suits your mission: nonprofit, fiscally sponsored, for-profit (B Corp)

A nonprofit organization serves the public in some way, and uses any profits to advance its mission. A fiscally sponsored organization partners with a registered nonprofit that accepts donations and grants on its behalf; there is usually mission-alignment between the fiscal sponsor and the organization it is sponsoring. A for-profit entity can determine what to do with any profits, from reinvesting them back into the business to paying them out to shareholders. There are both nonprofit and for-profit reuse businesses. If pursuing a for-profit model, consider a B Corp!

Questions

1. Consider the CRCs you admire -- how are they are incorporated?

2. Is the primary mission of your CRC community-oriented?

3. Can you locate a fiscal sponsor for an initial period of time, and transition to a 501(c)(3) after the CRC becomes operational?  ​

Tips

As you start to open bank accounts, sign a lease, and get insurance, you will need to follow the regulations and guidelines required by the businesses you work with and by the government.

Having a structure in place will help you navigate this process. Both the IRS and state governments have specific rules about how you register your organization, so you'll need to follow them!

Finger Lakes ReUse's Story

First, we worked with an attorney to file our purposes for incorporation as a nonprofit in New York State -- this was fairly quick and an important step prior to opening bank accounts and taking other legal- and finance-related steps. The process of getting tax-exempt (501(c)3) status from the IRS can take a while, so many nonprofit organizations get their start through fiscal sponsorship. Finger Lakes ReUse obtained fiscal sponsorship from Cornell Cooperative Extension of Tompkins County so that we could receive tax-deductible donations while applying for tax-exempt status from the IRS.