To function as a non-profit organization it is required that certain legal formalities are carried out. To achieve this, one must follow a set of legal guidelines, some of which are stated below.

 

A non profit organization is usually the outcome of a passion of a person or a group of people. They should jointly formulate a Mission Statement outlining the purpose of their organization. This Mission statement can be improvised from time to time. 

 

Thereafter, a board should be formed according to the guidelines given by the country or state where the organization is to be registered. Articles of Incorporation should be filed, which states the name and purpose of the organization, their Mission, the place of business and primary officers. Authority for the board to function is given by the Articles of Incorporation. Next it is important to register the organization in the appropriate legal bodies that permit the organization to function as a non profit organization. Obtaining tax exemption approval for the organization is also important. Also you should find out what is legally permitted to do with the profits earned, if the organization is planning to have any components which will be profit making. This aspect is very important as non-profit organizations are usually not permitted to make profits, but in certain instances depending on the type of work the organization is planning to do, permission may be granted if the profits are diverted to avenues that are permitted to do so.

Opening a bank account should be the next step to take. When choosing a bank it is important to find a bank that understands your needs and are willing to help if necessary. It is essential to have a bank where you can operate with a good relationship. Give specific instructions for operation of the account. 

 

By then it would be time to recruit a financial employee who is able to set up the book keeping system. In any organization good financial management is the essence to the credibility of the organization and it is even more so in a non-profit organization, as the donor’s would be interested to see how the ‘Books’ are managed. 

 

Find out whether it is necessary to obtain a license to solicit funds as this requirement is there in some countries. 

 

Even as you obtain legal approval for the functioning of the organization, there may be other legal procedures and approvals necessary depending on the nature of work. If the work is with children, then there may be other sanctions and approvals required. In some countries, these approvals may be needed from organizations such as Probation and Childcare or such similar organizations that deal with the welfare of children. Therefore in such instances, dual approvals may be required.

It is important to continue to find out and adhere to every legal requirement that may be required for continuation of the organization.