Piling onto nonprofits: The path to starting a nonprofit is an arduous one

Gail Holman, co-director of Come and See Farm in Royalton Township, checks on several of her goats. The nonprofit farm teaches children and adults about the agriculture world. (Don Campbell | HP Staff)

Gail Holman, co-director of Come and See Farm in Royalton Township, checks on several of her goats. The nonprofit farm teaches children and adults about the agriculture world. (Don Campbell | HP Staff)

By Tony Wittkowski | Business Reporter | The Herald-Palladium

BERRIEN SPRINGS — Gail Holman is following her dream.

Holman began pursuing that dream in the spring of 2014. Two years later, she’s a co-director for Come and See Farm, a 501(c)(3) nonprofit that teaches children and families about home-based agricultural practices.

Along with her partner, who teaches special education at Bridgman Elementary School, Holman uses her 8 acres along Rockey Weed Road near Berrien Springs to teach seasonally appropriate programs. Last year, participants built portable chicken coops for families to take home.

However, the farm might not have been possible without a nudge and some help from a regional business management consultant.

Shrouded in paperwork and government approvals, many find it difficult to start their own tax-exempt nonprofit organization. The process of becoming a nonprofit took Holman six months, despite the added help.

“It’s a lot more work than you initially think it’s going to be,” Holman said. “Now that we’re here, raising funds is a constant. It consumes your life.”

The nonprofit guru

Joe Trupiano is retired, but works as a SCORE mentor in Southwest Michigan.

After 40 years of experience, he has become a sort of “not-for-profit guru” for Berrien County. Trupiano said it takes a lot of determination these days to begin a nonprofit.

While many people go into creating a nonprofit with good intentions, the application process can be daunting.

For starters, the application fee to the federal government is expensive. Trupiano said the fee can range from $400 to $850 depending on the type of nonprofit.

“Anyone who wants to form (a nonprofit) normally has a super big heart,” Trupiano said. “They want to do something to better the community, help women and kids. I’ve seen a lot of them pop up in Benton Harbor. With the amount of paperwork and time that’s involved, you have to have a big heart.”

Every nonprofit needs a board of directors. Trupiano said a minimum of three board members must be selected before the articles of incorporation are submitted the state.

Articles need to state the nonprofit’s purpose and indicate what would happen to its funding upon dissolution.

“Nonprofits can’t keep profits, so if they go under and choose to give them to similar nonprofits – that has to be spelled out in writing,” Trupiano said.

Next comes bylaws on how the operation will run, which includes the length of term for trustees. Once the state paperwork is complete and approved, it’s onto the federal level. Trupiano said his clients then file a 30-page form explaining who the directors are, along with attached copies of the nonprofit’s bylaws. Final approval can be a two- or three-month wait.

Then comes the hard part.

You either make money or go out of business.

Grants up for grabs

With hundreds of nonprofits in Berrien County, Trupiano said the most common ones he comes across are the 501(c)(3) charitable organizations.

These groups have the right to apply for grants and to solicit funds. This is the cause behind all the paperwork.

Trupiano said regulations have increased over the last few decades as some people have been forming nonprofits to avoid paying income taxes. The IRS requires all this paperwork to make sure it is legitimate.

“The paperwork they require is demanding a lot more documentation than it has in the past,” said Trupiano, whose last job before retirement was as a fiscal director dealing with grants. “The annual reporting has gotten much more complex as well. It has gotten to the point where they are really digging into the financial numbers behind the organization.”

Gail Holman

Gail Holman

Come and See Farm recently got an $1,800 grant from the Berrien Springs Community Foundation.

However, that can only do so much as hundreds of nonprofits are applying for funding with few grants to go around.

“We’re really trying to raise enough funds to build a barn,” Holman said. “We have four goats and would like to expand the types of animals we have here. But we don’t have a lot of funding, so we have to look at our immediate needs, like building a barn and workshop space.”

Unless nonprofits have a constant funding source, Trupiano said grant writing will be important.

Cathy Knauf knows the difficulties of getting grants.

As founder of the SW Michigan Human Trafficking Task Force – a nonprofit that educates and raises awareness about human trafficking – Knauf was unable to get the needed grants while they were operating as just a task force.

They started as a small outfit in March 2013.

Knauf discovered the problem of human trafficking and felt the need to do something. The more she learned about the growing issue, the more she couldn’t walk away from it. Knauf formed a task force and got the county prosecutor and Sheriff Paul Bailey on board.

But as the operation grew and money became harder to come by, Knauf said they were forced to file as a 501(c)(3) last year.

“One of the major reasons we became a nonprofit was because of grants. We couldn’t apply to so many because we weren’t a nonprofit,” Knauf said. “We were simply a task force. Being a nonprofit was a stipulation in all the grants. You needed minutes and a board of directors. It almost forces a group of volunteers to consider filing at some point for grant money.”

Making a difference

Helping others chase their dreams is a reason Trupiano continues to help. After retiring, Trupiano thought of a good way to put his 40 years of nonprofit expertise to work with SCORE.

“It’s a good way to give back,” he said. “At one time, I thought all this historical knowledge would go down the drain. I see a community that can use a lot of help. There’s a lot of people here doing stuff and I feel I’m part of it.”

Knauf and her nonprofit went to Trupiano in search of some help. She said the process was arduous and felt anyone starting a nonprofit should reach out if they want to make a difference.

“We were lost in the paperwork,” Knauf said. After everything was filed, Knauf said it felt like an eternity waiting for their approval to come through. “Every time we would see something in the mail, I would think this is it. But then it wouldn’t come and we were left wondering, ‘Are we ever going to reach Oz?’”

Not every nonprofit goes through a tumultuous ride in getting their certification.

Lory’s Place has been a nonprofit since 2004. (Don Campbell | HP Staff)

Lory’s Place has been a nonprofit since 2004. (Don Campbell | HP Staff)

When it began in 2004, Lory’s Place filled a niche in Berrien County as a peer support services group for children and adults who have trouble dealing with a family member who had died or were in the process of dying.

Lisa Bartoszek, director of Lory’s Place, said the grief healing and education center took 10 months to become a nonprofit. However, Bartoszek did not have to handle the bulk of the paperwork.

“Because we are a part of Hospice at Home, we did not have to seek our 501(c)(3),” Bartoszek said. “We created our own bylaws. As far as the legal structure is concerned, we didn’t have to do that. That was a big blessing. I can only imagine that must be a time consuming effort. If other (nonprofits) didn’t have to go through that process, there would be more out there.”

Going legitimate

Despite the mountains of paperwork, Knauf understands the needs for regulations.

“The fact that we can go after grants has changed,” she said. “We can put that on our letterhead to let people know. We’re still relatively small in the donation category, but it legitimizes us. People know it’s not going in our pocket.”

Turning her task force into an official nonprofit was no easy task, but Knauf said they overcame the challenge a little at a time through several meetings to make it seem less overwhelming.

Knauf said the hardest part of filing was trying to understand the paperwork. She said it can be a nerve-wracking experience.

“When you are filing, you don’t want to make an error,” Knauf said. “We asked other nonprofits, and they always told us to look out for common mistakes like checking the wrong boxes, defining things incorrectly and submitting the wrong articles. I compare filing to become a 501(c)(3) to doing one’s taxes. Unless you are of that legal kind of mind, it can seem like you’re reading a foreign language. Just don’t give up. When you finally get that letter, it’s very worth it.”

Contact Tony Wittkowski at twittkowski@TheHP.com or (269) 932-0358. Follow him on Twitter: @tonywittkowski.

(Author’s Note: This article was originally published on March 20, 2016)

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