The Disadvantages of Starting a Non Profit

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A reason as to why someone might have some reservations about starting a non profit business include the necessary expenses. There are filing fees in order to start a nonprofit with the state. In most states there will be annual fees to pay to the state as well. And although a professional registered agent is recommended, there is a cost for that too. It is similar to how buying something online but needing to pay an additional shipping fee may deter buyers from completing their purchase. 

There are also ongoing compliance obligations. Statutory nonprofits also have to comply with the provisions of the statute under which they were formed. The process might entail among other things, the need to file an annual report, draft bylaws (or an operating agreement), retain certain books and records, and make filings with the state upon certain important changes to the company.

Another reason that could deter someone from starting a successful non-profit organization is management oversight. There are nonprofit statutes, specifically nonprofit corporation laws that closely regulate how the nonprofit is to be managed. For example, the law may require a board of directors, periodic meetings, quorums, minutes, and other compliance obligations to which informal nonprofits are not subject. 

There is also a low possibility of no lobbying or political campaigning with your organization. Tax-exempt nonprofits have restrictions on their lobbying and political activities, which can affect their ability to advocate for their causes. For example, if a nonprofit that focuses on LGBT rights and relief, being involved with a political protest may cause issues legally.
 Please feel free to check out these links for more information:

https://honestproscons.com/non-profit-organization/

https://www.wolterskluwer.com/en/expert-insights/the-benefits-of-forming-a-nonprofit-company


 

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