Before you start a foundation, you need to establish whether the foundation will be private or public. You also need to define the foundation's purpose and goals. Finally, you have to determine the following information:
- The names of all members of the foundation and their specific roles and responsibilities
- The name(s) of the donor or donors who will provide the foundation's initial capital
- The resources the foundation will use to keep itself afloat
- The names of prospective board members and officers
- The managerial and administrative duties you will fulfill, and the names of those to whom you plan to delegate the remaining duties
- The amount of control you will have over the funds
- The relevant tax issues
[source: Foundation Requirements]
Once you have this information, follow these steps to start the foundation [source: Start a Foundation]:
- Check what state laws and requirements you need to comply with.
- Create a board of directors. Define each board member's function and responsibilities.
- Develop bylaws and a mission statement.
- Hire an experienced accountant and attorney.
- Incorporate your foundation.
- Apply to the IRS for tax-exempt status. This may be the most time-consuming step. You will need to provide the IRS with a statement of planned activities and a three-year budget estimate.
Be sure to keep detailed records of the following:
- Keep a record of all board meetings.
- Keep a record of all income, expenditures and donations.
- Keep a record of all contracts and insurance policies.