The industry standard is to limit administative costs to a TOTAL of 10% of revenue.

That's office, utilities, salaries, benefits, supplies, equipment, etc.

There's much more to this than you think.

A nonprofit is a corporation, just like General Motors, or Sears, or McDonald's.

You file the incorporation documents with your home state the same way.

There must be an official address and place of business, by laws, a board of directors, board meetings, and minutes of those meetings.

They are required to file formal reports on their financial activities with the state AND the feds.

And you must be an adult to file the legal forms.

Once the org incorporates, it must apply to the IRS for a tax exempt status.

Those rules are under section 501(c) of the IRS code.

Most charities are under (c)(3).

Labor unions are under c5.

There are 31 different categories.

Until you do that, YOU DO NOT HAVE A NONPROFIT ORGANIZATION.

You have a hobby.

And all of the money that you raise IS TAXABLE.

And you are not permitted to solicit money from the public until you have a state-issued solicitation license.

Violations can result in hefty fines and even jail time.

Yes, really.

"Nonprofit" means that the corporation has no owner and no stock.

When the corporation brings in more money than it spends, the excess is called a "fund balance", instead of a "profit".

That fund balance can be re-invested in the corporation or held in savings for future projects or for lean times.

The board of directors makes those decisions.

"Tax exempt" status means that That means that the ORGANIZATION does not pay taxes on its income.

The EMPLOYEES of the organization pay their personal taxes under the same rules as everyone else.

And yes, nonprofits can and do have employees, just like McDonald's.

Approximately 10% of the American work force is employed by nonprofits.

Individuals who donate money to c3 orgs can deduct it from their income taxes, if they itemize.

Donations to other categories - c4, c5, etc. are not deductible.

There are thousands of state and federal rules governing activities, finances, and reporting.

For example, c3 orgs CAN NOT endorse political candidates and there are strict limits on the lobbying that they can do.

That's why labor unions can endorse candidates and churches can't.

C3 and C4 orgs can be eligible for government grants for their work.

They can also solicit money from charitable foundations.

But then the foundations will come to their offices and tell them they're doing everything wrong and refuse to give them any money unless they change everything they do.

And even then they might not give the money.

I hate foundations.

There are thousands of organizations already doing the work that you want to do.

And they're already competing for VERY scarce dollars.

Find a good one and volunteer.

http://serve.gov/

Look at http://www.irs.gov/charities/index.html

There is more info at www.foundationcenter.org

Source(s):

28 years as volunteer, staff, manager, board member, board president, and consultant to nonprofit corporations.

You don't have to be poor to run a non-profit. Consider that most colleges, for example, are non-profit, and their Presidents make really good salaries.

Here's a great list of salaries of the CEOs of some top charities:http://www.charitywatch.org/hottopics/To¦

Note that Wayne LaPierre, the VP and CEO of the NRA, makes $1,281,635. The head of the American Cancer Society also does very well. Etc.

Your only problem is you think you can start a non-profit from scratch and are going to rake in big money. This is probably not realistic, paritcularly in these economic times.

Supply and demand

If the service provided by your NFP organisation is so unique or so in demand that it warrants paying the director $600,000 to ensure that they don't go elsewhere (or into the private sector), then there is your reasoning.

What would you consider to be an appropriate wage, based upon your own level of experience in this field? Is the wage itself worth more than the experience you would no doubt gain while working there?

I have no doubts that possessing a Masters degree is all well and good. Understanding theory is useful, but sometimes the practicalities don't fall into that 'cookie-cutter' pattern that goes to make up a theory. Identifying what you know about the practical demands for the services you offer would be my first concern, if I were a grant-making body.

Good idea...to work for yourself and help people.