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I myself am developing a nonprofit startup. Right now it seems like the biggest hurdle will be all the paperwork and compliance work.

It'd be awesome if somebody started some sort of umbrella organization to file the paperwork, deal with the IRS, and maintain a board for "member" charities in exchange for a small cut of donations.

Such umbrella organizations exist -- they're called fiscal sponsors (http://en.wikipedia.org/wiki/Fiscal_sponsorship)

I worked at a non-profit fiscally sponsored by the Trust for Conservation Innovation (http://trustforconservationinnovation.org/), which is focused on environmental projects and takes 8% of project revenue.

I definitely recommend non-profit startups consider starting with a fiscal sponsor instead of trying to register as an independent 501(c)(3). You can always spin off later if necessary.

I considered getting a fiscal sponsorship when I launched my tech-driven nonprofit organization, but I ultimately decided that that was not the best course for us. Getting a fiscal sponsor can save you some paperwork and headache in the beginning, but the biggest drawback (other than that they take anywhere between 7-15% of your revenue) is the issue of control. Technically, your fiscal sponsorship has control of your program, operations, and hiring. While you can find and work with a fairly hands-off fiscal sponsor, if you want full control of your startup organization, then file for the 501(c)3. It's more upfront work, but will save you the headache of spinoff and potential conflicts.

Also, get a pro-bono lawyer or accountant to file for your tax exempt status. Most law firms actively look for nonprofit pro-bono work to do, and you can also look for pro-bono work at law schools. I had an accountant do ours pro-bono, and in the end the actual application did not take that much time.

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