Setting Up Your 501(c)(3) Nonprofit Organization

Setting Up Your 501(c)(3) Nonprofit Organization

This seminar article was originally written in 2004 and delivered at the State Bar of Texas Course: Representing Nonprofit Organizations. It was substantially revised following the IRS revisions to Form 1023 in 2006. The most recent revisions are from May 2011 where the paper was delivered at the Tarrant County Bar Association All-Star CLE.

Welcome to Moore Nonprofit Law


Welcome to my new site!

Who am I?  My name is Darren Moore and I’m a lawyer with a practice focused on the legal issues faced by nonprofit organizations.  Thus, the name of the blog (get it?  Moore is my name but this is also a place to get “more” nonprofit law — I know, that’s why I’m a lawyer and not an advertising genius).  You can find out more about me on the About page.

This is a new site I recently created as a place I can comment on current legal events affecting nonprofits and offer thoughts and advice on various nonprofit legal and tax topics.  As the number of posts grows, so will the topics and blog categories.  It also gives me a place to keep papers and presentations from seminars for anyone who may be interested.  (Side note, I am still uploading papers from previous years so as of this post, that section isn’t quite complete).  Finally, the Resources page contains a list of links that I find helpful in regard to nonprofit legal issues and hope you do too.  New categories of blog posts will be created as new posts go up, so check back in from time to time.

When I’m not tending to this site (which, let’s face it, means most of the time) I practice at the Fort Worth, Texas law firm of Bourland, Wall & Wenzel, P.C. I’m fortunate to get to work with such smart and hard-working folks.  If you are looking for legal services (as opposed to legal information which this site provides), click over to the firm site, and go from there.

Thanks for visiting and I hope you’ll stay tuned.  Next up, a series on fiduciary duties of nonprofits decision-makers.

Four Keys to Creating Lasting Vision for a Nonprofit


Years before releasing his influential book, Good to Great, Jim Collins teamed with Jerry Porras to author an article in Harvard Business Review titled, Building Your Company’s Vision, examining one aspect of how companies had created lasting success – vision.  Central to their theories of visionary companies is the idea that “companies that enjoy enduring success have core values and a core purpose that remain fixed while their business strategies and practices endlessly adapt to a changing world.”  This same idea applies with equal force to the nonprofit sector (as Collin subsequently noted in Good to Great and the Social Sectors:  A Monograph to Accompany Good to Great).

So what is “vision?”  Collins and Porras define “vision” as consisting of two major components: core ideology and envisioned future, with the core ideology being composed of core values and core purpose and envisioned future being ten to thirty-year goals.  Working together, core ideology and envisioned future combined to form a vision for the organization, functioning in the role of a “North Star” for the foundation and its board.

I suggest there are four keys to to creating lasting vision in the nonprofit context:

1. Conceptualizing Vision: Whether done at the founding stage of the organization or after, the board should take time to distill the core values (the essence of the organization) and core purpose (the reason for being) of the organization.  What values and purpose should stand the test of time, remaining fixed despite the changing world.

2. Stabilizing Vision: Once the core values and core purpose (together, the core ideology according to Collins and Porras) have been conceptualized, the board should embed that core ideology into the foundational aspects of the organization.  This will look different depending on the type of organization but may include choosing a specific form or entity to further the core ideology, drafting a specific purpose statement (as opposed to the standard broad purpose statement) into the governing documents, making choices such as whether a foundation is to be perpetual or a spend-down foundation, and considering other provisions such as requiring super-majority votes or external court approval to amend specific purpose provisions of the governing documents.

3. Institutionalizing Vision:  Because most nonprofits are created with a potential perpetual duration, and because boards change over time, the vision must move from individual to institution, from entrepreneur to enterprise.  This is accomplished through board initiation, ongoing board training (particularly including training on fiduciary duties), and strategic planning (including succession planning).  Where the organization is a family foundation, the use of junior advisory boards can be a great way to pass on vision to successive generations.

4. Contextualizing Vision: While core values and purpose should remain fixed, strategies and practices must adapt to the changing world, making the organization relevant and effective to its particular time and place.  Contextualizing the vision will necessarily look differently depending upon the variables involved—the board members, the investment climate, technological advances, the needs to be met, and those to be benefited by the organization’s work.  This requires the hard work of the board to differentiate between what is part of the core ideology of the organization and what is not.  It also requires ongoing study of what is working in the organization’s field.  Finally it requires the willingness and courage to make changes to strategies and practices.