Cooperatives are businesses that are run for the benefit of the people they serve.A credit union is a common type of cooperative.It's rare that a cooperative is also run as a non-profit.All revenue is used to pay for the operations of a non-profit.The money is put to charity when there is an excess.The excess will have to be spent on the cooperative itself because it is run for the benefit of its members.You need to work with a lawyer to establish a non-profit cooperative.You could lose your non-profit status if you don't set up and run the nonprofit correctly.
Step 1: Potential cooperative members can be found.
An organizing committee needs to be formed.The initial exploratory meetings and analyses will be performed by this committee.An organizing committee with like-minded individuals who are passionate about the issue will be ideal.Reach out to people you know who might be interested in forming a cooperative.You could reach out to charities.Sometimes charities form non-profits to advance their goals.The non-profit cooperative could benefit from the help of charity members.
Step 2: Discuss your goals and strategy.
All day-to-day operations of the organization are taken care of by members of a coop.All members need to be on the same page when it comes to the goals and strategy.Once you have identified a core group of people interested in forming the organizing committee, you should schedule several meetings where you can discuss your goals and strategy.Is it possible to form a credit union that will bring economic opportunity to a depressed area?Is it possible to sell locally produced goods?Is it possible to create independent media?Will the business grow out of an existing one or will it be built from the ground?Does the organizing committee have what it takes to run the coop?What other skills are required?How will decisions be made?Should decisions be made unanimously, by majority, or by supermajority?How are you going to hire new people?You might want to give people a trial period to see if they like it.The work relationship can be ended if the employee is not a good fit.
Step 3: Sources of funding can be identified.
You need to figure out how to pay for the start-up costs of your nonprofit cooperative.You need to create a budget and identify realistic sources of funding.You can get money from members.Each founding member contributes money.You can get a loan.Do you know of a bank or credit union that has given loans before?A grant from an organization.
Step 4: You can find a cooperative incubator.
These organizations help new incubators get off the ground.They can provide advice, training, and other resources.Some incubators help businesses transition from one form to the other, while others help new co-ops start from scratch.The Internet can be used to find an incubator.Go to your favorite search engine and type in your state.You need to apply for the incubator program to meet the requirements.It is possible that you will need to pay an initial fee as well as monthly fees.
Step 5: Meet a lawyer.
Cooperatives that are run for the benefit of their members can sometimes be classified as non-profits.These are very rare.You should bring a business lawyer into your planning very early on.You should find out if your state doesn't allow non-profit co-ops before you start.If you want to find an experienced business attorney, you should contact your local or state bar association.If they would recommend their lawyer, you could ask another cooperative.You can schedule a consultation once you have the lawyer's name.You will have to pay for legal advice.The lawyer is unlikely to give out legal advice for free even if he or she agrees to a free initial consultation.The consultation is usually a meet and greet affair.When you call to schedule the consultation, say that you are looking for legal advice.A lawyer can give you a price for half an hour of legal advice.
Step 6: Do you want to create a non-profit cooperative?
Some states don't allow you to create this kind of business.Before meeting with the lawyer, sketch out what your plans are for the non-profit and ask if you think this type of cooperative would qualify for non profit status.Credit unions are the most common non-profit cooperative.The national healthcare legislation passed in 2010 led to the creation of nonprofits.
Step 7: The required paperwork needs to be obtained.
If the lawyer thinks you can legally form a non-profit cooperative in your state, he or she should help you fill out the necessary forms.You will need to file Articles of Incorporation with your state Department of Corporations or Secretary of State's Office.Your lawyer should be able to get the forms for you.You need to apply for federal and state tax exemptions in order to operate as a non-profit.You apply for non-profit status in this way.If you are denied non-profit status, you will be able to make money.
Step 8: Return to the lawyer with questions.
If you don't have a good relationship with your lawyer, you may have to return several times in the future for advice.You should have the lawyer look over your organizational materials.In the future, you may need a lawyer's advice to help with hiring or firing employees, defending yourself in a lawsuit, or dealing with the IRS.
Step 9: You can create byLaws.
You may be required to create byLaws by your state law.The operating manual for how the cooperative will be run is contained in the bylaw.It is a good idea to create them even if your state does not require them.When drafting your bylaws, make sure to include member duties and responsibilities.
Step 10: You can create a membership application.
Give people a way to join your non-profit cooperative.You should create a template that you can distribute to many people.Make sure your membership application contains a summary of member rights and benefits from the board of directors.
Step 11: The directors will be elected at the charter meeting.
The initial group of members are called chartered members.If the board of directors were not named in your articles, you need to identify them.Take minutes of your meetings and follow your state's laws on record keeping.Specific requirements in your state should be discussed with your lawyer.
Step 12: Get licenses and permits.
Unless you have the required licenses and permits for your business, you can't run a business.To find out what licenses and permits you need, contact your state.Links to the office in each state that issues permits can be found on the Small Business Administration's website.Before starting your business, be sure to get all the necessary permits and licenses.It is against the law to run a business without the approval of your state.