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What Is Involved in NGO Formation?

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  • Written By: Osmand Vitez
  • Edited By: PJP Schroeder
  • Last Modified Date: 21 November 2016
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A nongovernmental organization is an entity that serves a nonprofit purpose, with many individuals or companies working together in an association format. Starting an NGO is similar to starting any business organization in an open market. The processing for NGO formation includes hiring a lawyer to review the process, filing legal paperwork, and creating organizational papers for managing the entity. The process can take some time depending on the type of NGO and number of individuals involved in the organization. Proper paperwork is necessary, however, to ensure the NGO formation is legal and receives the requisite benefits under current law.

Lawyers are an essential part of NGO formation, much like any other time a business starts in a market economy. Many times, a lawyer has specific experience in the area in which an NGO wishes to specialize or operate. Therefore, the lawyer can provide services on starting the organization and how to best safeguard the assets the entity will retain over time. A tax attorney may also be necessary as lawyers who specialize in the creation of a new nonprofit organization may not have proper tax experience. Both of these areas, however, are very important to an NGO and require proper specialization in legal terms.

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The next stage in NGO formation is the filing of all legal paperwork with proper government agencies. This is where the lawyers come in most helpful for the individuals starting the associative organization. First, individuals must file for a license, start-up paperwork, and other documents relating to bylaws and guidelines if the organization is a corporation or LLC. Second, tax paperwork is necessary to file in order for the NGO to be a nonprofit, tax-exempt entity. The first set of papers start the NGO, and the second set allows the company to avoid paying taxes on money received from donors.

Once the legalities are taken care of in NGO formation, further organizational paperwork is necessary to ensure the entity operates itself properly. These documents outline which individuals are responsible for specific parts of the organization. The documents also provide information for external users to assess and understand how the NGO operates. Again, lawyers can help create this paperwork to ensure proper management of donor funds and the cost of administrative tasks or activities. In some cases, this set of paperwork may be available for public review so outside individuals can review the organization.

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