The pitfalls, the headaches and the joy of starting a nonprofit


To say veterans are inclined to help those in need is not a controversial statement.

Whether it’s a sense of duty, of brotherhood, or of a deeper need that can only come after witnessing the haunts of war, who is to say specifically? But, attend any Veterans of Foreign Wars Post 2669 fundraising feed, head to the Bremerton VA on a Tuesday morning, or google ‘Veterans Volunteer ideas’ to see the proof: Veterans volunteer in large numbers.

They help those in need. They lend a hand to their brothers. They continue to serve, even after the uniform is long retired. For thousands of veterans across the country, and many in Kitsap County, looking to serve their community, the idea of starting a nonprofit veterans organization is a good one.

To build an organization where all surplus money goes to helping the cause is a tempting prospect. From feeding aging veterans to providing outdoor activities to wounded warriors, is a way to continue service. However, starting one is a tricky business full of hangups and pitfalls that even the most passionate volunteers couldn’t imagine.

From broader picture items such as composing a board of directors and securing start-up funds, to bureaucratic challenges like applying for a Federal Employer Identification Number and meeting county licensing requirements, the journey of a new nonprofit is not easy. Yet it is rewarding, both in the process and the end goal.

“I love everyday,” says Tony Moore, the maintenance manager of the USS Turner Joy, a decommissioned Navy destroyer from the Vietnam War now docked in Bremerton and fully supported by the USS Turner Joy nonprofit organization.

“There aren’t many places you can go to work and have this rewarding experience,” Moore says.


Putnam Barber is a senior advisor for the Nancy Bell Evans Center on Nonprofits & Philanthropy at the University of Washington. In an email to Veterans Life, he said the IRS divides exempt charitable groups, or nonprofits, into two categories. First, “Public Charities” are the familiar organization that taxpayers can make a tax deductible donation to. Second, “Other” organizations are ones that do not pay federal income taxes but that donors cannot deduct gifts made to them.

There are five public charities in Kitsap County that classify as a “military or veteran organization,” out of a total of 89 in the State of Washington. There are 26 “other” exempt organizations with the primary purpose of military or veteran out of 563 in Washington State.

It’s these existing organizations, says Matt Fikejs, that individuals interested in starting a nonprofit should first look to.

“Not every group out there should start a nonprofit,” says Fikejs, the information and referral programs manager at 501 Commons, an extensive organization based in Seattle that lends help and resources to nonprofits. “There are existing veterans group that might be willing to partner and might already offer the same type of services.”

The 501 organization offers a 38-page guide to starting a nonprofit on their website, Among the first things Fikejs and the guide recommends is partnering with an existing nonprofit and exploring partnerships or pilot programs through these established organizations because many ‘new ideas’ people come up with might already exist in a successful way.

“Consider if there are established organizations within the community that serve the same or related purpose‚ you may be able to advance your idea more quickly by working through an existing organization,” the online guide reads.

If no like organization can be found, set up interviews with at least four different nonprofit organizations and pick their brains. Figure out how they work, how they maintain their finances and how they’ve managed in lean times. Most importantly, Fikejs says, think of starting a nonprofit much like thinking of starting a new business. Because a small business and a burgeoning nonprofit are almost one in the same.

“It’s like running a small business,” Fikejs says. “You still have to make payroll, you still have to make human resource policies.”

Moore, who came to the USS Turner Joy shortly after it was donated to the Bremerton Historic Ships Association in 1991, couldn’t agree more. Though nonprofits operate under a charitable 501(c)(3) Internal Revenue Service designation, Moore says he has to think everyday of how to run the ship effectively and clean.

He has to pay the bills, has to keep up with maintenance and keep the the lightbulbs changed. Most importantly, he has to keep costs down so they can keep the doors open and pay for big improvements, including a $750,000 dry-dock fee every 15 years or so, entirely funded through entrance fees on the ship.

“No matter what, you still have to run it like a business,”he says. “Most businesses are for profit, while we are out to maintain the ship and educate. Still, we keep a CPA, we have bookkeepers and we have to bring in some money. The only difference is there is no profit.”

In conjunction with running a nonprofit like a business, a startup organization should come up with a business plan, says Fikejs.

“First and foremost is the business plan,” he says. “It’s one of the top recommendations we have.”

“Of course, there are differences between a nonprofit and a business. Differences that individuals should look at when starting out, Fikejs says. It’s important for individuals to realize that the structure of a nonprofit is designed to give back to the community, a fact that seems to be cut and dry, but isn’t always the case.

“Remember that the profits have to go back to the organization, not benefit a few individuals,” he says.


Leif Bentsen is a Human Servies Planner with Kitsap County. He advises and facilitates the Kitsap County Veterans Advisory Board, a group of 17 local veterans who look for resources and ways the county can help service the needs of other area veterans and their families. For two years, Bentsen and the advisory board has looked at starting a nonprofit organization outside of their work as a board. Something simple at first. Something that would allow the board to move outside of the numerous restrictions of county and state laws that are not exactly tailor fit to the reality of veteran need. Since the board is funded through county property taxes, a privately funded nonprofit would expand the group’s scope.

“The reason the board is exploring starting a nonprofit has to do with there are some things that cannot be funded through the county that we want to do,” Bensten said. “We want to do more.”

But the task of starting a nonprofit has been arduous for the board. Of the problems the group faced is the daunting task of wading through the bureaucracy of it all. 501 Commons’ online guide notes a bevy of processes that seem filled with paperwork and headaches. Obtain state licenses. Apply for nonprofit designation with the IRS. Comply with county regulations. And that’s only starting out. Once the nonprofit is formed, the paperwork doesn’t stop, as businesses taxes, management paperwork and other forms are required.

“One of the hurdles is it takes a lot of work,” he says. “It has to be it’s own legal entity.”

Fikejs can’t accurately estimate how and why nonprofits that never make it past the planning stage fail. But he does recognize the administrative side of things as fairly daunting, especially for those without too much experience in these areas.

“There is the case of the administrative side of things,” he says, mentioning hurdles both small and large that every nonprofit must go through.

Administrative hurdles can be helped by a competent board of directors, a vital asset to any successful nonprofit. Legally, every nonprofit must have no less than three individuals. And as many as twelve with a broad range of skills, from fundraising to administration can go a long way in the success of an organization, Fikejs says.

Moore says paperwork is where a nonprofit can easily slip up.

“Do your paperwork,” he says, saying to do so both during the life of the nonprofit, and before. “Make sure it’s not a nonprofit idea that’s going to put you under.”


Like anything,though, persistence is key, Moore says. So too is a stable of volunteers who are passionate and driven for a cause. The USS Turner Joy has two regular maintenance workers on board that show up almost everyday, he says. Outside of a trim paid staff, he also has volunteers leading tours, taking money at the gift shop and greeting. Most of them are veterans who worked on a ship much like the Turner Joy when they served.

“They served on this ship with their stories to go with it. They come here and add to the feeling of it. We couldn’t do it without them,” Moore said. “I honestly enjoy what I do.”