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Nonprofit Education

Hiring a Consultant vs. Attorney to Help Start Your Nonprofit

In this article, we provide a comprehensive overview and explanation of nonprofit business consulting services to help you understand the differences between using a consultant versus an attorney for starting your nonprofit.

What is a Nonprofit Business Consultant?

A Nonprofit Business Consultant is a person or organization that specializes in helping nonprofits by advising, guiding, training, or assisting nonprofits on a variety of different topics. A consultant may assist nonprofits, including incorporation, 501(C)(3) tax-exempt status, fundraising, strategic planning, and budgeting.

What is a Nonprofit Attorney?

Not to be confused with a pro-bono attorney, a nonprofit attorney is an attorney who provides legal services to nonprofits. Typically, they will help with incorporation, the 501(C)(3) application, creating nonprofit bylaws, and advising on specific legal matters related to the nonprofit.

Why Does a Nonprofit Need Help with Formation or Other Outsourcing Need?

According to the National Center for Charitable Statistics (NCCS), almost 70% of nonprofit organizations have total annual revenues of less than $500,000. This data suggests that most nonprofits are small businesses, as many other small business nonprofits share similar challenges. Common reasons for engaging a consultant include a lack of time, in-house resources, and/or expertise. Since most consultants specialize in specific areas, nonprofits should define their needs before researching consultants, attorneys, CPAs, or other providers.

Common Reasons for Outsourcing the Setup of Your Nonprofit

Lack of Time

At BryteBridge, we help over 4,000 nonprofits each year. In addition to obtaining our expertise, we find many nonprofits outsource to make better use of their time to focus on their mission, building programs, and recruiting volunteers versus administrative tasks.

Lack of In-House Resources

Even for nonprofits who have the time, if they lack the people power or money, they will likely face obstacles in attempting to structure the nonprofit and accomplish the appropriate steps effectively. That’s a good reason to outsource: to help teach or get your nonprofit set up appropriately with minimal hassle.

Expertise

When you’re making major decisions that will affect the future of your nonprofit, such as incorporating correctly and achieving 501(C)(3) status, a professional consultant, attorney, or CPA can give you some valuable advice; you rely on their expertise and have the reassurance your nonprofit is set up correctly. If you make a mistake on the 501(C)(3) application, the processes start over and can delay your status an additional 4-6 months. At BryteBridge Nonprofit Solutions, we guarantee 501(C)(3) when you hire us to help start your nonprofit.

Having a specialist who understands the nuances of setting up a nonprofit while helping you get 501(C)(3) tax exemption can save you both time and money in the long run. We make sure it is set up correctly and stand by your side if the state or IRS requires clarification or follow-up inquires.

Why a Consultant Versus an Attorney?

Whether you elect to hire a consultant or an attorney, you are hiring them for their advice, guidance, research, and technical proficiency. As part of your research, make sure they specialize in helping nonprofits. Additionally, you should request a flat or fixed rate for the services being provided. The reason why we recommend a fixed price is if they specialize, they should have confidence in the total time and resources required to establish your nonprofit.

At BryteBridge, we’ve heard stories of newer, smaller nonprofits paying anywhere from $10,000 to $30,000 for setup when going directly through an attorney. We cringe when we learn of the high costs, especially when most new nonprofits don’t have the budget to spend that much on start-up costs. Our current premium services start at $1500, and we guarantee our work. You should know common hourly rates if you choose to hire an attorney. According to the Florida Bar (BryteBridge is based in Florida), the average hourly rate for an attorney in Florida is $300 per hour. Our research indicates most states range between $100 and $400, but maybe as high as $2000+ depending on the experience level and type of law. For attorneys who charge a flat fee, the fee should be in the $1500-$5000 range (with, of course, some exceptions based on overall complexity). Anything greater than this should be earmarked for very complex or unique setup challenges, where the nonprofit is attempting to navigate specific legal challenges such as conflicts of interest concerns, political organizations, large corporate or family foundations, and other non 501(C)(3) types of nonprofits.

Attorney vs Consultant for Start-Up Help

Services Provided Attorney Consultant (BryteBridge)
Advice Yes Yes
Research Yes Yes
Handle State and Federal Filings Yes Yes
Represent Nonprofit in Court or IRS Yes No
Provided Ongoing Nonprofit Business Consulting No Yes
Flat Fee Pricing Possibly Yes
Strategic Planning No Yes
Establish Nonprofit Website & Logo No Yes
Attorney / Client Privilege Yes No
Assist with Trademarking Nonprofit Yes Yes
Understand all 50 US State Charity Requirements Possibly Yes
Process Annual 990 Tax Filings No Yes
Relationship Focused Possibly Yes

Committed to Nonprofit and Professional Experience

Unfortunately, anyone can call themselves a nonprofit consultant. This opens the market to unsavory characters and inexperienced advisors. Fortunately, it’s not difficult to distinguish between professionals and amateurs. At BryteBridge, the average team member has 8+ years experience working for or with nonprofit organizations. Many of our team members hold advanced degrees in Nonprofit Management, Public Administration, and Organizational Development and Leadership.

You Do Not Need a Consultant or Attorney to Set Up a Nonprofit

While we have spent much of this post educating on the difference between hiring a consultant versus an attorney to help start your nonprofit, the truth is outsourcing isn’t for everyone. The process of acquiring your 501(c)(3) classification can be intimidating and complicated, and we certainly understand the need to find someone willing to take such a large responsibility off your plate for you. After all, that’s why we are here. Most individuals (and even most lawyers) have never filed Form 1023, whereas the team at BryteBridge completes over 1500 of these IRS forms per year. If you can find someone to do it for you, that’s great, but you should make sure they know what they’re doing.

Whether you want to outsource or attempt to do it yourself, we offer a start-up guide to ensure you have a complete understanding of everything necessary to form your nonprofit.

Please speak to our consultants for valuable information on incorporation or fundraising to build a new nonprofit venture from scratch. Reach out today and be part of the growing 35,000 people we’ve served!

Download a Free Nonprofit Startup Guide Now!

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