Should You Have Multiple Nonprofits Within An Umbrella Nonprofit

Lastly, let’s end this chapter on starting your nonprofit with a frequently asked question. Have you ever heard the adage “Don’t put all of your eggs in one basket?” Well, the same holds true in the nonprofit sector. You will want to set up different nonprofits for each nonprofit organization as soon as you can afford to do so. 

Why? Because if all of your nonprofits are under the same organization, then someone that wants to sue you based on one aspect of your nonprofit (e.g., food pantry) will have access to your assets from the other nonprofit organizations (e.g., mentoring and tutoring, etc.) if they are all under the same nonprofit. As convenient as it may seem to have one “umbrella” nonprofit, major foundations and industry professionals almost always form separate entities to minimize the chances of someone being able to sue them and taking everything.