How to turn a college project into an independent organization

This post was written by Michelle Nie and originally presented via Facebook Live.

In Fall 2015, Ankita Joshi, Aubrey Larson, and I happened to be in the same undergraduate social entrepreneurship class at UC Berkeley’s Haas School of Business. We realized we were passionate about expanding educational access and financial inclusion. We applied and won the Big Ideas at Berkeleycompetition, raised seed funding, and created a student organization through the ASUC at UC Berkeley.

But we didn’t want Acorn to only exist while we were still in college. We were emotionally invested in the project and the vision. That’s when we realized we wanted to go independent. We incorporated as a nonprofit, and since then, we have never missed the days when we were just a student organization!

There are several reasons why college students should consider turning their projects into nonprofit or for-profit organizations:

  • You declare your commitment to serving your target populations. We work with many low-income high school and middle school students in the Bay Area. These students are (understandably) skeptical of the intentions of those who are trying to serve or mentor them. By becoming an independent organization, we sent the message that we were committed to bettering their lives and improving their futures.

  • There are so many more opportunities for fundraising and winning grants. Sure, there are amazing student competitions out there such as Big Ideas, but it doesn’t beat getting a grant from an established foundation.

  • More legitimacy with partner organizations. When we started working with Oakland Technical High School and Oakland Public Library to establish programs with them, they were initially hesitant when we introduced ourselves as UC Berkeley students. However, when we explained that we were going independent, they saw us as committed partners who were dedicated to our social mission.

  • More organizational sustainability. Student organizations by nature often are a revolving door of different leaders and team members. There is significant turnover, which in turn attracts students who are unwilling to be committed to a project for the long term. By forming an independent organization, even when most of your members are still students, you establish more long-term organizational structures and policies that are more sustainable over time.

Of course, we didn’t learn these lessons overnight. Making these decisions and building our attack plan required many caffeine-fueled late-night conversations, honest discussions with our mentors and advisors, and years of meeting with those who were successful in forming their own startups and organizations.

Here are some key lessons that we learned on our almost 3-year journey to independence.

Lesson #1 — Have an amazing advisory board. Do your organization a favor by building an advisory board that is diverse in terms of background, expertise, connections, and resources.

Our advisors, many of whom have now become our board members, come from diverse backgrounds and have many different work experiences. Each sees the world in an entirely unique way, and it has benefited our organization tremendously to have input from so many perspectives.

Dr. Alice Agogino is our jack-of-all-trades board member, the mastermind of both engineering and business. She has connected us to many different companies and nonprofits by just sending their founders a simple introductory email.

Mariana Somma is our business model and expansion board member. She helped us navigate different organization and legal structures and advised us on how to develop a business plan.

Jacie Jones is our social impact board member. She has been with us on our journey since our Big Ideas days, and she made us think deeply about our social mission and how to put impact at the center of everything we do.

Deniz Dogruer is our youth education board member. She gives us valuable insight and advice as we develop our STEM education curriculum for middle school and high school students.

And last but not least, Dr. Oliver O’Reilly was our advisor when we were a student organization. A well-liked mechanical engineering professor at Berkeley, he taught us best practices for training the trainers — college students.

Each advisor is an expert in their own field, whether it be engineering, education, social impact, or business. All of our advisors were supportive of us becoming an independent organization, specifically, a nonprofit. Having support from many different viewpoints helped solidify our decision to become a nonprofit.

Lesson #2 — Get legal advice. Fast.

At the beginning of our journey, as I was looking through all the paperwork we would need to file to become a nonprofit, I thought to myself, “This is easy! I can do this all by myself.”

And then I looked at the form we’d need to file to the IRS. I realized that we were going to need to get a lawyer, and quickly.

Luckily for us, a team member connected us to the Berkeley Law New Business Practicum, where we met our amazing lawyer Kevin Xu. He graciously agreed to give us pro bono legal advice, and has since been extremely helpful and responsive whenever we have any questions.

Kevin was instrumental in educating us about nonprofit incorporation paperwork, intellectual property, liability waivers, insurance, and even best business practices. He was the one who looked over our final Form 1023-EZ before we submitted it to the IRS, and no doubt he saved us from a lot of headaches.

We’re not the only ones who got so lucky. There are tons of law firms, legal clinics, and even law schools that offer pro bono legal assistance for new businesses. And it’s mutually beneficial for both parties. Law firms actively seek out pro bono activities not only to look good in the press, but also to attract top talent who are looking to make a difference in the community.

Personally, we recommend reaching out to law schools. If you’re located in the Bay Area like us, there are at least three prestigious pro bono programs: Berkeley Law, Stanford Law, and UC Hastings Law.

Lesson #3 — Deeply consider your business model and structure. Ankita and I considered for several months whether we should incorporate as a nonprofit or for-profit. While being a nonprofit was the more natural path, we recognized that forming a for-profit entity, such as an LLC, was a more straightforward path.

However, for us, it wasn’t about what was easy. It was about what made sense and what put our mission first. Being a nonprofit now guarantees that we make our mission of empowering underserved youth to become designers our number one priority. Even though filing the multitude of required paperwork was very time-consuming and soul-draining, we have never looked back.

Acorn Labs