One of the most important aspects of creating a new museum is that there must be an understanding that the objects in the collection have to be protected and conserved indefinitely. A plan to provide the fiscal and physical needs of this permanent responsibility is one of the questions central to the creation of a new museum. A needs assessment should be completed prior to making any lasting decisions about the creation of a new museum, does it compete with another museum nearby, is there money to operate, does the community support the museum? Once a decision has been made to start a new museum the practical matters of making it happen must be addressed.

Nonprofit museums must follow the laws of the state in which they are located. The Secretary of State or State Corporation Commission requires registration as a corporation in order to do business. The incorporation process varies from state to state but generally a charter, by-laws, and a list of board members and officers is required.

The Internal Revenue Code, section 501 (c) 3, allows museums to operate as nonprofit corporations. This designation as a 501 (c) 3 allows donations to the organization to be tax deductible. Once this designation is approved for an organization, it must submit an annual tax return on IRS Form 990.

Bylaws govern the way an organization operates. They include the make up of the board, frequency of meetings, accurately reflect the operation of the museum, provide for amendments, outline delegation of authority, include a dissolution clause and comply with state laws which may require other provisions or information.

Meeting of the board should be on a regularly scheduled basis and minutes of those meetings must be taken and kept in a permanent file. The minutes must include all motions and any actions taken by the board. The board governs the organization, hires and fires its director and is fiscally responsible for the museum, its assets and actions.

The board must observe generally accepted accounting principles. It must insure that accurate financial reports and records are kept, it must comply with wage and hour laws, it must report and pay monthly income related taxes, it must have up-to-date personnel policies, must file annual reports to the state corporation commission, complete IRS form 990, and keep a US Citizenship and Immigration Service (USCIS) Form I9 for each employee

Insurance is a responsibility of the organization, its board, its members and staff. Organizations must maintain general liability and Directors  & Officers policies,  and must have procedures in place for reporting accidents, thefts or other liabilities.

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