How to Start a Nonprofit Organization?
Starting a nonprofit organization can be a rewarding way to give back to your community. It is also a way to help people in need. However, launching and growing a nonprofit can be really challenging and can take years of effort and hard work.
That’s why it is crucial to understand how you should start. This article will provide you with some general guidance on how to grow a sustainable nonprofit.
But note that specific steps might be different from state to state. So, it’s always a good idea to consult either a lawyer or a tax specialist for help.
Needs analysis first
There are different types of organizations including nonprofits, for-profits, and government. Do your research to understand which one you really need. Maybe some guys are already doing similar work in your community. If yes, there might be no sense in duplicating someone else’s work. Your nonprofit organization should do something new or it should at least offer add to whatever others are doing.
Thus, conduct a needs analysis first to see what your community lacks or what they need most. Try to get some demographic information about your community and use it in your best interest.
Draft a mission statement and a business plan
You need to build a solid foundation for your nonprofit. That means you need to elaborate on your purpose by developing a mission statement. After this, describe how you are going to achieve your mission in a more specific way in your business plan.
Gather the good guys; develop the board
Any nonprofit organization needs a governing body that will fulfill a variety of roles and legal responsibilities. Of course, the board will change along with the growth of your organization. Still, you need to conduct constant training and evaluation in order to make sure you have the best board ever.
Incorporate your nonprofit organization
You can benefit from incorporation and gain the trust of you potential donors. Incorporation also limits liability for your directors and executives. The process of incorporation involves the following steps:
- Choosing an available name that meets your state’s requirements
- Gathering an initial board of directors
- Filing Articles of Incorporation along with the filing fee
This last one is the document that formally creates the organization. Some basic information must be provided here:
- Your nonprofit’s name and address
- Names and addresses of the initial board members
- The registered agent’s name and address
- The nonprofit’s purpose
- Where will its assets go if it stops working?
Note* you will need to be incorporated in order to file as a 501(c)(3) tax-exempt organization with the federal government.
File for 501(c)(3) tax-exempt status
This you need to be exempted from federal and in most cases state taxes as well. A few stated might require that you file separately for state tax exemption. You will qualify for this status only if your purpose is one of the following:
- Religious services
- Animal welfare
Your application should include the following:
- Your nonprofit’s name, contact details, and incorporation date
- A certified copy of your Articles of Incorporation
- A copy of your bylaws
- Your employer identification number
- Details about your nonprofit’s activities and goals
- How the directors and the employees will be paid
While understanding how to form a nonprofit organization is easy, it’s important to know how to maintain it. You will need to constantly comply with your ongoing status. And to provide annual reports regarding your activities. A lawyer who is familiar with the nonprofit law can help you and guide you throughout the whole life of your organization.