The following steps will guide you through starting a nonprofit organization.
- Essentials You’ll Need
- Do Your Research & Make a Plan
- Establish a Strong Foundation
- Incorporation and State Forms
- Filing for Federal Tax Exempt Status
1. Essentials You’ll Need:
|Articles of Incorporation||Form SS-4|
|Form 1023||Nonprofit Business Plan|
|Appropriate certifications and licenses||Bylaws|
2. Do Your Research & Make a Plan
Creating a nonprofit begins with answering important questions:
- Is starting a nonprofit the right solution?
- What are the costs for nonprofit startups?
- Does an organization already exist in your area that operates within the same field and/or mission?
- Will your nonprofit be the best equipped to meet the needs of the community?
- Will your nonprofit compete over other organizations to win grants? After all, there is a limited number of dollars to award nonprofit organizations.
- How will the nonprofit demonstrate its impact?
It’s important to be able to clearly identify and state the problem that your organization is designed to solve. Also, define the market for the services that your nonprofit will provide along with the demand. Creating a detailed nonprofit business plan early is helpful for many reasons.
You will be able to extract excerpts from your strategic business plan and insert them into Form 1023 and/or grants when fundraising. And don’t forget to create a memorable, catchy, and legal name. It should reflect your mission statement and be related to your organization’s main activities.
3. Establish a Strong Foundation
Begin by finalizing your mission statement. A good mission statement clarifies the nonprofit’s purpose; it also motivates staff and volunteers. It should be concise and easy to understand. Mission statements are frequently reviewed by board members well after you have created your nonprofit.
Your vision and values can include elements from the mission statement, but it should be more innovative.
Next, partner with individuals who connect with your mission statement. Forming a strong leadership base is the ultimate foundation for your nonprofit’s success. Not only are you tasked with forming a board, but you need to decide whether or not you will hire staff and volunteers.
The final part of establishing a strong foundation is branding: people need to know what your organization stands for and why. Your leadership base, staff, and volunteers should be on the same page about goals and priorities so that you can create and portray a consistent brand identity. Successful branding draws together stakeholders and increases their confidence in your organization. Branding is essential to fundraising and a key step in starting a nonprofit organization.
4. Incorporation and State Forms
Begin by selecting the legal structure under which your organization will operate. Most nonprofits select the nonprofit corporation legal structure. With your board and leadership base, you can draft your bylaws which will assist you with the application process.
Although most states recognize Federal 501(c)(3) status as valid for state tax exemption, there are exceptions to this rule, most notably California and Texas. Be sure to file for state corporate tax exemption status if necessary.
Charitable Solicitations Registration is required in 40 states. It is usually administered through the attorney general’s office. Most states require this registration before soliciting donations.
File Articles of Incorporation within the state you are operating. This certificate is obtained from the secretary of state’s office in accordance with the state’s business code.
5. Filing for Federal Tax Exempt Status
Obtain the Federal Employer Identification Number (EIN) that is used all on all federal tax returns and receipts. It is needed whether or not your organization hires employees. It is needed to open a bank account and you can obtain it by filing IRS File SS-4.
Prepare Form 1023 in order to obtain federal tax exemption that will help you achieve 501(c)(3) status. It is the most difficult and costly step. You will receive a determination letter from the IRS that will officially grant you 501(c)(3) status.
BryteBridge Nonprofit Solutions is a resource center for those who are interested in creating their own nonprofit organization and seeking assistance in maintaining compliance. Not only do we publish material to help you answer questions about starting your nonprofit organization, but our experts are available to assist you with the application process. Start, grow, and maintain your nonprofit with BryteBridge Nonprofit Solutions today.