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How to Start a Non-Profit Organization

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How to Start a Non-Profit Organization

By Caron_Beesley, Contributor
Published: January 18, 2010 Updated: May 5, 2015

If your passion is to inspire, make a difference and give back to the world, then starting a non-profit is an exciting entrepreneurial proposition. But before you start there are a few things to consider.

Starting a non-profit organization (NPO) is similar to starting any kind of business - together with commitment you need a clear objective, a niche (i.e. an original, unclaimed idea) and a communicable business plan to present to your donors.

You'll also need to understand how to structure your non-profit, what tax exemptions you may qualify for, as well as how you can obtain government grants.

Here is a basic checklist for how to start a non-profit organization:

Do Your Market Research - With over 1.4 million non-profits nationwide, can you state categorically that your chosen non-profit niche is unique? *Here are some examples of questions you should be asking yourself to help identify your niche and whether there is a market need. You can also research existing non-profits at *guidestar.org.

Write a Business Plan - Since a non-profit is simply another version of a business, you'll need to develop a solid business plan and steer its implementation. A business plan is essential for procuring non-profit funding from donors and the government, and can also help you recruit volunteers and board members. Get help with your non-profit business plan *here.

Incorporate Your Non-Profit - Becoming a non-profit corporation requires some paperwork, but for many groups the benefits of non-profit status - such as 501(c)(3) tax-exempt status - outweigh the complications. Here are *five reasons to incorporate your non-profit association.

Incorporation for non-profits is very similar to creating a regular corporation except that you have to take the extra steps of applying for tax-exempt status with the IRS and their state tax division.

Here are the steps you should take to incorporate your non-profit:

  • Choose a Business Name - Get state-by-state information here on the various laws that apply to naming a non-profit in your state.
  • File your Incorporation Paperwork - You must next file formal paperwork, or articles of incorporation, and pay a small filing fee to your state. These 'articles' contain basic structural information, such as the NPO's name, its registered agent and office address, and the corporation's membership structure, if any. Again, you can find information about filing these articles of incorporation by state here. You can also look up your state office through the *National Association of State Charity Officials (NASCO).
  • Apply for Non-Profit Federal and State Tax Exemptions - Once you've received a copy of your article of incorporation from your state you are ready to submit an application to the IRS for your federal non-profit status as a 501(c)(3) organization. It's best to file within *27 months after the date of your incorporation.
  • Create Corporate Bylaws - These are the operating rules for your non-profit corporation. Find out how to write non-profit bylaws *here.
  • Appoint Initial Directors and Hold your First Board Meeting - Some states require that you appoint directors before filing your articles of incorporation. Get more information on choosing your board *here.

Start Fundraising - Now that your NPO is officially established you'll need to pay attention to its bread and butter – fundraising. While individual donors amount to the largest contributors to NPOs, federal and state and local governments offer grants, loans and programs to fund NPO projects. Check out these resources to find funding for your non-profit:

  • The online Catalog of Federal Domestic Assistance gives you access to a database of all federal programs available to non-profit organizations and institutions.
  • Grants.gov is another source to find and apply for federal government grants. The U.S. Department of Health and Human Services is a managing partner for Grants.gov, an initiative that is having an unparalleled impact on the grant community. Learn more about Grants.gov and how to find and apply for a grant that is right for your non-profit business.

You can also find other organizations that provide funds for NPOs at *foundationcenter.org.

Other Resources

The checklist above just skims the surface of the fundamentals of starting your own non-profit organization. There are many in-depth resources on the Web that are also worth bookmarking, including:
 

  • USA.gov for Non-Profits - This site is the online version of what many companies offering CFDA assistance services use to advise their clients. It is available for FREE to all who wish to reference it. It has specific information for non-profits divided into 3 sections: grants/loans, management/operations, and tax information.
  • *About.com Non-profit Portal - Covering everything from starting up, fundraising, and managing volunteers to marketing your non-profit, About.com's Non-Profit Guide is an invaluable and resource-rich Web portal.
  • *Non-profit Guides - Free Web-based grant-writing tools for non-profit organizations, charitable and educational organizations, public organizations, and other community-minded groups.

*Note: Hyperlink directs reader to non-government Web site.

 

About the Author:

Caron_Beesley
Caron Beesley

Contributor

Caron Beesley is a small business owner, a writer, and marketing communications consultant. Caron works with the SBA.gov team to promote essential government resources that help entrepreneurs and small business owners start-up, grow and succeed. Follow Caron on Twitter: @caronbeesley

Comments:

I don't know where to go from here... I've got Fresh Water For All Inc registered and incorporated but I can't afford to file for tax exempt status and I can't find any grants. I've tried crowdfunding but it's hard to get enough exposure to get enough funds raised. My design will end water shortages and create new sources of fresh water where it's needed most, not diverting existing sources but creating new sources. It would be almost free to keep it in operation, runs on sunlight, and the design can be copied in dry regions all around the world.
I have started in 2011 and every year giving school supplies, food, clothing to a group of indigent children in the Philippines. Every year, I solicit donations from my friends, relative and co-workers. I called other agencies that support these programs to kids, but they are asking for my 501c. Can I register and get a 501c even my beneficiaries are in the Philippines?
I am just beginning the processes of starting a non profit organization. So I will be able to bring a group of people together that can become willing to work together in ways they would have other wise never believe in.
Is this the correct guidance for a business leads group? We are in California, with ~55 members and gross revenues of $40,000 this fiscal year ending 3/1/2015. We'll have some left-over funds, so our board voted to pre-pay some expenses (we run on a cash basis) so our accounting system shows no profits. So we don't incur tax liabilities, is this action of either refunding extra funds to all members and/or pre-paying next fiscal year's expenses the only alternative to establishing a non-profit?
I Thank all people who help me
I am looking to start a non-profit organization in Virginia that assists drug addicts with alternative sentancing guidlines and provides financial assistance to Faith Based programs geared toward helping the addicted through food, shelter, and daily work routines along with daily studies in theology. The court system is broken when it comes to addicted men and women. They tend to just through them in jail with little assistance in helping them overcome their addiction. Addiction is usually combined with depression and needs to be treated as an illness. The crimes committed by addicts are a direct result of the addiction. They would never committ these crimes if they were not addicts. Why do we keep throwing them in jail. I want to help change the mindset of the legal system while helping the addicts at the same time. Any advise for me to get started.
I am in the process of setting up a nonprofit for a group of under-represented, economically challenged and deprived Minority Business Owners, after conducting my research thoroughly I know in my hear there is a need to teach, train and educate this group and to reach out to other minority business groups in the Caribbean. I have worked in the non-profit, Fed, State, Fortune 500 and Small Business in my 40 years of career and just know will the skills, experience and training I have gained I am able to assist this group of people. I am seeking 2 Directors and would like to know since this is a non-paid position what is the best way to go about recruiting. Is there a website known for this. Thank you kindly.
Yes, that is a good idea, but non profitable business very hard to established for everyone cause it's very costly. Clipping Creations India
It was my dream to start a non profit I.T learning center where I could teach my poor village people about computer and technology. But it's really hard. But I don't be hopeless yet! I am trying my best...
Hope your dreams come true! That's a good dream...

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