How to Start a Nonprofit Organization: The Ultimate Guide

How do we find value in this life? Though many would argue we are getting more self-centered in the modern era, there’s a lot of evidence to the contrary as well. There are many people who are contributing to the betterment of society.

If you’re looking to do the same in your community, you might consider starting a nonprofit organization. Working in a nonprofit can be rewarding. It can allow you to put in work that can better the world as a whole.

But do you know how to start a nonprofit organization? As you can imagine, it can be quite complicated to get started. Read on, and we’ll walk you through everything that you need to know.

Do Your Research

Before starting down the long road of starting a nonprofit organization, you should do your due diligence in ensuring there is a bright future for the organization you hope to start.

First and foremost, you should look at your community and determine if there are already organizations that are attempting to serve the same purpose as your planned nonprofit might. Not only would this potentially make your organization redundant in nature, it also might make it harder to get it off the ground.

A nonprofit is reliant on a lot of outside resources and support, and it might be hard to achieve this if there is already a pre-existing organization with the same goals.

Also, read into the nonprofit world as a whole and make sure you’re familiar with the ins and outs. There is a very high chance you might not even be able to give yourself a salary for a long time through the organization. If the reason you’re starting a nonprofit is to try and pay yourself via the community, you would be better of going another route.

At the end of the day, you need to ensure that opening a nonprofit is the best way to achieve what you want to do in your community. Is there another way you can help out that doesn’t involve starting an organization? It’s worth looking into.

Make a Plan

Alright, if you’re still reading, we’ll go ahead and assume you’ve done your reading and you’ve determined a nonprofit is still the best way for you to achieve what you’re passionate about. That means it’s time to get started.

To do so, you’ll need to lay out detailed plans of what your organization might look like and how you anticipate your nonprofit working out.

Start with your mission statement. What is the purpose of this organization? What are your goals? Before anyone will get on board with your idea, this needs to be crystal clear. This is not the place to be ambiguous: lay out exactly what it is you hope to achieve. Having this in place will help you make further decisions.

With your mission statement in hand, you move onto creating a business plan. A business plan outlines how you see yourself making this mission statement a reality. Where do you anticipate getting funds from, and where will those funds be allocated to?

Breaking down these details can be essential in proving to others that you have a handle on what you’re doing. If you’re not skilled in accounting and financial planning, this is where you might need to bring in help. You can make your first hire or have an organization like The Charity CFO come on to assist.

Get Incorporated

You’ve got a plan in hand and now it’s time to make it a reality. To get your nonprofit started, you’ll need to get incorporated in your state. How you do this will depend on where you are located, so it’s important to look into your state’s incorporation rights and laws.

There are a few huge reasons why incorporating is a necessary step for a nonprofit. For one, you’ll want to protect yourself legally and financially from the actions of your organization. You’ll have limited liability as the owner of an incorporated business, meaning if things go wrong, your personal assets aren’t on the line.

Incorporating will also mean you can file taxes and work more responsibly with the IRS. You’ll be able to follow the governances and policies that the taxing body applies to corporations.

Tax-Exempt Status

In fact, once you’re up and running you’ll need to file with the IRS to be tax-exempt. Tax exemption is one of the main benefits of running a non-profit. Applying for exemption status can cost a few hundred dollars and take anywhere from three months to a year to hear about.

But obtaining a tax-exempt status can be key and save you a huge amount of money in the long run.

Register with State Agencies

When you’re incorporated, you should also take the time to register with your state office. Each state should have a branch that oversees charitable organizations. Each state will have different annual reporting requirements and laws that your organization will need to follow.

Failure to adhere to the guidelines of your state can result in fees, fines, or even the dissolution of your company.