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How to Start a Nonprofit Organization

Is it the right time to start a nonprofit?

There is no best time to start.

If you see a problem that you can be the solution you should start the conversation and start the action.

First of all what is non profit?

Let us define what a nonprofit is.

A nonprofit organization is a type of organization that does not earn profits for its owners. All of the money earned by or donated to a not-for-profit organization is used in pursuing the organization's objectives and keeping it running, dedicated to furthering a particular social cause or advocating for a shared point of view.

So how do you start a non profit?

Step 1: Study

Conduct a needs analysis

Assess if there are already organizations that are doing the same or similar work in your community. This will make it harder to get support when there are existing services, why not support and help that organization instead. Find data showing the need and explain how the need is not being met.

Identify if nonprofit is right for you?

Nonprofits must be organized and run exclusively for exempt purposes set forth in section 501(c)(3) of the Internal Revenue Code. If you want to start a nonprofit so you can get grants to pay yourself a salary, maybe consider running a for profit instead.

Step 2: Develop your Foundation

Creating a Mission statement is a very important step. Define what inspired you to start? What do you see in your community that needs a solution ? A mission statement communicates your organization’s purpose, what groups it serves, and how it will serve them. This will be your organization’s guiding light, every decision and action in your organization should support and further your mission.  Create a business plan, this doesn’t work for for profit organizations only this could also help your organization describe how it intends to achieve its mission in more specific details. It also can be used to outline for new projects.

Step 3: Develop your team

If you’re driven by your own individual mission, you’ll need to find partners who share it.  Develop a strong team of leaders to help guide the creation of your organization. 

As governing body, your board fulfills a variety of roles and legal responsibilities. While recruitment is an important step in this process, a systematic approach to board development, including orientation, training, evaluation, and the cultivation of prospective board members, is critical to ensuring its long-term success.

You’ll establish an official board of directors of at least three members, and preferably an odd number of individuals.

In the meantime, it’s important to accept help wherever possible but also refrain from taking on too many individuals!

And you must make it easy for your team to work together. This means regular, open communication and easy-to-use systems with multi-user access. Everything should be an open book, and everyone should be on the same page!

Step 4: Write Your Bylaws.

Your bylaws will guide your organization’s operations. Your bylaws are an extremely important founding document that will affect both its internal culture and functions for years to come.

Comprehensive bylaws are a central element of managing your nonprofit, governing its operations, and setting a strong precedent— and they’re also required for receiving tax-exempt 501(c)(3) status.

Creating a reliable leadership structure composed of passionate, committed individuals is the only way to ensure that your nonprofit’s operations will be sustainable.

Nonprofit organizations tend to operate on extremely slim budgets, especially when they’re young. This, combined with the inherent challenges of founding a nonprofit, means that you must remain focused on your mission and vision.

Step 6: Incorporate

Nonprofits must register with their state to legally do business as a nonprofit corporation. You must next file formal paperwork, or articles of incorporation, and pay a small filing fee to your state. Look up your state office through the National Association of State Charity Officials (NASCO). 

Having a formal structure will give credibility to your programs and services.

The corporate structure limits the liability of the organization's officers and directors.

The IRS requires organizing documents and governance policies and procedures that are usually associated with corporations. Also note, incorporation registers your nonprofit, but it does not make it 501(c)(3) exempt.

Though it may sound intimidating, creating and filing nonprofit articles of incorporation is actually one of the easiest steps in the entire process. Do some quick research on your state’s nonprofit laws, then simply complete the incorporation document.

Step 7: File for 501(c)(3) Tax-Exempt Status

This is crucial because without the IRS' nod, donors won't be able to use their contributions as a tax deduction.  receiving 501(c)(3) status is the key to claiming status as an official nonprofit organization— complete with tax exemption and deductions for your donors. Over its initial five-year operating period, a charity must demonstrate to the IRS that it has broad-based public support.Applying for andThe federal 501(c)(3) application process is vital for any nonprofit organization. It can be time-consuming and requires some strategizing, but it’s not nearly as intimidating as many believe.

Be aware, the user fee will be $275 or $600, depending on your application method. It also can take 3-12 months for the IRS to return its decision, depending on how many questions the IRS has about your application. If you see the need Spark Solutions can guide you in crafting the solutions starting from step one.


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