Steps To Starting A Successful Non-Profit
If you’ve decided that your group is ready to start a non-profit, consider the following steps involved in the successful and legal creation of a new non-profit organization and to obtain 501(c)(3) status. Be aware that requirements can vary from state to state and from organization to organization. This list is best used as an overview, a basic to-do list to get you started and as a reference when consulting legal help and professionals.
Basic Steps For Starting A New Non-Profit Organization:
1. Formulate your goals and mission statement
You will need this mission statement later as you file various documents. Your mission statement and goals also have the purpose to focus the work and attention of everything your group does. Take your time with this task, because every action your non-profit takes in the future, or fundraising campaign it runs should be aligned with your defined goals and mission statement.
2. Form a formal Board of Directors and plan the first meeting
Your group’s first Board should be chosen with care as this is the team that will carry the group through the process of starting your non-profit, and the group that will make critical decisions regarding bylaws, mission, goals, etc. This very much needs to be a motivated group who is willing to put in some targeted effort.
3. Decide on a name for your non-profit
This gives your group an identity and it is a legal requirement. Be sure your name is unique. Search the internet and government websites (incl. your county’s recorder website) to see if your desired name is being used in any way. While you’re online, you may also want to make sure the website domain, or URL, is available. Consider buying at least the .com .net and .org versions, so no one else can use them. You can shop for URLs at sites like aPlus.net or GoDaddy.com.
4. Determine the legal type of non-profit your group should be
There are basically three possible legal distinctions for a non-profit - a corporation, charitable trust, or an unincorporated association.
5. Identify a lawyer who will act in a consultant capacity and/or hire one for further work as needed
6. Write Articles of Incorporation and/or bylaws
This document will name your non-profit and designate your location and purpose. Some states require non-profits to draft bylaws as part of the Articles of Incorporation and some do not.
7. File legal documents to incorporate as a non-profit
Legal incorporation minimizes risk and liability to the group, officers, and members.
8. Write a business plan and a budget
A plan and a budget give definite direction to a new non-profit. Just like a new business, a non-profit needs a solid business plan. The main difference between a non-profit and a business is that a non-profit benefits others or other non-profits, whereas a business benefits its owners or shareholders.
9. Apply for Federal Identification Number, or EIN
This gives you a legal identification for purposes of taxes, banking, and accounting.
10. Apply for Federal Tax Exempt status
Usually, this will be the 501(c)(3) status; 501(c)(3) status not only grants federal recognition, but also serves as recognition for grant funding, donors, and other organizations.
11. As applicable, file for state recognition and/or (sales and property) tax exemption.
These basic steps will set you and your organization on its way to becoming a successful non-profit organization. Upon completion of these steps, you will be ready for the business of achieving your new non-profit group’s mission and goals!
Online non-profit resources:
About.com
CraigslistFoundation
Nolo.com
Wikipedia.org
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[...] like any regular user, but with your 501c(3) information. Yes, your group has to be an official non-profit organization in order to [...]
Can someone help me because I’m really confused? If you are trying to satrt a business how do I raise money to start my business without taking loans? I’m confused about Non-profit organization because how do you gain money If its a Non-profit oraganization?
Hi Marlena,
Our site is focused on raising funds for non-profits and other charity groups, but you can certainly apply some basics to a commercial business as well.
Raising money can mean getting loans, grants, government grants, tapping your own savings, getting investors etc. It can also mean selling unneeded stuff on eBay, or even using one of your other talents (coaching, tutoring) to make money in order to finance your new venture. In this case you would call it ‘bootstrapping,’ since you’re not borrowing any funds from anyone else, but you’re doing it all yourself.
For more info on starting a business, you may want to try a resource like Entrepreneur.com. Good luck with your new venture!