| Successfully starting a nonprofit is a 1 in 2 gamble. | | | | organization. Before you spend your money, |
| Among the 30,000 nonprofits created each year | | | | please consider consulting with an attorney who is |
| in America, 50 percent of them failed. We are not | | | | experienced in the area of nonprofit law so that |
| sure how they failed or why they failed, but | | | | you do not make one of the many major |
| analysts believe it could all be rooted in the | | | | mistakes that people make when they try to |
| correct planning before start up. | | | | incorporate by themselves. |
| When one decides to go into business, they have | | | | 4. Draft Bylaws. Bylaws are simply the "rules" of |
| to first make a decision on whether they are | | | | how the organization operates. Bylaws are not |
| going into business for-profit or for advancement | | | | required to file for you 501(c)(3) status, but they |
| of a specific cause. The fundamental difference | | | | are very important for helping govern your |
| between nonprofit and for-profit organizations is | | | | organization. |
| that nonprofits use their profits to advance their | | | | 5. Develop a budget. A budget is the financial plan |
| programs, while for-profits distribute their profits | | | | of your organization that helps you achieve you |
| to their owners or stockholders. Starting a | | | | objectives. The success of your organization can |
| nonprofit with a specific cause. | | | | fall heavily on proper budgeting. Starting a |
| Starting a nonprofit that advances your cause and | | | | nonprofit and not effectively and systematically |
| makes the world a better place can be done | | | | creating and developing your budget can prove to |
| successfully if key steps are followed. Here is a | | | | be very detrimental to your organization. As a |
| brief step by step guide to successfully establish a | | | | new organization your first challenge may be |
| 501(c)(3) nonprofit corporation. More detailed | | | | looking at the process of obtaining initial income |
| information on the correct forms and documents | | | | and figuring out how much to spend. Budgeting |
| to file when and where, sample bylaws, sample | | | | however does not stop there, so be prepared for |
| articles of organization and your state | | | | startup and future costs. Don't be afraid to get |
| requirements can be found on our site. Please | | | | professional help. |
| check out our complete list of resources that | | | | 6. Proper System. Systems for any organization |
| answers the question of how to start a non | | | | are very import. Starting a nonprofit requires two |
| profit. | | | | systems, one for accounting and one for record |
| | | | keeping. Proper systems can help you avoid |
| 1. Draft a mission statement. This is one or two | | | | pitfalls later on. By law, for all nonprofits, all Board |
| sentences drafted to explain who your | | | | documents including minutes and financial |
| organization is, what it does, for whom and | | | | statements must be recorded. |
| where. The mission statement should be the | | | | 7. File for 501(c)(3) status. To apply for |
| mantra of the group and should be a drafted | | | | recognition of tax-exempt public charity status, |
| based on your organizations' purpose, services | | | | you must obtain, complete and file specific forms |
| and values. Starting a nonprofit with a strong | | | | with the IRS and state and local entities. There |
| mission statement that conveyed effectively is a | | | | maybe fees involved in this process as well. |
| great start to any organization and its future. | | | | 8. Apply for a federal employer identification |
| 2. Form a Board of Directors. A board of | | | | number (EIN). Regardless of whether or not you |
| directors is mandatory for a nonprofit organization | | | | have employees, nonprofits are required to obtain |
| and the minimum numbers required varies from | | | | a federal Employer Identification Number (EIN) - |
| state to state. Starting a nonprofit with the right | | | | also referred to as the federal ID number. This is |
| board members can make or break an | | | | a completely free process and the federal |
| organization. Once you have identified your | | | | government gives you several choices. |
| mission statement, make sure your board of | | | | 9. File for state and local tax exemption. In |
| directors are supportive of the mission and are | | | | accordance with state, county, and municipal law, |
| willing to give their talents and time. | | | | you may apply for exemption from income, sales, |
| 3. Draft and File Articles of Incorporation. Articles | | | | and property taxes. Contact your state |
| of Incorporation can be defined as the official | | | | Department of Revenue, your county or municipal |
| statement of creation of your organization. These | | | | Department of Revenue, local Departments of |
| not only need to be drafted but they are to be | | | | Revenue, and county or municipal clerk's offices |
| filed with the appropriate state agencies. This is | | | | for more information. |
| the first official announcement to the world that | | | | 10. Fulfill charitable solicitation law requirements. If |
| you are starting a non profit. This document is | | | | your organization's plans include fundraising, be |
| very important as it protects both your board | | | | aware that many states and few local jurisdictions |
| and staff from legal liabilities that an organization | | | | regulate organizations that solicit funds within that |
| may incur. Article of organizations makes the | | | | state, county, or city. Usually compliance involves |
| corporation the holder of debt and liabilities, not | | | | obtaining a permit or license and then filing an |
| the individuals and officers who work for the | | | | annual report and financial statement. |