Starting your own charitable cause is going to be a lot of hard work, no doubt about it. But, like they say, "Nothing worth doing is ever easy...and you’re going to want folks to be able to make tax deductible donations to you..." We’re not positive they say that last part, just FYI.
But regardless of the hard work ahead, here is a realistic list of first steps you can take to start making your nonprofit a reality. And having incorporated a non-profit ourselves recently, we felt like we could share some of that experience here.
1. Research, Research, Research!
Do Your Homework! First, answer this question, “Is there a need for the non-profit I want to provide?” You know how you answer questions? Research the answer! If you want to start a charity to feed hungry children in your area, get online or over to the library and pinpoint exactly where that need is. Which children need the most help? Who else is providing services like this in your area? Where can you find resources to help you follow through on your mission? Is it worth setting up your own non-profit if others like it exist? Can you be of more use to them? Can you manage the cost of a non-profit? Fundraising? Boards? Advocacy?
Ask yourself ALL the questions. Poke holes in your idea. Other holes will emerge down the line, but poke as many as you can in the beginning. While you’re doing this research, make sure you write down every other charity you run into that is working in your field or other fields that could be useful to you. Call them, ask them questions, set up meetings. Narrow down exactly what your mission is by researching what you want to do and what you need to do it. A great place to start is The National Council of Non-Profits.
2. You Can’t Build a House Without a Foundation
The same goes for a non-profit. Before you do any paperwork, take a good hard look at who you are going to invite to be on your team. It can be a very small team like ours, but no (wo)man is an island, especially when it comes to things like fundraising, grant writing and mission statements. Collect people, partners and resources that will make your non-profit soar.
Make sure you are organized and that you know when and where to file your paperwork. Figure out where you will be working from. A kitchen table is not a bad place to start, but maybe you’re looking at office space or warehouses. Start making a budget. Find out how much money you will need to make this non-profit a reality and keep track of changes to the budget that might occur. Make sure your house is in order so that the startup process is as seamless as it possibly can be. We can’t remind you enough that people are resources and the great part about starting a nonprofit is that many people will want to help you do it. And if you aren’t finding what you need from your community, use tools like Grantspace. They make it easy to get organized and build your house.
3. Geeet Incorporated! (Sing that, like the Kids, Inc. theme song- G-E-T...nevermind)
Well, well, well, you’ve made it to step 3, have you? Good for you! You must really want to do this. Perhaps one of the bigger misconceptions about nonprofits is that they are organizations and not businesses. While that’s half true, the first pile of paperwork you must file with your state is a exactly what you would do if this was a typical, run of the mill business. You have to incorporate. Every state has you do that a slightly different way, but the main thrust of it is this; you send some money to your state along with petitions to reserve/register your organization’s name (P.S. you also need a name before you get this step), and filing for your articles of incorporation.
Depending on the state, there may be other items you need to consider. For more information on that, check out the information provided here. Once you have officially incorporated in your state, then the “non-profit” portion can begin and that’s the big one.
4. To Be Tax-Exempt or Not To Be Tax-Exempt?
That’s not really a question when it comes to starting a non-profit: the answer is YES. In order to receive tax-deductible donations (you want this) or for grants to be awarded (you REALLY want this), you’re going to have to file for tax-exempt status from the IRS.
Fortunately, the IRS has some resources here to make that process a little easier for you. Or, if you are interested in getting help from professionals, you may want to contact a company like Legal Zoom to help you (they helped us). Basically, once you have your state incorporation status (with Tax ID #) you are eligible to apply for tax-exempt status. This means more paperwork and just to warn you, it can take weeks and sometimes even months for your clearance to come through, but once you have it, you are off to the races….or to the board meeting, rather.
5. Create Your Nonprofit Board
Phew! You’ve been working hard! You’ve done your research, built your foundation, filed all your paperwork. Have a seat!
I’m kidding! Stand up, there’s a lot more work to be done. Now that you are officially a non-profit organization, it’s time to start your board. Your board is your governing body, created to help your organization raise money, run as well as it can and essentially create the backbone of what you are trying to accomplish. These folks are here to help your non-profit accomplish its mission and the board should be chosen with the mission in mind. For more information about building a board check out Bridgespan.org. They know what they are talking about. Look at you, you’re building boards!
And there you are! Well, we won’t lie, there are about a million steps to ensuring your new not-for-profit hits the ground running, but hopefully these five steps will make it just a little easier to make your dream a reality. Starting a nonprofit is hard work, but the rewards are endless.
