Starting a business is no simple task – it’s tedious, methodical, and rigorous. But it is well worth it. Starting a nonprofit organization is no different.
In fact, it’s slightly more complicated.
Fortunately for those of you thinking about taking the plunge, we have narrowed the process of starting a nonprofit into 8 key steps in order to make it less intimidating.
How to Start a Nonprofit
Lets take a look!
1. Perform a Needs Analysis
First and foremost, you will want to find out if any organizations are already doing the work you intend to do.
If this is the case, it may make it more difficult for you to get support. You will also want to make sure that you are targeting the need of a certain population, and not providing a service that nobody has any use for.
As such, you will need to find demographic data that shows this need. After this analysis, if you find that you have a new idea for an organization that will meet the unmet needs of a population, go ahead and pursue it.
2. Draft Your Mission Statement
As a nonprofit organization, your purpose is to accomplish a mission based on specific values.
If you hope to raise money through donations, you will have to make potential donors aware of what this mission is.
You can do this by writing a mission statement, or a short description of your organization, its target population, its purpose, and how it aims to fulfill this purpose.
Use your mission statement to show how your nonprofit is different from other similar organizations.
Although mission statement can vary in format and length, from a couple sentences to a couple pages, make sure it is compelling, as it will likely be used in all of your published materials, such public relations documents to donation requests.
3. Build Your Board
You will also need to build your organization’s board of directors. As a new organization, you will want to recruit board members based on their expertise and enthusiasm.
Choose members that are interested in your nonprofit’s mission, have relevant experience (fundraising, nonprofits, boards), and have enough time and energy to dedicate to the organization.
Board regulations vary from state to state, the minimum size of a board often ranging between 3 and 7 members.
However, the size of your board should be determined by your organization’s needs. Keep in mind that as your organization expands and develops, your board is likely to grow with it.
4. Draft Your Articles of Incorporation and Bylaws
In order for your nonprofit and its services to gain credibility, it will need a formal corporate structure. Incorporating your nonprofit will register it under law, where it is effectively recognized as a person.
You can first start by filing your Articles of Incorporation.
These are official statements announcing the creation of your organization that will be filed with your appropriate local government agency, which varies between states.
Articles of Incorporation protect your organization’s board and staff from legal liabilities, instead placing these liabilities on the corporation itself.
Requirements for how to incorporate an organization also varies from state to state – we recommend you contact your state Attorney General’s office or your Secretary of State’s office for more information on how to follow through with this.
Depending on your state, these documents may also be known under other names such as “articles of association,” “corporate charter,” or “trust instrument.”
We recommend you consult with an attorney experienced in nonprofit law as you draft these documents, in order to avoid any common major mistakes.
Then, you should draft your By Laws, as some states require By Laws in order to file for incorporation. These are the internal rules of the organization, which dictate how the nonprofit is managed and will operate. These should be drafted with the help of an attorney and approved by your board.
5. File for 501(C)(3) Status
Next, you will want to apply for recognition as a tax-exempt public charity with the IRS.
The filing fee for these forms ranges from $400 to $850, depending on the size of your organization’s budget and your expected average annual gross receipts.
The IRS usually takes between 3 to 12 months to return its decision about your application, based on how many questions they have about your application.
In order to solicit donations, you must register with your state’s agency that regulates charitable organizations and solicitations.
Registration requirements vary from state to state, but usually consist of obtaining a solicitation permit or license, and filing annual reports and financial statements (some version of Form 990) with the IRS.
Keep in mind that if you plan of fundraising in other states, you need to register there as well.
7. Create a Website
In this day and age, people turn to the internet for answers and solutions.
As such, anybody that is looking for the service you provide or that wants to donate to a charitable cause will need to be able to find you online.
In addition, you will want to create social media accounts, such as on Twitter, Facebook, or LinkedIn. This will help increase your online visibility, as well as allow you to better communicate with your clients and donors.
8. Set Up Online Fundraising
Once everything is filed and your nonprofit is ready to go, you will need to set up your donation platform.
This is where DonorBox comes in! Donorbox is the most affordable donation platform out there, charging only a 1% transaction fee if you reach $1,000 in donations.
If you don’t reach the 1K, our services are free!
In addition, our optimized donation form embeds in your webpage so your donor can checkout faster without having to leave your website.
Head over to donorbox.org to create your account and sign up with Stripe, our payment processor, and you’ll be up and running in under an hour, ready to start taking in donations.