New Mexico is known for its natural attractions and exciting arts community. Many of these wonders would be lost to history without the nonprofit community. In 2023, nonprofits in New Mexico reported over 9 billion in revenue. If you want to become one of these organizations with a significant impact on New Mexico’s economy, this article will help you with a step-by-step process.
Starting a nonprofit takes drive and passion. Those who strive to make a difference in their communities have an overfill of both but may need more fundraising and business knowledge to develop an effective organization. There are currently 10,994 active nonprofit organizations in New Mexico. If you’re reading this article, and you want to start a nonprofit in New Mexico, we’re here to help. Read on for a step-by-step process to start a nonprofit and form a solid foundation for years to come.
Don’t let a complicated process stop you from starting a nonprofit. These steps will help you file the necessary documentation and form a solid, long-term business.
New Mexico has a few rules for naming your nonprofit. Names cannot contain a word or phrase that implies a different purpose. Your name also cannot be the same or confused with another corporation. Search for available names here.
Naming your nonprofit can be fun, but finding one that shares your organization’s mission and speaks to your target market may also be a struggle. If you’re struggling to find a name, we’ve created a naming checklist to get you started.
Once done, you can reserve your name here, but you don’t have to reserve the name if you file Articles of Incorporation.
Your nonprofit’s mission is as important as your name. The Internal Revenue Service (IRS) requires 501(c)(3) nonprofit organizations to benefit the public with one of the following purposes:
Once you have a clear purpose, you can create a unique mission statement. This statement must show who you help, why, and how. Your nonprofit’s purpose statement must be the same on all state and federal applications. Creating a unique mission statement in the beginning will make filing these documents easier.
A business plan is one of the best ways to build a solid foundation for your organization. A business plan helps you to:
Creating a business plan before filing any documentation will help you answer any unexpected questions and provide detailed information you’ll need to solicit startup funds.
The first section of your nonprofit business plan will lay out the organization’s programs and services. How will you fulfill your mission? What makes you different from other organizations with the same purpose? Answering these questions will have a significant impact on funders. Remember, people’s attention spans are limited, so it’s best to include images and infographics when explaining complicated ideas.
Your programs and services are critical, but you must also know your target market. Your marketing plan is where you should provide details on two types of markets: donors and beneficiaries. You’ll need information on their demographics, interests, and giving ability. Your marketing plan should include communication plans for potential donors, foundations, partners, etc.
The next section will help you create your organization’s bylaws, which are required when applying for tax exemption with the IRS. Your operational plan should include day-to-day activities, necessary legal requirements, and any insurance you may need. An organizational chart will help you provide details on the roles and responsibilities of your nonprofit board and staff.
The effect your nonprofit has on your community is its greatest appeal to funders. In the beginning, your organization’s impact is entirely in your mind. It’s vital to spend time on this section of your business plan and elaborate on how your organization can reach its goals.
Typically, business plan financials will include bank statements and reports. Since you don’t have any, you’ll need to research your competitors. Visit GuideStar and research similar nonprofits’ tax documents for examples of revenues and expenses. This information will give you a solid foundation for your organization’s budgets.
An Executive Summary is the first thing the funders read, but it should be the last thing you write. This section gives an overview of your business plan and describes your organization’s mission plan, target market, and how you’ll meet the needs of your community.
This section provides a space for additional documentation you may need, including:
An Incorporator is responsible for signing the articles of incorporation. This can be one or more individuals. Choosing your board of directors is much more critical. New Mexico nonprofit boards must have a minimum of three directors. The Internal Revenue Service (IRS) also requires 501(c)(3) organizations to have a minimum of three board members but recommends organizations have more to help run the operations and fundraising effectively. Board member terms should be included in your organization’s bylaws and end when a qualified successor is elected.
Additional board regulations include:
Board officer requirements must also be stated in your bylaws or by board resolution. New Mexico only requires one officer to prepare minutes of the board and member meetings, authenticate, and keep records. Best practices encourage nonprofit boards to include a President, Treasurer, and Secretary. Two or more offices can be held by the same individual if stated in your bylaws.
Pro Tip: These regulations are meant to help you get started, but there is much more to building an effective board of directors. We’ve written several articles to help you build a board and recruit more members:
All nonprofits must have a Registered Agent to receive all legal documents for the organization. Registered agents can be an individual or a company. The company must be located in the state and hold regular business hours.
The first document a nonprofit must file in New Mexico is the organization’s articles of incorporation. Nonprofits can file this in person, by mail, or online. The application will include:
The filing fee is $25, and the turnaround time is two months. You must also file an initial report within 30 days of the New Mexico Secretary of State issuing your Certificate of Incorporation.
A board officer must file your nonprofit’s initial report online. There is a $10 fee, and the report is due within 30 days of the date your nonprofit is certified. If you miss this deadline, there is a $10 late fee.
After filing the initial report, you must file for an employer identification number with the IRS. You can file Form SS-4 immediately online or by mail. Corporations will receive a certificate of acknowledgment from the secretary of state’s office.
Before filing for tax exemption with the IRS, you must hold your nonprofit’s first board meeting. This board meeting is an opportunity to elect your officers, assign board members to committees, and start onboarding and training. It’s also time to finalize and adopt the organization’s bylaws and conflict of interest policy and approve opening a bank account.
Your nonprofit bylaws are a roadmap for your board of directors. Nonprofit bylaws must include the following:
The IRS does not allow any board or staff member to benefit financially from an exempt nonprofit’s earnings. Your organization’s conflict of interest policy will provide rules to follow when individuals in leadership have conflicting priorities.
Nonprofits in New Mexico must next register and obtain a New Mexico Business Tax ID. You must have:
A TAP account may be created for you when registering your business, so visit this website to see if you already have one.
Nonprofits that benefit the public can apply with the IRS as 501(c)(3) organizations and file either Form 1023-EZ or Form 1023. Organizations that earn under $50,000 for the first three years can file Form 1023-EZ for $275. There is an eligibility worksheet to determine if your organization qualifies. All other 501(c)(3) nonprofits must file Form 1023 and pay $600. It can take up to six months to receive your determination letter from the IRS.
Nonprofits that primarily benefit their members may also qualify for some benefits from the IRS. These organizations must use Form 1024 and pay $600 to become 501(c)(4) organizations with the IRS.
501(c)3 and 501(c)6 organizations with a letter of determination from the IRS are exempt from New Mexico corporate income tax and franchise taxes.
According to the New Mexico Charitable Solicitation Act, most nonprofits must register with the New Mexico Department of Justice within thirty days of the organization’s creation (even if they don’t begin soliciting donations). Religious and educational organizations may be exempt from registering. There is a $100 penalty fee for failure to register and failure to file annual reports. Step 12: Business Licenses and Permits
Nonprofits wishing to hold raffles and other lottery games must obtain business licenses with the state and local governments. Visit the New Mexico Gaming Control Board website to learn more. Check with your local municipality to ensure you’ve filed all necessary permits before running a raffle.
New Mexico nonprofits must also file an annual report with the Secretary of State office. These reports are due within six months following the organization’s fiscal year; a six-month extension is available.
Pro Tip: An annual report is more than just a necessary legal document. It can also be an effective fundraising tool. Check out Donorbox’s guide to a nonprofit annual report to see how to use this tool to raise more funds for your new nonprofit.
As you work through these steps, remember to record and save all documentation in an easily accessible format. Your nonprofit will exist for years and must have a succession plan. Donorbox can help with your current strategic fundraising efforts today and in the future.
Visit our website to learn more about our features and pricing for all nonprofit types.
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Kristine Ensor is a freelance writer with over a decade of experience working with local and international nonprofits. As a nonprofit professional she has specialized in fundraising, marketing, event planning, volunteer management, and board development.
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Kristine Ensor