If you are extremely passionate about an under-represented cause, starting your own nonprofit might be a way for you to work for a mission you believe in. However, a lot goes into starting a nonprofit or foundation. The following five steps are some of the first things you will want to accomplish or take into consideration before getting your new nonprofit off the ground.
1) Do Research
Some things to consider before starting your nonprofit are whether or not there is a demonstrated need for your organization in your desired community, how you plan to finance the organization when donations are low, and if your stated mission is attainable.
If there is no organization in your community working towards the mission you envision for your nonprofit, then that is a good sign that you will be filling a void in the market. However, you should also conduct research on your desired community and audience to ensure that your organization is something that is even wanted or needed in the first place.
While it would be ideal if all nonprofits had enough donors to make sure the program was always adequately funded, unfortunately, this is not the case. You should have a plan in place for how your organization will continue to be financially viable during times when donation goals are not reached.
Finally, you want to ensure that your stated mission for the organization is attainable. A cause with unrealistic goals will draw few donors and supporters.
2) Build the Foundation of your Organization
In building the foundation of your nonprofit, there are five questions you should be able to answer about your organization before moving on to the next step:
WHO will be involved? It is very difficult to run a successful organization alone. You must ensure that you have a dedicated support system and team to help you achieve your goals, including volunteers, board members, and organizational partners.
WHAT do you need to do? There are many aspects of running a nonprofit that some organizers may forget about. Do not let anything slip through the cracks. A successful organization will have a plan for the mission, budget, organizational structure, marketing efforts, fundraising, etc.
WHEN should you file your paperwork? There is a lot of paperwork to keep up with when running a nonprofit. First, the organization must be incorporated at the state level. Then you can file for federal tax-exempt status. Finally, there will be ongoing reporting to keep up with, including annual state and federal tax filings, submitting of required information to funders, and acknowledging donor contributions.
WHERE can you go to get reliable help? Not all lawyers are well-versed in tax-exempt law. It is important that you have someone experienced helping you with your organizational paperwork. The local state bar association should be able to put you in contact with a qualified representative.
WHY is starting this organization the best way to accomplish the stated mission? Being able to effectively answer this question will help you recruit competent individuals to sit on your board and dedicated volunteers to work towards your goal.
3) Incorporation and State Forms
The required steps for state incorporation often vary based on which state your organization will be serving. For this reason, it is important to first contact you state association of nonprofits to ensure that all of your paperwork is in order. For this step, you may again want to seek legal counsel from someone experienced in tax-exempt law.
While requirements will vary, some of the standard steps to incorporation involve: registering your organization’s intended name, filing articles of incorporation, publishing articles of incorporation in newspapers, and preparing and adopting items such as bylaws, a conflict of interest policy, and compensation policies.
4) File for Federal Tax Exemption
This is another step that will require assistance from someone experienced in tax-exempt law. Filling out this paperwork properly is vital in ensuring the survival of your nonprofit.
5) Ongoing Reporting and Compliance
Always consult with someone who is knowledgeable and experienced in the area of nonprofits when completing and submitting reports. Your organization will likely have to register for fundraising and lobbying, secure licenses and permits, register for unemployment insurance, and register for various tax exemptions more than once, so be sure you have a reliable consultant.
These five steps are just the tip of the iceberg when it comes to starting your own nonprofit, but they can give you something to think about. For more information on nonprofits, visit www.FoundationsEC.org.
