Forming a non-profit entity

Welcome to the Nonprofit Journey

Starting a nonprofit is an exciting way to bring people together and make a difference. It can also be overwhelming. This guide covers everything you need to know to start and grow a successful nonprofit.

What is a Nonprofit?

A nonprofit serves a community or advances a social cause. It can be a club, society, trade association, social advocacy group, or charity. Unlike for-profit businesses, nonprofits reinvest their profits into their operations.

Nonprofits typically have an ongoing mission with no end date. If your project is short-term, consider partnering with an existing nonprofit.

How Long Does It Take?

Starting a nonprofit takes time. You need to organize, assemble a board of directors, incorporate, and apply for tax-exempt status. This can take a few months. Once you apply for tax-exempt status, the IRS may take 3-12 months to respond. If your revenue is under $50,000, you can file the expedited Form 1023-EZ, which takes 2-4 weeks.

Expect to wait a few months to a year before operating your nonprofit.

Making Money in a Nonprofit

Nonprofits generate profit, but it must cover expenses like rent, equipment, marketing, and salaries. As the founder, you can receive a salary, but it can’t be tied to the nonprofit’s profits. Your board of directors will decide on a reasonable salary.

12 Steps to Start a Nonprofit

Step 1: Research

Understand the need your nonprofit will address. Ensure no existing organizations are already meeting this need. Conduct surveys if needed. Consider alternatives if starting a nonprofit isn’t feasible.

Step 2: Build a Foundation

Decide on your role as a founder. Identify key roles for board members, volunteers, and staff. Seek support from legal advisors, experienced mentors, and experts in various fields.

Step 3: Create a Business Plan

Draft a comprehensive business plan. Include your mission, vision, values, goals, and strategies for achieving them. Detail your programs, market analysis, marketing plan, operational plan, impact plan, and financial plan.

Step 4: Recruit Your Board

Build a diverse board with expertise in finance, marketing, legal matters, and community connections. Create job descriptions and recruit the best candidates.

Step 5: Establish Your Identity and Brand

Choose a memorable name, create a slogan, and design a logo. Develop a cohesive brand with a consistent voice, tone, and visual elements.

Step 6: Plan Funding and Revenue

Identify revenue streams such as memberships, event fees, merchandise sales, fundraising, and grants. Register for charitable solicitation if required by your state.

Step 7: Incorporate

Choose a business name, appoint a board, decide on a legal structure, and file incorporation paperwork. Obtain an Employer Identification Number (EIN).

Step 8: File for Tax Exemption

Register with the IRS for tax-exempt status by filing Form 1023 or 1023-EZ. Familiarize yourself with related IRS resources and state registration requirements.

Step 9: Hire Staff

Determine your staffing needs and budget. Hire staff for essential roles and set up a performance review process. Register for necessary state programs.

Step 10: Choose Software Tools

Select software to manage administrative tasks, member databases, event registration, donations, and more. Consider all-in-one membership management software for efficiency.

Step 11: Plan for Growth

Set up a website and social media presence. Use email, events, publications, and partnerships to spread the word. Engage potential members and donors.