Steps to become a nonprofit
Fundraising Resources

You Won’t Believe What it Takes to Start a Nonprofit

By on October 24, 2016
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If you’re trying to start a nonprofit organization to help your community, be ready to jump through a couple legal hoops. The government strictly regulates nonprofits to make sure only organizations that are truly working for the public good receive nonprofit status. We’re here to help by providing you with the steps you need to take.

Example of nonprofits

1. Registering With Your State

The first step is registering as a nonprofit organization or association with your state. You’ll need to pick from one of several registration categories, such as charitable, social welfare or veterans organizations. The exact process depends on your state. The agency that processes registrations is usually the Department of State.

2. Incorporating

Part of the registration process is going through the formalities of forming a corporation, trust or association. You’ll need to select a board of directors, file articles of incorporation and create your bylaws.

While you usually aren’t required to have a lawyer, how you set up your organization will dictate what it can and can’t do, so hiring a lawyer isn’t a bad idea if you have the resources available.

3. Applying for Permits Getting Tax-Exempt Status

Even though you may have registered as a nonprofit organization with your state, you still need to apply for tax-exempt status with the IRS. Because of differences in state and federal law, not every state-level nonprofit qualifies for federal tax exemption.

The IRS application process asks for detailed information about how you plan to run your organization and where it will get funding. The most common status to apply for is the 501(c)(3) charitable, religious or educational organization. There are also other types of exempt status that may better suit your needs.

When you select your status, don’t just consider what’s easiest to apply for. Also think about what status will be easiest to maintain while giving you flexibility to achieve your goals.

4. Applying for Permits

Even if you’re a registered nonprofit, you may still need additional permits from your state or local government. These may include general business permits or permits for special events like bake sales. Failing to obtain the necessary permits could jeopardize your nonprofit status. Luckily, many states charge reduced fees or waive fees for nonprofits.

While completing all the legal work does takes time, once it’s done, you can turn all of your attention to raising funds and working for your community!

 

Do you have any additional tips? Let us know by commenting below!

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